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White House Claims Power to Regulate, Tax Internet Without Congress

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The White House dropped a bombshell on Thursday by announcing that FCC already has the authority to take over regulating and taxing the Internet without Congressional approval.

Under “network neutrality” proceedings, the FCC could extend its 16.1% fee on interstate telecommunications services and relay fees to the Internet. The action would more than double the “universal service” revenue it collected in 2014, from $8 billion to $16 billion.

Although Congress has mandated the general nature of the federal universal service fund and telecommunications relay services, it is the FCC that has the sole authority to set the budget size and the fee structure to perform its regulatory mandate.

The FCC last year announced an ambitious multi-billion program to connect schools and libraries with Wi-Fi.  Other advocates are also seeking expansion of low-income subsidies for  the “Obamaphone” to include Internet access programs.

But the FCC had not moved forward on its social agenda due to a perceived lack of congressional jurisdiction, and due to the need for a significant revenue source to defray the huge costs.

Implementing network neutrality proceedings without addressing huge opposition from congressional conservatives and personal liberty advocates would be a game changer.

“In terms of legislation, we don’t believe it’s necessary given that the FCC has the authorities that it needs under Title II,” a White House official told Reuters. “However, we always remain open to working with anyone who shares the president’s goal of fully preserving a free and open internet now and into the future.”

FCC control of how Internet service providers (ISPs) manage web traffic on their networks is supposedly an effort to ensure that the ISPs treat all of the Internet’s content “fairly.” But it is the potential for political bias in interpreting what “fairly” actually means that is at the heart of the debate over the legal authority to set regulations and fees.

President Obama urged the FCC to begin strictly regulating ISPs under a section of the  communications laws known as Title II, which would treat them as public utilities. Broadband companies and venture capitalists vehemently oppose the White House plan, claiming intrusive regulatory burden would stifle innovation and tank investment.

New Republican Chairmen of the Senate and House Commerce Committees, John Thune (SD) and Fred Upton (MI), respectively, were working toward a legislative deal with Democrats that would adopt some net neutrality principles, but without resorting to extending the Title II framework to the Internet.

As a show of a good-faith bipartisan approach, Senator Thune released a list of the net neutrality principles he would pursue as new legislation, which closely echoed the President’s call for bans on cable ISPs and others blocking or throttling websites. But the arrogance of the Obama administration’s comments will spike the ability of moderate Democrats to cooperate with the Republicans.

FCC Chairman Tom Wheeler, an Obama appointee, indicated no interest delaying an FCC vote scheduled for February 26 and seems determined to impose the President’s new net neutrality rules. FCC spokeswoman Kim Hart said in a prepared statement, “Chairman Wheeler believes it is important to move forward as quickly as possible to protect consumers, innovation and competition online.”

The White House’s dismissal of any negotiations with Republicans in setting the “basic rules” governing Internet access is a slap in the face to the private sector, whose innovations created Internet demand. President Obama effort to turn the Internet into just another telephone service is demonstrating his faith in an intrusive public sector that thrives on high taxes, heavy-handed controls and the status quo.


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