Houses Votes to Encourage Investment and Innovation Through Passage of H.R. Res.73

The phrase "net neutrality," as it relates to the Internet, was well chosen. After all, it sounds fair. When it comes to the Internet, shouldn't broadband providers be "neutral" on all content?

But of course, when your car is in "neutral," you don't go anywhere. Going nowhere would be the best-case scenario when it comes to net neutrality.

It must be understood that net neutrality is just a nice phrase for regulating broadband Internet services. It's about government - that is, politicians and/or their appointees - dictating operational, business model and pricing decisions to broadband providers.

And that is exactly what the Federal Communications Commission (FCC) has proposed doing. Net regulation would be bad news for investment and innovation, as government sticking its nose into the management of networks would serve as a discouragement to risk taking.

For good measure, there is the matter of the FCC not possessing the authority from Congress to regulate broadband services. It's a case of political appointees acting without the approval of elected officials.

U.S. Greg Walden (R-OR), chairman of the House Subcommittee on Communications and Technology, observed in an opening statement to a February hearing: "The Internet did not become the explosive driver of communications and economic growth it is today until we turned it over to free enterprise. Dating as far back as the 1971, the FCC has consistently treated the Internet as an unregulated information service and not as a regulated telecommunications service. Congress codified this distinction in the 1996 Telecommunications Act."

Quite simply, going against the points raised by Rep. Walden and against a D.C. Circuit Court decision, the FCC is attempting a power grab.

But the House of Representatives moved to rein in the FCC on April 8 by approving H.J. Res. 73, sponsored by Rep. Walden, which would disapprove the FCC's efforts to regulate the Internet and broadband industry practices.

Voting in favor of the measure to disapprove the FCC's actions were 240 members of the House (234 Republicans and six Democrats), with 179 (2 Republicans and 177 Democrats) then supporting the FCC's overreach.

Each member supporting H. J. Res. 73 voted for innovation and investment; for the entrepreneurs and small businesses that provide broadband content and services, and use such products; and against agency regulatory abuse and overreach.

But now it's up to the Senate to make a stand. Unfortunately, that will prove to be an uphill battle. And then, of course, there is the President, who made clear his support for regulating broadband during his campaign for the White House.

Raymond Keating, Chief Economist, SBE Council

New Petition to Stop Regulation of the Internet

U.S. Rep. Mary Bono Mack (R-CA) has an interesting and worthwhile petition on her campaign website.

People are urged to sign up to protest the federal government's - specifically, the FCC's - move to regulate the Internet. While "net neutrality" sounds nice, it is, in fact, all about government regulation of broadband.

The petition says:

We, the undersigned, join Congresswoman Mary Bono Mack of California's 45th Congressional District in rejecting the efforts of the federal government and their unaccountable boards, commissions, and bureaucrats to regulate the Internet.

It is clear that government overreach and intrusion is threatening the vitality of our free markets, the future of innovation and technology, and the freedom of individuals and private enterprise.

We reject the recent internet regulations forced on the private sector by the Federal Communications Commission (FCC) and stand with Congresswoman Bono Mack in her fight against this type of government intrusion.

The petition can be found here.

Raymond J. Keating

Chief Economist

Technology & Entrepreneurs: Net Neutrality - Watch What You Wish For

It's a dicey and dangerous endeavor whenever businesses turn to politicians to do their bidding. Not only do efforts by certain businesses to get the government to regulate other businesses undermine free enterprise in general, but the worm can turn. Those seeking regulation easily become the targets of regulation.

Consider the net neutrality debate...

Read this entire SBE Council Technology & Entrepreneurs analysis here.

How About Government-Run Internet?

Small business owners can urge the Federal Communications Commission (FCC) to not intervene in the workings of the Internet. The FCC is putting the final touches on proposed rules that will heavily regulate the Internet.

Such unnecessary meddling will only discourage innovation and investment at a time when our country needs to encourage a robust climate for both. You can visit the FCC’s blog -- www.openinternet.gov -- click on the "Join the Discussion" link, and express your views about so called “net neutrality” rules.

Please make your views known by Thursday, October 22nd. Of course, supporters of extreme internet regulation are flooding the site, so please take some time to express your views as a small business owner.

Here are some of SBE Council’s concerns about a government-run internet:

- Small business wireless consumers can currently access a broad range of innovative services and devices. At every turn, new innovative services are devices are improving the competitiveness and productivity of America’s entrepreneurs. Why is the government intervening in a market that is working beautifully? The argument has not been made (not even close to it) that the market has failed.

- Competition for wireless and broadband customers is fierce. The market is working for small business consumers. Don't disrupt it with harmful regulations.

- One of the goals of the Obama administration is to provide every American access to broadband. The FCC’s net-regulation rules work against this important goal in that they will discourage private sector investment in building out broadband infrastructure. Many small businesses still need access to broadband. The FCC is undercutting this important initiative to bring new tools to individuals and small business owners at a time that they need this support the most.

- Our economy is still struggling. The FCC is punishing the telecommunications industry at a time when we need to leverage their investment capacity to keep and create new jobs. Thousands of small businesses serve as suppliers to the industry, and placing new roadblocks to its growth and success will ultimately hurt small firms and their workforce.

Let your voice be heard!

Karen Kerrigan, President & CEO

Net Neutrality = Net Control

So-called “net neutrality” seems to be morphing into “net control.” Is anyone really surprised?

