28 Jan 2015 Visa, Inc. Leaders Balk at Request to Support Free and Open Internet

Leading Free Market Organization Questions Visa About Reports Credit Card Giant is Supporting Obama Plans for Increased Federal Regulation of the Internet

National Center for Public Policy Research Warns: Obama Administration Efforts to Reclassify Broadband Bad for Innovation, Consumers and Competition

Foster City, CA – At today’s annual meeting of Visa Inc. shareholders in Foster City, California, in response to a question from the National Center for Public Policy Research, Visa CEO Charles Scharf refused to take sides in the net neutrality debate.

The question came amid media reports that Visa Inc. has urged the Federal Communications Commission to go along with President Barack Obama’s plan to reclassify broadband providers. This would give the federal government greater control over Internet pricing, service terms and much more.

“Net neutrality rules are a solution in search of a problem,” said National Center Free Enterprise Project Director Justin Danhof, Esq. “In its simplest terms, President Obama and the FCC would transform the Internet from the largest information service mankind has ever developed into a price-regulated utility. This would hamper innovation, decrease private sector investment, increase business costs, increase consumer prices and decrease consumer choice.”

“Visa CEO Charles Scharf and another Visa executive made it very clear to me that Visa does not have a public position on the net neutrality debate. Scharf insinuated that the company wanted as many people to be able to connect to the Internet through as many devices as possible. If that’s the case, the company should publicly denounce President Obama’s net neutrality goals and support the free and open Internet philosophy that has guided U.S. Internet policy since the Clinton Administration,” said Danhof.

At today’s shareholder meeting, Danhof asked Scharf, in part:

In November, Bloomberg Businessweek reported Visa “has been quietly pushing the Federal Communications Commission for strict broadband rules” and “urged FCC commissioners to reclassify broadband service under Title II.” We share the same concerns about net neutrality as Texas Senator Ted Cruz (R), who recently wrote that “[i]t would put the government in charge of determining Internet pricing, terms of service and what types of products and services can be delivered, leading to fewer choices, fewer opportunities and higher prices.”

As the FCC continues to debate the issue, where does Visa currently stand regarding net neutrality and why?

Audio of the meeting is available at: http://youtu.be/SGmswDYblYA

“After Scharf repeated that the company did not have a public position on the issue, I gave him the opportunity to repudiate the Bloomberg Businessweek report. I specifically asked if the report was incorrect,” added Danhof. “He demurred and insisted he was unaware of the report.”

“Scharf’s noncommittal response is very discouraging,” said Danhof. “Credit card companies such as Visa have benefited greatly from Internet freedoms and expansions that have grown exponentially over the past two decades. The ease of e-commerce has drastically reduced transaction costs and has been a boon for Visa. Under President Obama’s vision, innovation and start-ups will be hindered by a costly regulatory regime. It is sad to see a company that profited from a free and open Internet now supporting rules that may close the door to future competition.”

Today’s meeting comes less than one month before the FCC commissioners are expected to vote on new net neutrality rules. That vote is expected to take place on February 26. While the FCC welcomes comments on its net neutrality proposal, it has yet to make the specific language of the proposal public. Some congressional conservatives have requested that FCC Chairman Tom Wheeler allow the public to see the proposed rules in advance of the February 26th vote.

“Congressional conservatives calling for openness from the Obama Administration should not hold their breath,” suggested Danhof. “President Obama has run perhaps the least transparent Administration in modern times and isn’t likely to change now.”

Reports indicate the FCC’s proposal will likely be in line with President Obama’s plan to reclassify broadband service under Title II of the 1934 Telecommunications Act. This change would upend years of agency findings and court decisions that have viewed broadband as an information service and instead regulate Internet providers as telecommunication entities under arcane laws written during FDR’s first term as president.

According to FCC Commissioner Ajit Pai, any such “[r]eclassification opens the door to actual access charges – tariffed charges that Internet service providers could impose on edge providers, content delivery networks, and transit operators without their consent. Indeed, one Title II option on the table would guarantee new Internet tolls by giving broadband ISPs no option other than access charges to recover their regulated costs. Not only that, but reclassification means a broadband price hike for every consumer in America—not exactly a move that will encourage broadband adoption.”

“The future of the Internet as we know it is in the hands of five unelected officials who are sitting behind their desks at the FCC – and two of those officials have made strong public statements against further regulation of the Internet,” warned Danhof. “Those regulators who seek to fix the supposed problem with Internet access and innovations should ask themselves one question: when has government regulation been the prelude to a thriving private sector industry? Companies such as Visa should not lobby to hamper the tremendous progress that America has seen over the past 20 years when it comes to Internet speed, content and availability.”

The National Center’s Free Enterprise Project is the nation’s preeminent free-market corporate activist group. In 2014, Free Enterprise Project representatives participated in 52 shareholder meetings advancing free-market ideals in the areas of health care, energy, taxes, subsidies, regulations, religious freedom, food policies, media bias, gun rights, workers rights and many other important public policy issues. Today’s Visa meeting marks the first shareholder meeting of 2015 for the National Center.

The National Center for Public Policy Research, founded in 1982, is a non-partisan, free-market, independent conservative think-tank. Ninety-four percent of its support comes from individuals, less than four percent from foundations, and less than two percent from corporations. It receives over 350,000 individual contributions a year from over 96,000 active recent contributors.

Contributions are tax-deductible and greatly appreciated.

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