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The Internet is to modern America what the post office was to the original United States. But whereas Article I, Section 8, Clause 7 of the Constitution entrusted exclusive authority over the Postal Service to Congress, the Internet is threatened with flank attacks by a cluster of states under the banner of “network neutrality.” These attacks are clearly pre-empted by the Constitution, federal statutes, and the open-market broadband policies of the Federal Communications Commission. They should also be pre-empted by wise policy and common sense: By balkanizing the regulation of national broadband service, these efforts risk either arresting important technological innovation or saddling subscribers with the costs of expanding the broadband network. State bills initially emerged late in 2006 after federal net neutrality legislation stalled and proponents reconnoitered for more promising political terrain. We’re fortunate that no state law has been enacted yet. But the continuing push for local regulation is keeping the drive for net neutrality alive. The FCC is now seeking comment on the behavior of broadband market participants and the need, if any, for additional national regulation. Comments are due June 15. WHEN NEUTRAL IS BAD “Net neutrality” is a phrase that misleads more than it informs. The policy would require broadband service providers to treat all Internet content providers the same. The hitch is that all Internet content providers are not the same. To be transmitted efficiently and effectively, different types of online content have very different needs. Simple e-mail transmissions make tiny network demands and are relatively impervious to hiccups in the system. Streaming video feed and online medical services, by contrast, use vast broadband spectrum and cannot tolerate transmission delays. Because such delays can and will occur as the Internet becomes more crowded, the more technologically complex services need to be able to contract for extra-reliable service. But net neutrality would bar giving such service guarantees — much less charging for them. In the end, consumers would lose out because they could not reliably enjoy the benefits of these online services. In theory, we could settle for a plain-vanilla broadband, reminiscent of plain-vanilla phone service, sans voice mail, sans call forwarding, sans call waiting, sans caller ID, sans everything. In practice, we cannot turn our backs on broadband development. Internet service providers have to upgrade the network. In a net-neutral world, those ISPs would be compelled to recover their costs by charging all consumers higher subscription fees. But that would force subscribers who place small demands on the network to subsidize subscribers who place much (in some cases, much, much) larger demands on the network. And the higher fees would slow — if not, indeed, defeat — the drive to make broadband service affordable and accessible to all Americans. Nevertheless, a handful of states — California, Maine, Maryland, Michigan, and New York — are flirting or have recently flirted with net neutrality legislation. If the bills move forward, broadband subscribers in these states might be deprived of high-quality services like telemedicine or online movies that those in neighboring states enjoy, creating a first cousin of the worrisome “digital divide.” Fortunately, constitutional, statutory, and regulatory pre-emption doctrines should prohibit such potluck regulation. SINK OR SWIM TOGETHER The Founding Fathers enshrined the commerce clause in the Constitution to prevent local measures from confounding national economic and communications enterprises. As the Supreme Court elaborated in Baldwin v. Seelig Inc. (1935): “The Constitution was framed . . . upon the theory that the peoples of the several states must sink or swim together, and that in the long run prosperity and salvation are in union and not division.” Even where Congress has not spoken, as the Court explained in Pike v. Bruce Church Inc. (1970), the commerce clause by itself pre-empts state legislation that imposes a burden on interstate commerce disproportionate to its putative local benefits. Broadband service providers operate a national network. Local net neutrality laws would stunt that network by, piecemeal, deterring innovation and discouraging new fiber deployment. Those evils would follow inescapably from giving certain content providers — those with huge bandwidth demands or pioneering technology requirements — a heavily subsidized ride. Indeed, permitting ISPs to charge content providers full freight may be essential to the provision of innovative services. Consider a plan to charge broadband customers $10 to watch live Major League Baseball games. The plan will work only if ISPs can first build advanced networks to guarantee a certain level of delay-free service. If the ISPs are unable to capture the revenue necessary for new construction from the baseball game purveyor and similar content providers, the plan will fail. If, instead, subscriber fees are hiked to finance the advanced network, the number of subscribers will plunge and diminish the customer base for the baseball offering. As for the alleged protections offered by net neutrality, they are an illusory firewall against a theoretical problem. Federal antitrust laws and FCC rules already prohibit broadband providers from exploiting putative