Why treating the Internet as a public utility is bad for consumers

[Commentary] Open Internet advocates celebrated long and loud in June when a federal court upheld the Federal Communications Commission’s “net neutrality” rules that prohibit broadband-access providers from blocking websites or accepting payment to prioritize traffic. But consumers and businesses should look beneath the rhetoric to see larger dangers lurking in the FCC’s actions. The new limits and the uncertainty over how the agency will interpret them could seriously constrain future evolution of the Internet. But the bigger danger comes less in the rules themselves than in how the FCC finally got them past the courts.

To overcome explicit congressional limits on Internet regulation, and at the insistence of the White House, the FCC began this time by “reclassifying” broadband access as a public utility. The commercial Internet has become crucial in virtually everything from business and employment to civic engagement and social interaction. But there is a world of difference between essential services and public utilities. Food, clothing and shelter are also essential, yet none of them are regulated as public utilities. That legal designation, codified in the late 19th-century Progressive Era, has always been limited to a small class of basic infrastructure, such as electricity, gas and water, which shared unique economic features, including a need for universal availability and extremely high financial barriers for potential competitors. For the Internet, regulation as a public utility represents a dangerously poor fit.

[Downes is a project director at the Georgetown Center for Business and Public Policy]