ALEC Opposes Internet Regulation in Congressional Stimulus Legislation.

WASHINGTON -- The American Legislative Exchange Council (ALEC) voices its serious concerns over provisions in the economic stimulus plans of the U.S. Senate and House of Representatives to usher in unprecedented government regulation of the Internet. ALEC opposes plans for federal regulators to impose network management standards through conditional spending grants. Any congressional stimulus legislation should reaffirm our system of network freedom that fosters the kind of innovation that a thriving Internet depends on.

Title III of the House version of the American Recovery & Reinvestment Act of 2009 allocates nearly two billion dollars of federal taxpayer money for infrastructure build-out grants to private broadband service providers or to state and local governments that provide broadband services. But strings are attached to those grants that would give the federal government sweeping new controls over broadband service networks. The House proposal requires the Federal Communications Commission (FCC) to create and enforce "open access" regulations that all broadband service providers receiving grants must follow. The proposal would also transform the FCC's existing set of voluntary principles for network management into an enforceable government mandate for those broadband service providers. These provisions in the House proposal essentially guarantee that any broadband service provider receiving such grants must accept a network neutrality regulatory regime. Similarly, the House proposal's requirement that the FCC create and enforce "wireless open access" regulations for wireless broadband services could be aggressively interpreted by the FCC to impose network neutrality regulations on wireless broadband providers. A similar, strings-attached grant program is contemplated for the Senate stimulus plan that currently in the works.

"Internet regulations won't stimulate the economy," said Seth Cooper, ALEC's Telecommunications & Information Technology Task Force Director. "Unfortunately, the strings-attached provisions have more to do with increasing government control over the Internet than with improving broadband build-out to unserved areas. Regulatory schemes reduce incentives for economic investment by the private sector for broadband build-out. A regulatory stimulus of this kind is inherently at odds with the supposed economic purpose behind the broadband infrastructure grants. Congress should remove all provisions that could lead to network neutrality regulations."

Private broadband service providers that compete for customers based on price and service demand flexibility to relieve Internet traffic congestion on their networks. So-called network neutrality regulations increase potential risks and jeopardize potential rewards for private sector pursuit of network management innovations. Such regulation undermines the incentives for the private sector to invest in their networks.

ALEC's Resolution on Network Neutrality (2007) affirms that the exponential growth of the Internet is a result of "the government's 'hands off' approach, ever increasing competition, as well as fierce consumer interest." The Resolution recognizes that "companies that invest in broadband and broadband-related applications should be afforded the flexibility to explore fair and competitive business models and pricing plans for their products and services." The Resolution also declares that "mandated net neutrality regulations would impede future capital investments in the U.S. broadband infrastructure."

ALEC takes no overall position on economic stimulus legislation in Congress, but it opposes any attempt to legislate network management regulations through conditional spending grants.

The American Legislative Exchange Council is the nation's largest individual membership organization of state legislators, dedicated to advancing the Jeffersonian principles of free markets, limited government, federalism, and individual liberty.