Net neutrality: Nice rule, but where was the law?

Net neutrality won a big victory Thursday when the Federal Communications Commission chose to start treating big broadband providers as public utilities.

When the cheering dies down, though, we ought to ask why a small appointed commission wound up making the decision instead of a large elected Congress. This is a textbook case of Congress punting its responsibilities to unelected regulators.

The FCC’s new policy is a testament to the power of citizen lobbying. A formal net neutrality rule has been the goal of online entrepreneurs and activists who want to curb the power of broadband heavyweights like Comcast, AT&T and Verizon.

The idea is to prohibit the giants from playing favorites with Web-based companies that depend on their cables or wireless networks. Under net neutrality, no company can sign a sweetheart deal that gets its video or data transmitted faster to homes than its competitors, nor can a non-sweetheart get its transmissions blocked or slowed.

The pro-neutrality forces haven’t merely won the decision they wanted from the FCC; they have won their case with the public. There have been scattered instances of such favoritism in the past, but the broadband behemoths now fear public backlash.

Thursday’s ruling is problematic, though. Critics say the commission is guilty of regulatory overreach. Congressional underreach is more like it.

The commission’s rule-making is governed by the federal Telecommunications Act. Yet that law does not reflect 21st-century realities.

On Thursday, the commissioners reclassified the big broadband providers as “telecommunications services,” a category created in 1934 – yes, 81 years ago – to allow heavy federal regulation of slowly evolving copper-wire telephone monopolies.

In 1996, Congress added a category to the Telecomunications Act, “information services,” for a radically different purpose: to encourage enterprise by largely freeing Internet ventures from regulation. Until Thursday, the broadband divisions of the Comcasts and Verizons enjoyed this classification.

Neither the 1934 law nor its 1996 amendments envisioned the contours and complexities of today’s Internet. Broadband providers bear little resemblance to Ma Bell. They have monopolistic aspects and lethal market power, but like other Web enterprises, they face ferocious competition and are quickly spawning new technologies and services. That dynamism is also important to the Internet, and over-regulation could chill it.

The FCC, in effect, had a bad choice: It could put the round peg in the square hole of too much regulation or leave it in the triangular hole of almost no regulation. Congress had not given it the round hole of right-sized regulation.

So the commissioners are more or less making it up as they go along. They say they won’t do more than prevent the broadband companies from playing favorites, but the logic behind the reclassification could allow the FCC to go much further, even to the point of price-setting.

The new rule faces intense challenges in federal courts, where the FCC has been rebuked before. But an issue this complex and important shouldn’t be left to judges or a 3-2 majority on the FCC.

In Internet years, 1996 is the Bronze Age and 1934 is the Jurassic. Only the nation’s elected lawmakers can bring the Telecommunications Act into the 21st century.