On April 6, a three-judge panel in Washington, D.C., found that the Federal Communications Commission (FCC) lacked the regulatory authority to impose “net neutrality” regulations. This is a critical decision—a very positive one—for entrepreneurs.
The court’s decision means the FCC does not have “ancillary authority” to impose intrusive and complex regulations on broadband providers. As many in the entrepreneurial community have argued, radical “net neutrality” rules would discourage investment and innovation in broadband networks and technologies. Such regulation is an extreme departure from the currently effective, competitive and investment-friendly framework that has been extraordinarily beneficial for small businesses.
Broadband provides small businesses with access to new markets, cutting-edge tools and greater opportunities to compete more efficiently regardless of scale and physical location. As small business owner Dr. Yamile Jackson, founder of Zakeez, Inc. recently said at the launch of a new SCORE public-private consortium to train entrepreneurs on broadband access and e-commerce, “Broadband is not a luxury, it is essential for my business. Broadband also allows me to reach customers around the world, conduct web conferencing and keep an eye on my competition. It allows me to save time, compare prices and create efficiencies.”
Indeed, accelerating the reach and benefits of broadband is critical to sustaining U.S. entrepreneurship, innovation and job creation. All small business owners and individuals who wish to pursue becoming an entrepreneur need to have access to broadband. That is why the public-private collaboration, of which the FCC helped to develop, is an important and useful initiative for small business and economic recovery. It is a strategy that will advance greater adoption of broadband, which will lead to economic growth and job creation.
On the other hand, net regulation threatens investment in broadband deployment and infrastructure upgrades. Intrusive and complex net regulations bring uncertainty to an environment that has been relatively free from stringent rules. For more than fifteen years, political leaders from both parties have correctly pulled back from unneeded regulation—first, because the power of the market continues to produce extraordinary outcomes for society and our economy; and second, there have been no signs of market failure with respect to competition and how consumers are being treated.
Hopefully, the court’s ruling will bring some clearheaded thinking back to the FCC. Unfortunately, we are hearing that may not be the case. The agency is looking at how it can apply existing regulatory authority (its old-world telephone regulations) to the Internet. Does anyone really believe that this would be less than disastrous for broadband networks and the future of the Internet?
Again, the agency has too much on its plate executing a National Broadband Plan where the goals are to increase adoption rates to more than 90 percent of the population, and connect 100 million households to connections of 100 megabits per second (which is 20 times faster than most homes have now) by 2020. In order to reach these goals, the private sector must stay incentivized to pump the billions upon billions of investment dollars that will be necessary to reach the full and robust broadband deployment goals established by the FCC’s plan. The agency itself estimates that $350 billion in investment will be needed to fully deploy broadband with the capacity and speed it favors.
Because a few voices fear that broadband providers could use their power to favor some Web sites and online services over others, “net neutrality” rules would make it almost impossible for the network companies to offer quality of service guarantees or customize many types of services to meet customers’ needs. While larger companies like Google or Amazon have in-house staffs to build their own technology solutions, small businesses do not have that luxury. Most small firms rely on outside services and help, or go without. Steady and reliable network management remains central for small business, and upending the high-quality services we now have access to would be a disaster, plain and simple.
Consider the risks to online sales and marketing if a small business can’t buy the management services that network providers now offer to keep these systems working efficiently and safely against hacker attacks, unauthorized intrusion, or just plain old malfunctions. Or, what about internal networks—VPNs—that enable businesses to link remote employees, communicate company information in a secure environment, and determine what communications have priority. The new regulations governing “managed services” could reduce these critical small-business options.
In addition, small business costs may be impacted by the new regulations. If network operators lose the ability to offer custom services, they will be forced to make up the revenue elsewhere. That could mean higher prices for broadband subscriptions, adding costs for small businesses that often survive on thin margins as it is.
The FCC needs to avoid a heavy regulatory approach to governing the Internet. The private sector continues to successfully meet the needs and demands of small business consumers. As the court ruled on April 1, the vast and dangerous powers to regulate the Internet were never given to the FCC by Congress. In order to safeguard investment and innovation, the FCC must preserve the certainty that has long governed the Internet. Certainly, the agency has a role to play in encouraging adoption and deployment, but intrusive regulation will undermine its national broadband plan and small businesses will come up losers under such a scenario.
Karen Kerrigan is president and CEO of the Small Business & Entrepreneurship Council.