network bottlenecks to acquire a competitive advantage. Those laws were more than sufficient to provide redress in the only known instance in which a network provider sought to interfere with any service. In that instance, the FCC sanctioned Madison River Communications for blocking service offered by Vonage, a Internet telephony rival, on March 3, 2005. The only possible conclusion under the Constitution is that state net neutrality laws would impose a needless burden on the national network in violation of the commerce clause. THE FEDS AGREE State net neutrality legislation would also run afoul of the mandates of Congress. Both Republicans and Democrats have championed a national goal of affordable broadband service in every home by the end of 2007. A federal law declares that “it is the policy of the United States . . . to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by Federal or State regulation.” Local net neutrality requirements would confound that open market by prohibiting a whole range of freely negotiated contracts between Internet content providers and the network operators who deliver that content to consumers. And the Supreme Court has repeatedly held that local laws must bow before conflicting congressional policies. The FCC, the federal agency entrusted by Congress with stewardship over Internet service, has supported the open-competition framework, too. In 2002, the commission concluded that “broadband services should exist in a minimal regulatory environment that promotes investment and innovation in a competitive market” and thus be shielded from the heavy-handed common-carrier rules that fettered traditional telephone service. In 2005, the agency found that broadband deployment would be advanced and broadband innovation would be accelerated if broadband service providers were permitted flexibility in fashioning commercial arrangements with particular ISPs. The FCC further maintained that local net neutrality laws requiring identical service terms and conditions for every user would impede “deployment of innovative wireline broadband services taking into account technological advances and consumer demand.” As the Supreme Court wrote in Fidelity Federal Savings & Loan Association v. De la Cuesta (1982), “federal regulations have no less pre-emptive effect than federal statutes” if they have been authorized by Congress. State laws are thus vulnerable to pre-emption if they conflict with or frustrate the purpose of a federal regulation. And it is clear that state net neutrality laws would frustrate the FCC’s regulatory decision to subject the arrangements between broadband service providers and the whole range of their customers to free and open competition and to eschew common-carrier-type obligations. The Supreme Court declared in IAM v. Wisconsin Employment Relations Commission (1976) that states are stripped of authority to regulate where federal policy intends that the activity in question be governed by the free play of economic forces. LEAVE IT TO BUSINESS If the law and the policy so clearly swing against net neutrality laws, why does the maneuvering continue? The biggest beneficiaries of such laws would be such corporate behemoths as Google, eBay, Yahoo, and Amazon.com. They are implacably against paying their fair share of the fiber-optic construction necessary to accommodate the spiraling demands on broadband service occasioned, in part, by their own spectrum-hogging operations. Robert Litan of the Brookings Institution has cogently elaborated the policy issue by comparing the charging of higher fees to all broadband users to the levying of equivalent highway taxes on double-wide trailer trucks and individual family cars: “In fact, state governments tend not to do this: they require trucks to pay taxes based on weight per axle that you and I with our cars . . . don’t pay . . . . Why should telecom companies that want to build next-generation cyber-highways be treated any differently? Shouldn’t they at least be allowed to charge data-heavy sites more than others?” Some might point out that net neutrality laws do not require flat fees; ISPs can still charge subscribers according to their online usage. But that observation does not answer the mischief. As ISPs contemplate spending billions in capital investment, they must have the freedom to experiment with a variety of pricing models. Let the free market weed out the bad plans. Google’s business, for example, pivots on a pricing scheme that charges consumers nothing while third-party advertisers pay everything — basically the same system used by over-the-air broadcasters. What if the law had insisted that the broadcast model was the only way to pay for Internet services? Think of all the technological and commercial innovation that would not have happened. There is no sensible reason to deny ISPs a corresponding choice to finance costly new broadband construction and capabilities by charging online providers or subscribers or both. Even if the constitutional objections could be overcome, the law should not force ISPs into a straightjacket at a time when agility is a keystone for innovation.
Bruce Fein is an attorney specializing in constitutional and telecommunications law at D.C.’s Bruce Fein & Associates and a consultant to AT&T. He served as associate deputy attorney general and general counsel to the FCC under President Ronald Reagan.

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