Did You Really Mean That FCC?

 

This week, the House Energy and Commerce Committee held a hearing on a bill, HR 2666, which would prevent the FCC from regulating broadband rates. In fact, the FCC’s Chairman Tom Wheeler is quoted as saying “Let me be clear, the FCC will not impose ‘utility style’ regulation…” when
issuing the Commission’s decision to subject broadband service providers to regulations that govern telecommunications services – Title II of the Communications Act.

 

That begs the question, why pass a bill that reiterates what the Chairman promised? There are a couple of reasons why. First, FCC Commissioners do not have permanent appointments—they arinternet.jpge appointed by the President and serve five-year terms. While we doubt anyone questions Chairman Wheeler’s integrity, the next set of Commissioners may not hold the same view. Second, regulating rates in utility- style fashion does not really fit the fast moving technological changes that come with the industry providing internet services. Third, talk about a damper on investment – subjecting broadband networks to the government’s slow ratemaking process would surely have a negative effect.

 

As we understand this issue, no one is purporting to restrict the FCC’s ability to protect the consumer with respect to broadband access or technology companies who rely on an open internet to conduct business. Women-owned businesses have much to lose if the government does not properly balance internet access with regulation.

 

We are keenly aware that according to the SBA Office of Advocacy, “Small businesses, defined as firms employing fewer than 20 employees, bear the largest burden of federal regulations. As of 2008, small businesses face an annual regulatory cost of $10,585 per employee, which is 36 percent higher than the regulatory cost facing large firms (defined as firms with 500 or more employees).” Small businesses are usually the losers when it comes to more regulation.

 

The Congress ought to pass this bill. Broadband access is a critical lifeline to all businesses. Business certainty resonates throughout our economy—especially small companies. Putting the FCC intent into law with respect to broadband rate regulation is a good idea.

Internet Regulation Hurts Instead of Helps

by Barbara Kasoff, WIPP President

EarlieInternetr this year, the FCC voted to adopt overbearing “Title II” regulations that have already led to legal battles which will likely extend for the next several years.  What is Title II?  Title II of the Communications Act of 1934 would grant the FCC additional regulatory authority; this is the authority they utilize over telecommunications services currently. Plenty of experts and economists, as well as the small business community, warned  against the consequences of applying outdated Title II regulations on our country’s Internet infrastructure.  For small telecom providers especially, it’s quickly becoming clear that Title II is detrimental to growth and investment in their businesses.

According to U.S. Census Bureau data, small businesses are the overwhelming majority in the telecommunications sector.  And in his dissent, FCC Commissioner Ajit Pai pointed out that “today there are thousands of smaller Internet service providers…that don’t have the means or the margins to withstand a regulatory onslaught. Smaller, rural competitors will be disproportionately affected, and the FCC’s decision will diminish competition.”

The FCC’s new regulations would subject those small businesses to uncertainty and costs, slowing innovation and leading to decreased investment.  A new policy memo from the Progressive Policy Institute highlights the investment issue, stating the FCC’s decision to adopt Title II regulations could undermine the FCC’s broadband adoption and expansion goals, as well as cost the economy billions in lost investment—a reduction in annual investment of $4 to $10 billion.

These damaging effects are not mere speculation: As of last week, many of these small broadband operators have gone on record, stating under penalty of perjury that these regulations are forcing them to cut back on investments.  These Internet providers include wireless Internet service providers, small-town cable operators, and others, from all across the country.  These different businesses are united, because they have been directly affected by regulations.  As a result, they are forced to cut back on network upgrades, expansion plans, capacity upgrades, and investment in rural and underserved areas.

For consumers, these cutbacks in investment will cause slower speeds, service delays, and coverage gaps.  Reduced investment means that expansion plans will be scrapped or at least delayed, especially in rural and underserved communities where increased broadband deployment is critical.  Consumers have been clear in their desire for faster speeds, expanded coverage, lower prices, and increased competition—but Title II regulations will result in the opposite, hurting small businesses along the way.

There’s a way out of this mess, one that doesn’t involve legal limbo: bipartisan legislation.  Congress can design bipartisan solutions that will protect the Open Internet and consumers, as well as provide light-touch regulation that prohibits blocking and throttling.  This approach will pave the way for increased investment, innovation, and competition—benefitting American consumers and relieving small businesses and entrepreneurs from an overwhelming regulatory burden.  These legislative efforts are currently underway, and we certainly look forward to a real solution, one that does not harm small businesses or consumers.