Thursday marked the largest government intervention into the Internet ecosphere in American history. By equating the dynamic 21st century Internet to the telephone system of 1934, the Federal Communications Commission has thrust powerful but antiquated utility-style regulations onto the U.S. tech economy.
To justify its actions, the FCC had to resort to misleading distortions that essentially asserted "the Internet is so horribly broken that only the government can fix it." And "you can trust unelected Washington bureaucrats to do a better job of running the highly complex Net than engineers, entrepreneurs and consumers."
The FCC's power grab discards the bipartisan light-touch regulatory framework laid out during the Clinton administration. That hands-off approach made the Net the greatest deregulatory success story of all time.
History teaches us that utility-style regulation raises costs to consumers, reduces investment and innovation, and creates uncertainty due to the politics-driven nature of "mother may I innovate" government mandates. Regulation only grows. Now the Internet cannot escape that fate.
The ultimate result of more government encroachment will be something akin to the sagging European Internet market, where investment in broadband infrastructure is only one-fourth of America's due to heavy-handed regulations. Even worse, this new power grab could trigger expanded intergovernmental powers over the Web through existing telecom treaties, jeopardizing Internet freedom.
What many in Silicon Valley don't understand is that, according to the Supreme Court's 2005 Brand X decision, nearly any "tech" company that builds a telecom-style network to deliver its content and apps has the potential to be captured by the FCC's new rules. If the agency tries to exempt some companies but not others, it will be choosing the politically favored over everyone else.
As the effects of these new rules gradually slow the lightning-fast evolution of the Net, it is likely to be overturned by courts, Congress or both. In the meantime, America's Internet consumers will be caught in the crossfire.