Having failed to muster support
in Congress for regulating Internet transmissions, proponents of so-called "net
neutrality" are turning to state legislatures for action. But Internet policy is unquestionably the province of the federal government, as established by statute and an abundance of case law and administrative orders. To circumvent proper
legislative and regulatory channels would provoke costly litigation and inhibit
broadband investment in Michigan.
Michigan is the first stop in the forum-shopping underway
by Internet content providers such as Google, Yahoo and Disney, who want
lawmakers to prohibit broadband networks from instituting tiers of transmission
services. These content providers contend that priority services such as
higher-speed transmissions would destroy the "neutrality" of Internet traffic,
which currently moves on a first-come, first-served basis.
Network owners and economists say that tier pricing could
help generate the revenue needed to expand broadband infrastructure, which is
inadequate for widespread delivery of video and other new bandwidth-intensive
The issue has been imported to Michigan just as the state
Senate is finalizing franchise reforms that will speed deployment of
Internet-based video services. However, consumers will not benefit if the
franchise reforms are delayed by special interest pleadings for net neutrality
regulations. As it is, the courts have already invalidated a number of state
laws intended to restrict Internet-related activities. For example:
- In Libraries Association v. Pataki, which overturned a New York law restricting online content, U.S. District Court Judge Loretta A. Preska identified the Internet as a "national preserve" in which only the federal government may legislate. As Judge Preska’s ruling stated: "Typically, states’ jurisdictional limits are related to geography; geography, however, is a
virtually meaningless construct on the Internet. … Regulation by any single state can only result in chaos, because at least some states will likely
enact laws subjecting Internet users to conflicting obligations. … (T)hese
inconsistent regulatory schemes could paralyze the development of the
Internet altogether. … Haphazard and uncoordinated state regulation can only
frustrate the growth of cyberspace."
Vonage v. Minnesota, a case that invalidated state regulation of
Internet-based phone service, U.S. District Court Judge Michael J. Davis
concluded, "State regulation would effectively decimate Congress’s mandate
that the Internet remain unfettered by regulation." The Federal
Communications Commission subsequently issued an order exempting Voice over
Internet Protocol from state regulation.
National Cable & Telecommunications Assoc. v. Brand X, the U.S. Supreme
Court declared that Internet services transmitted over telephone, cable and
electric power lines are "information services" under the federal
Telecommunications Act of 1996 and thus immune from state regulation.
Passage of the Internet Tax Nondiscrimination Act, which pre-empts state
authority to levy taxes on online transactions, further illustrates the
intent of Congress to shield the Internet from state regulation.
State regulation of the Internet would also violate the
U.S. Constitution. Article 1, Section 8, Clause 3, states, "Congress shall have
power … to regulate commerce … among the several states." This grant of
authority to Congress long has been interpreted as conveying a negative (or
"dormant") prohibition against state laws that interfere with interstate
commerce. By its very nature, the Internet is interstate and international.
Even assuming that state regulation were somehow
permissible, there’s simply no benefit to any state — particularly one in an
economic slump like Michigan — becoming widely known as hostile to the broadband
industry. Regulatory burdens are anathema to investors, and lawmakers who impose
net neutrality rules would put their state at the end of the line for high-tech
Ultimately, skirmishes over net neutrality will only harm
Michigan citizens. The most responsible reply to demands for net-neutrality
regulations is: "No. Go compete in the marketplace."
Diane S. Katz is director of science, environment and
technology policy for the Mackinac Center for Public Policy, a research and
educational institute in Midland, Mich. Raymond L. Gifford served four years as chairman of the Colorado Public Utilities Commission. He is currently
a partner in the law firm of Kamlet, Shepherd & Reichert in Denver, Colo., and a
senior adjunct fellow with the Washington, D.C.-based Progress and Freedom
Foundation, a market-oriented think tank that studies
the digital revolution.