The push for so-called “net neutrality” was billed as promoting a free and open Internet. The threat supposedly was that Internet service providers would launch a nefarious plot to block certain traffic on the Web. Why broadband network providers would go about angering consumers, content providers, public crusaders and politicians remains a mystery, but hey, why let economic and political realities get in the way of a juicy political power grab?

And now The Wall Street Journal serves up a report noting that the FCC Chairman Julius Genachowski, and how two fellow Democrats on the commission, are preparing to grab the reigns of the Internet, and decide how things should operate.

From the Journal:

Federal Communications Commission Chairman Julius Genachowski is proposing that the agency apply tougher open-Internet rules broadly, raising concerns of cable and phone companies and some lawmakers that the government could try to control efforts to offer products such as digital cable or premium business services.

Mr. Genachowski's proposal suggests everything in the Internet pipe is covered by rules prohibiting discrimination against any legal Internet traffic, known as net neutrality, unless the agency says otherwise, according to FCC officials familiar with a draft circulating in the agency.

Internet providers could seek exemptions for so-called premium managed services, like private corporate data networks or pay-TV services, which require guaranteed levels of data speed.

Phone and cable companies worry Mr. Genachowski is trying to turn their broadband lines into "dumb pipes" of Internet data, instead of highly segmented and managed lines that allow them to offer different sorts of services -- at different prices -- to customers.

Dumb pipes? In effect, dumbing down the Internet? If that’s what we want, then net neutrality/net control regulation is just what’s needed. However, if we want a dynamic Internet, with companies investing and innovating, then more government control and regulation certainly is not the answer.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

Broadband Deployment and Internet Regulation

Nearly everyone seems to be in agreement that broadband deployment has been and will continue to be a huge plus for consumers, entrepreneurs, business and the economy.

Before and after taking office, President Obama has spoken of broadband deployment as a priority.

FCC Chairman Julius Genachowski has declared: "Broadband is our generation's infrastructure challenge. It is as important as electricity and highways were for past generations."

But is more regulation then the best way to accelerate broadband deployment?

On September 21, Genachowski proposed "net neutrality" rules on all Internet service providers, including wireless firms. While "net neutrality" sounds nice; it's really all about government regulating how providers operate their networks.

ISPs have every incentive to provide the best service to both content providers and consumers. And that includes managing and prioritizing traffic, especially given the vast expansion in bandwidth-gobbling applications, such as video downloads.

And complaints against network operators in terms of traffic flow issues have been practically nonexistent, as one would expect. Again, why would ISPs go out of their way to stir up consumer, media and political opposition? Meanwhile, competition and choice have expanded and continue to expand, especially given the wireless revolution.

So, it's bewildering as to why the FCC is going down this path at all - especially given the risks that come with unwarranted government dictates and interference in such a dynamic and innovative market.

A September 22 Wall Street Journal warned about potential lawsuits, given that Congress has never passed a law providing the FCC with "net neutrality enforcement powers." The article also pointed out that "telecom firms ... recently paid a premium at auction for what was advertised as unencumbered radio spectrum."

Strangely, this is being billed in the media as a loss for ISPs, but a win for content providers. However, both would wind up losing if the FCC regulates how networks are managed. Why? Incentives for innovation, differentiation and investment in broadband would suffer, which means both content providers and consumers would suffer as well. And most certainly among those listed in the negative column will be entrepreneurs who use the Internet to build and run their businesses, and the entrepreneurial firms involved in building broadband networks.

In fact, in the end, more government regulation of the Internet would only be a plus for the political class. Both politicians and regulators seeking more power would acquire it, with little regard for the restraints they are placing on competition, investment, innovation and technological change actually geared towards serving consumers and businesses in the marketplace.

Raymond Keating, Chief Economist
Small Business & Entrepreneurship Council

Does the Internet Need to be Micromanaged by Government?

FCC "Net Regulation" Initiative Will Harm Broadband Innovation and Deployment
...small firms and investment will suffer

If Federal Communication (FCC) Chairman Julius Genachowski advances new Internet regulations, such an initiative will negatively impact private sector investment and economic recovery. The FCC is also working on a plan to reach full deployment of broadband in the U.S., but these new Internet regulations work against encouraging the large-scale private sector investment that is needed to achieve their "broadband for all" goal.

Small businesses will invariably suffer under this intrusive regulatory regime as an investment chill will leave many small firms without broadband -- that includes the breakthrough innovations that lead to improved efficiency, productivity and expanded market access.

"Entrepreneurs who use the Internet - and those who do not yet have access to broadband - as well small businesses that are helping to build and enhance the Internet will be the hardest hit by a regulatory climate that stifles investment," as I said in response to the FCC "net neutrality" announcement.

Genachowski announced new principles to govern the Internet, and said he would initiate a "public discussion" that is "fair, transparent, fact-based and data-drive" before implementing new rules. If the Chairman sticks by his statement regarding the type of proceedings and metrics the FCC plans to use, he should ultimately conclude that the Internet does not need the type of government intervention he proposes.

The fact that the telecommunications industry is so critical to U.S. economic competitiveness and health, should make regulators wary of interference. Yet, incredibly, we see policymakers developing proposals that only fuel the flames of uncertainty. This is an astonishing move that will have unintended consequences.

SBE Council believes that the FCC should stick with the congressionally-mandated priority to fully deploy broadband. This important effort is better aligned with economic conditions and will bring hurting Americans greater opportunity. Regulating the Internet remains a lousy idea in good economic times and bad.

Karen Kerrigan, President & CEO