What happened when former President Donald Trump deregulated and fixed mobile broadband internet service? Prices plunged, speeds skyrocketed, and all of the crazy end-of-the-world-is-nigh predictions from the media and other Democrats were wildly, comically wrong.
It is objectively one of the most successful deregulations in history. Yet urged on by President Joe Biden, the Federal Communications Commission is set to reverse it on Thursday and has already enacted digital discrimination rules that will create an even heavier regulatory burden.
One of the wise decisions by Congress in the mid-1990s during the infancy of the internet was to keep the internet relatively regulation-free and lawsuit-free. This hands-off policy helped spawn a multitrillion-dollar digital industry that American technology companies quickly came to dominate.
That changed when President Barack Obama’s FCC reclassified the internet as a public utility, opening the door for new and significant restrictions on what commercial contracts would be permitted. One was a set of business-to-business price regulations euphemistically described as “net neutrality.” Another regulation essentially prohibited wired and wireless internet service providers from using, sharing, or selling information about consumers’ browsing history, app usage, or location information.
The Trump administration removed the Obama requirements, returning to the light-touch approach to internet regulation. The privacy rules were repealed in March 2017 by Trump and Congress. Net neutrality rules were repealed later that year.
Rolling back Obama-era regulations would be “the end of the internet as we know it,” promised Sens. Bernie Sanders (I-VT) and Jon Tester (D-MT) in 2017. The New York Times opined that ending the Obama FCC’s public-utility regime would “hasten the death of [our] internet” as it would increasingly resemble the Chinese model of information control. NBC News predicted that it would “destroy everything that makes the internet great,” stifling innovation and sticking internet users with extra fees.
Our new Committee to Unleash Prosperity study finds that the opposite happened: a boom in commercial internet activity and much wider access. The internet became democratized and affordable in part through deregulation. The price regulations and the prohibition of low-price market segments that came with the public-utility approach were not saviors for households or businesses. Regulations undermined competition, business investment, and product quality. Repealing them did the opposite.
In early 2017, Janet Yellen’s Federal Reserve was puzzled about how the economy was growing at the same time that something was dragging down inflation. Yellen, now the Biden Treasury Secretary, plowed through the data and discovered “a large decline in telecommunication service prices,” which she dismissed as an “idiosyncratic shift.”
Actually, it was the 115th Congress and Trump who used the Congressional Review Act to overturn a regulation by the FCC that was encouraging both wireless and wired internet service providers to charge high subscriber fees. Immediately prices fell about $40 per subscriber.
Competition is likely an important factor helping to reduce internet service prices while increasing their quality. Republican FCC commissioner Brendan Carr explains: “The percentage of Americans with access to two or more high-speed, fixed ISPs has increased by about 30% since 2017 — up from 229 million in 2017 to approximately 295 million in 2022, according to FCC measures.”
Although 2017 was supposed to be the end of the internet as we know it, wired internet speeds increased by a factor of 5.8 between 2017 and 2023. Wireless internet speeds increased by a factor of 8.7. In 2017, speedtest.net data showed the U.S. ranked 45th in the world in terms of average mobile internet download speeds. By 2022, which is the most recent year that average speeds are reported, the U.S. had climbed to 16th. Between 2022 and 2023, the U.S. gained another seven ranks (from 22nd to 15th) on the median speed metric. All of these improvements occurred after Trump’s deregulation.
In the face of this deregulatory success story, the Biden FCC nonetheless proposes to reclassify broadband internet service as a regulated public utility and to impose the privacy rules that were overturned by Congress.
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The FCC has also, under the Infrastructure Investment and Jobs Act, imposed digital discrimination regulations on ISPs based on an open-ended disparate-impact standard, notwithstanding its own findings that there is no intentional discrimination.
The combination of the new digital discrimination rules and the pending return of public utility regulation will, if sustained by the courts, more than reverse the Trump-era deregulation. This suggests that no deregulatory success, no matter how obvious, discourages a Biden administration agency from reregulating.
Phil Kerpen is president of American Commitment and the Committee to Unleash Prosperity. Casey B. Mulligan, an economics professor at the University of Chicago and a fellow with the Committee to Unleash Prosperity, was chief economist for the White House Council of Economic Advisers from 2018 to 2019.