March 11, 2015
Washington’s seizure of the Internet is one of the great case studies in the annals of political naïveté.
Over several years, leading lights of the Web—among them Netflix,Google and Tumblr—importuned the Obama White House to align itself with the cause of net neutrality.
“Net neutrality,” like so many progressivist-y causes—climate change, health care for all—is a phrase designed to be embraced rather than understood.
But net neutrality had real meaning. Its core idea was that the U.S. Federal Communications Commission, a Washington agency whose employees have been regulating communications since 1934, should design and enforce a price mechanism for the Internet. Up to now, nobody did that.
In February the FCC did, and on that day the Little Red Riding Hoods of net neutrality found out what big teeth grandma has. The FCC said its plans to regulate the Web were in a 332-page document, which no one can see until the agency is ready.
Within days, Netflix CFO David Wells spoke about the Internet coming under the FCCs Title-II control: Were we pleased it pushed to Title II? Probably not. We were hoping there might be a non-regulated solution. But it seems like companies that are pursuing their commercial interests including us have to arrive at something like that.
The Internets descent into the Washington heart of darkness is a perfect example of that famous Santayana-ism: Those who cannot remember the past are condemned to repeat it.
For our purposes, the personification of this forgotten wisdom would be David Karp, the 28-year-old founder of the Webs popular blogging platform, Tumblr. Mr. Karp got Barack Obamas ear on net neutrality at one of the presidents nonstop New York City fundraisers. Mr. Obama then told aides and lawyers in the White House to move on it, and they told Chairman Tom Wheeler of the nominally independent FCC that regulating the Web was a done deal.
Netflix and the others are being mocked for turning the Internet over to a telecommunications law written in the 1930s. But you dont have to travel back that far to understand the fix theyve gotten themselves into. The more relevant political event is the Telecommunications Act of 1996, passed when Mr. Karp was . . . 10 years old.
Mr. Karp and the rest of the 20-something and 30-something Peter Pans in the app development world should find their way to the 80-something communications lawyers and lobbyists retired in Florida for a tutorial on what its like trying to get Washington off your back once it has climbed on. Heres the tweet-length version: You are going to pay and pay and pay. To save you, Washington will bleed you.
Briefly, in 1987 the FCC proposed partially deregulating its ancient control of long-distance telephone rates; and it proposed allowing more competition among AT&T, other national carriers and the regional Bell operating companies, or Baby Bells. What ensued over nine years was arguably the greatest pig-out of lobbying fees and campaign-contribution shakedowns in Washington history. The Beltway bled political payments out of these businesses until Congress finally disgorged a law in 1996.
In one of the umpteen litigations that ensued, AT&T v. Iowa Utilities Board (involving, among other things, the pick and choose rule), Justice Antonin Scalia said the 1996 act is in many important respects a model of ambiguity or indeed even self-contradiction.
For sure. The telcom act set up a 14-step competition test for the Baby Bells. A congressional staffer called the law a communication lawyers dream.
Political ironies abound in the net-neut saga.
About the only faction unabashedly cheering the FCCs capture of the Internet is the Occupy-everything left. Their numbers include such famous high-tech innovators as The Center for Media Justice, Demand Progress, 18 Million Rising and Popular Resistance.
This is the same left that loathes Hillary and Bill Clinton for their crony capitalism, such as the Clinton Foundation donor stories. Thats rich. What the left and Barack Obama have done with the Internet and all the rest of this administrations reregulation (banks, health care, education, utilities) is put Clintonalia back in control of Washington. No one can do business until they first run it through the Beltway bosses. For the K Street corridor, its the golden age all over again.
Along the partisan divide, the Internet providersAT&T, Verizon,Comcastare seen largely as part of the Republican donor base, while the new Web companies and their high-asset employees trend Democratic for reasons, they say, of social conscience.
That divide is too neat now. The days of blissed-out Patagonia progressivism are ending with FCC regulation of the Internet. Its time for these new-generation techies to think about where their political interests lie.
Got a new Web idea? Run it by your Washington reps. Which will include the regulatory enablers of the Obama White House. They didnt invent the Internet. But now they run it