THE BLOG
08/06/2014 06:11 pm ET Updated Oct 06, 2014

Fear and Loathing as Telecom Policy

The adoption of the "Pulver Order" by the Federal Communications Commission (FCC) in 2004 recognized the madness of applying 70-year-old Title II telecom regulations to IP communications. Ten years later friends in telecom policy circles spend their days weighing the implications of legal hypotheticals that imagine discrimination by network operators as the primary threat to the communication future. Net neutrality relies on the fear and loathing of telephone companies as a basis for applying Title II regulations to IP networks. This reversal by civil society and entrepreneur friends who had supported Pulver Order puts the madness back in play. The reversal includes circumstances making the network operators allies in preserving the Pulver Order's deference to technology innovation and Moore's Law.

I did not find anyone who could point to a substantial problem caused by the Pulver Order's recipe of non-regulation during a recent return visit to Washington, DC. The potential of IP communications won the day in 2004, and the still ever-expanding breadth of communication services make the case stronger a decade later. The 1000 fold expansion of routine connectivity to 10Mbs cost $10,000 per month when I founded Free World Dialup in 1995. The transformation of communication over the last two decades makes the pre-Internet limitations to "long distance" telephone calls and waiting for the mailman seem medieval by comparison. We might convene a conversation to start work on the next 1000 fold expansion, but no one can dismiss the remarkable expansion of communication capacity arriving with IP networks.

The fact everyone agrees about the sacred nature of communication explains the power of the fear, uncertainty, and doubt energizing the net neutrality debate. The magnitude of the stakes makes action seem better than inaction and dispassionate reason difficult to muster, but principle of innocent-until-proven-guilty exists for good reasons. In 2004, we argued the experiment known as IP communications should continue without regulation absent an explicit cause for intervention. Preemptive action against the mere perception of risk is always problematic, but the pace of change makes it impossible in the case of IP networks.

The madness motivating the Title II enthusiasts and one million comments in the FCC Open Internet proceeding traces to the suffering of a communication public during 20th century. Telephone calls remained an expensive luxury justifiable for narrow personal or business purposes from the invention of the telephone in 1876 through the year 2000. Anyone born before 1980 likely still feels the ticking clock anxiety when talking on the telephone even though IP communications made charging by the minute obsolete. The endorsement of Title II rules for IP communications fails as a solution, because Title II and FCC stewardship caused of the communication drought underlying the upset.

The fact Title II makes innovation illegal became clear with my first experience of Voice over Internet Protocol (VoIP) in the 1993. The ability to "talk" over the Internet felt like running a car on tap water. The conversation always came back to the question of the legality of using IP networks for voice services. The uncertain legal atmosphere made it extremely difficult to attract investors in Vonage. Everyone assumed the FCC would put a stop to startup's "bypassing" the telephone networks via the usual all-good-things-come-to-an-end sentiment. The history of telecommunications policy includes plenty of examples where government prosecuted innovation as a crime under Title II rules. The first FCC petition after the arrival IP communications argued for declaring VoIP software illegal.

No one seems to realize Skype, Facetime, and the myriad of other voice applications of IP networks almost did not happen and would not have happened had the Title II regime applied to IP networks. Fear of Title II still makes the voice communication startup a relatively rare occurrence in Silicon Valley or anywhere else. The new IP communication functionality obsoletes Title II telephone network rules by the free choice and verdict of end users. Bringing Title II back from the dead appeals for the purposes of punishing the telco's or preserving billable hours for the legal profession, but fans might want to carefully inventory the accomplishments of Title II before proceeding.

My two decade opposition to Title II rules survived real world experience building companies requiring connectivity as a basic input and conflicts with the telco's, but the stand does not mean I cannot imagine problems requiring government intervention. It means imagined problems are too easy to identify and too numerous. Creating rules to address imagined problems wastes resources, injures the investment environment and produces unknowable unintended consequences. There exist a wide range of worrisome business models a network operator might attempt, but only a very few will prove sustainable. Title II regulation threatens to foreclose the experimentation necessary to maximize the public interest, consumer benefit, and enterprise value of all-IP networks.

The madness of applying Title II means declaring everything telecom. It requires an entirely new standard and ends 60 years of precedent underlying the telecom versus information services distinction. The Federal Communication Bar Association may not see a problem, but I can attest I have no idea how to judge the difference between IP transmission and IP services for the purposes of my next startup. I will not be able to explain it to investors, because the line exists entirely in the mind of whoever happens to be Chairman of the FCC. Applying Title II to IP networks creates a new Federal Computer Commission with authority to weigh in on everything connected to an IP network, in other words -- everything.