FCC Chairman Wheeler tries to rewrite Internet history

[Commentary] In an effort to justify its aggressive new regulation of the Internet, the Federal Communications Commission is rewriting history. Intrusive oversight of the digital economy is actually good for investment and innovation, says FCC Chairman Tom Wheeler. “Wireline DSL was regulated as a common-carrier service from the late-1990s until 2005,” Chairman Wheeler argued at a recent Broadband Communities Summit in Austin (TX). “Interestingly in this period, under the old heavy-touch approach to Title II, our nation saw the highest levels of broadband infrastructure investment ever.” Chairman Wheeler’s analysis, however, is like arguing that housing policy and monetary policy between 2002 and 2007 were superb because we built so many new homes. His analysis would fail to mention the housing crash, the financial panic, and the Great Recession, which arrived just months later and whose catastrophic effects lasted several years.

In fact, the FCC’s brief experiment applying Title II regulation to emerging broadband services contributed to the spectacular crash of the tech and telecom sectors in 2000-01. Only when Title II was shelved did the broadband and Web industries rationalize and begin their now-uninterrupted ascent. Each moment in history is unique. No analysis is dispositive. Yet Chairman Wheeler cannot argue that Title II was a success in the brief time it applied to one sliver of the nascent broadband world. Where it did apply, it depressed (or misdirected) investment and precipitated a crash. When it was banished, the U.S. information economy enjoyed unprecedented growth and innovation.

[Bret Swanson is president of Entropy Economics LLC]