Regulating internet traffic could cripple Montana's tech sector
Guest Commentary
Montana’s growing technology sector is something to get excited about. Homegrown startups are emerging all over the state, spurred by a new generation of Montana entrepreneurs. They’re being joined by veterans from Silicon Valley who are relocating to enjoy the magic of Montana. And we’re only at the first stages of the development of a thriving technology sector that has huge potential to create new employment opportunities and spur economic growth.
Promising as it may be, the success of a Montana technology boom is not guaranteed. In fact, it just became a little more difficult due to a huge stumbling block erected by the Federal Communications Commission.
In February, the Federal Communications Commission enacted a controversial new rule to start regulating internet traffic under “Title II” of the Communications Act of 1934.
That’s a very big deal for a rural state like Montana. The margins on investment have always been slim in rural states. Despite that, we have seen new service providers step in and existing companies step up investment. That investment may grind to a halt, however, if the Federal Communications Commission regulations become the law of the land as those small profits turn into losses.
The regulatory structure under which they’ve based their rule, referred to as Title II, was originally enacted to control monopoly telephone companies during the New Deal era. It’s an antiquated law designed for a completely different technology and devised under an obsolete economic mindset.
Investment in the core backbone of the internet took off in the 2000s largely because government regulators decided to let the market work.
When the Federal Communications Commission made clear they would not impose the onerous Title II regulations on fiber networks investment exploded. Internet providers tripled the number of miles of new cable laid per year in just five years and consumers reaped the benefits of those billions of dollars of annual investments.
The new rule is completely contrary to what has worked thus far and jeopardizes future progress. To compound the problem, the rule is expected to result in higher internet service costs for consumers. Brookings Institute, a left-leaning think tank, put the price tag at $15 billion in new costs on users. For tech entrepreneurs operating on shoestring budgets, the cost they pay for internet access very well could be the difference between success and failure.
The move to impose such a high degree of regulation on the internet has prompted outrage in the tech community and left many wondering why the government has gone so far. As internet pioneer Daniel Berninger put it: “The U.S. represents 70 percent to 80 percent of the [global] information technology economy — why would you reverse your strategy that got us to this point?”
That seems to be the most salient question. Keeping the heavy hand of government out of the internet has been a feature, not a bug, of the freedom and openness that has got us to the point we are today. To reverse all that now could be a colossal mistake.
Montana’s fledgling technology sector is poised to flourish on its own. It doesn’t need a handout from government to get there; it just needs government to stay out of its way. We’re counting on our congressional delegation — Senators Tester and Daines, and Congressman Zinke — to fight for Montana and for a free and open internet. Our elected officials can demonstrate bipartisan leadership by upholding laws that both ensure no blocking of internet traffic takes place and prevents new outdated regulations from changing the internet. Only then can Montana’s technology future grow to new levels.
— Brent Mead is the executive director of the Montana Policy Institute.