PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

2018 Policy Agenda for Entrepreneurs and Small Business – Issue Four: Broadband Access and Deployment

By at 28 January, 2018, 3:11 pm

By Karen Kerrigan

Entrepreneurs have entered 2018 with solid optimism and a strengthening economy.  Indeed, the keys to small business growth and healthy entrepreneurship hinge on strong and sustainable economic growth and the continuance of policies that lift government imposed barriers, encourage capital formation and investment. To that end, entrepreneurs are hopeful that President Trump and Congress will prioritize their agenda and provide them with every opportunity to succeed in 2018.

When entrepreneurs and small businesses are successful, they create the quality jobs and innovative breakthroughs that are needed for a dynamic economy that benefits everyone.

The big tax relief package that just kicked in will certainly power economic growth this year. Regulatory actions taken by the President and his Administration have already paid dividends for the economy by boosting business optimism, which has fueled more investment and positive economic activity.

The Agenda: Still, there is more to be done to make the U.S. more globally competitive for all U.S. businesses and to revitalize the ecosystem for entrepreneurial activity.  Transforming the outdated regulatory system, improving capital access, lowering health coverage costs and increasing choice and competition, global market access and intellectual property protection, additional tax code fixes and ensuring all communities across America have access to quality broadband are some of the key areas for action.

Regarding surface transportation infrastructure, and other priorities of the Trump Administration and Congress, the voice of small businesses will be vital to ensuring that new initiatives and changes in these areas are beneficial to our sector.

Review details of SBE Council’s 2018 Policy Agenda in these blog posts below:

Regulatory System Transformation and Reform

Access to Capital

Tax System Modernization

Health Care Affordability and Innovation

Growth via Global Trade and Strengthening IP  

Broadband Access and Deployment

In this blog post, I address broadband deployment and the need to ensure that all communities across American have access.  Many communities – especially rural areas – still lack broadband, which means people do not have access to the digital economy, and its tools, that enable opportunity.

For entrepreneurs, access to broadband is vital.  Revitalizing Main Streets, rural communities and urban areas across America is contingent upon investment and new business creation.  According to a July 2017 Wall Street Journal report:

“About 39% of the U.S. rural population, or 23 million people, lack access to broadband internet service—defined as ‘fast’ by the Federal Communications Commission—compared with 4% of the urban residents. Fast service, according to the FCC, means a minimum download speed of 25 megabits per second, a measure of bandwidth known as Mbps. That speed can support email, web surfing, video streaming and graphics for more than one device at once. It is faster than old dial-up connections—typically, less than 1 Mbps—but slower than the 100 Mbps service common in cities.”

On January 8 2018, President Trump signed an Executive Order on “Streamlining and Expediting Requests to Locate Broadband Facilities in Rural America,” which directs federal agencies to “reduce barriers to capital investment, remove obstacles to broadband services, and more efficiently employ Government resources” among other initiatives.  The Executive Order builds upon important policies advanced in 2017 that set the stage for achieving the promise of broadband for all.

In addition to broadband access and closing the digital divide, the U.S. must also stay on the cutting edge with regard to next generation networks. The movement to 5G (more on this below) will be exciting for entrepreneurs and innovators but a modern and enabling policy framework is necessary for its roll out.

Sound Policy Foundation Established

In 2017, the Federal Communication Commission (FCC) shifted away from the intrusive and outdated regulatory approach pursued during the Obama era. Under the current leadership of Chairman Ajit Pai, a refreshing strategy has emerged – light touch regulation and smart policies that will encourage innovation and investment. The voice of small businesses is now being heard and the commission, finally, will use economic analysis to help guide policy decisions.

Significantly, the FCC enacted Chairman Pai’s “Restoring Internet Freedom” plan, which repealed 1930s-type rules (Title II of the Obama-era “Open Internet” order) imposed upon the internet.  Title II disproportionately burdened the many small ISPs that provide telecommunications services in rural communities, and harmed investment by ISPs.  Investment dropped by $3.5 billion (a 5.6 percent decline) in 2016 following the enactment of Title II internet regulation. Massive investment is needed to bring broadband to all Americans. As noted in an Op-Ed in The Hill by Jonathan Spalter, President & CEO of USTelecom:

“The FCC estimated in 2017 that to deploy high-speed broadband to 98 percent of American homes, it would cost $40 billion. For 100 percent, the cost doubles. Which is why greater broadband infrastructure funding — both public and private — is urgently needed in remote areas, where the cost of connectivity infrastructure remains extreme.”

Prior to passage of Chairman Pai’s “Restoring Internet Freedom” order, the FCC also advanced a series of actions in April 2017 that aim to streamline regulatory barriers and roadblocks preventing or disincentiving investment in broadband deployment and network enhancements in the U.S.  Those steps provide flexibility, modernize various rules or frameworks, and explore how to expand broadband to rural areas and accelerate deployment of next-generation technologies for wireless and wireline broadband.

See Chairman Pai’s easy-to-read, new report on the FCC’s accomplishments in 2017 to bridge the digital divide and bring the benefits of the internet age to all Americans (The Chairman’s #1 priority.)

Looking forward, the following key areas will be the focus of SBE Council’s work to help bring entrepreneurs and small businesses a first-class internet in the United States, affordable access to high quality broadband, and more investment to fuel next-generation networks and the development of innovative tools that are the drivers of entrepreneurship and economic growth.

Related content:

Expanding Broadband in Rural America: Small Business and Innovation Answer the Challenge, SBE Council, June 2017

Internet “Bill of Rights” and Fending Off the Red Tape

Efforts are brewing in the Congress to put into legislation the “principles of an Open Internet,” which thankfully exclude the intrusive and complex approach of the antiquated Title II mess.  Legislation would bring certainty to this space by providing a regulatory framework that is flexible, investment friendly and centered around protective principles for consumers.  As noted by AT&T Chairman and CEO Randall Stephenson in an Open Letter on January 24, 2018:

“Government rules for the internet have been debated for nearly as long as the internet has existed, even before a professor coined the term ‘net neutrality’ 15 years ago.”

Indeed, the back and forth on how the internet should be regulated has spanned four presidents, numerous big court decisions, reversals in policy directives and other initiatives that have created uncertainty, which impacts investment and causes confusion for all the various players that encompass the internet ecosystem – which has grown massively, and continue to grow.  Support for legislation is increasing among industry players, including entrepreneurs, small businesses and the groups who advocate for them like SBE Council. Consistent rules are needed. More certainty will lead to more investment, and better broadband for all Americans. SBE Council will be working with Congress to advance legislation.

In the meantime, a congressional review act (CRA) effort is moving in Congress to overturn the FCC’s recent order and restore Title II regulation. SBE Council is urging all Senators and House members to oppose the CRA

State Action:  Twenty-two states are suing the FCC in response to repealing Title II, and the Governors of Montana and New York recently signed executive orders requiring ISPs with state contracts to abide by “net neutrality” principles.  As these Governors work to outdo each other on this issue in the political arena, they are harming their states’ competitiveness in the process.  New York, especially, is driving businesses, investment and people to more cost-friendly and less-bureaucratic environments.  It ranks near the bottom (#48) on SBE Council’s “Small Business Policy Index.”  This type of rash policy action is a foolish move for these states, and SBE Council is educating state lawmakers about the huge downside and unintended consequences of moving forward with state-based internet regulation.

T.V. White Spaces

The unused spectrum between TV stations, called white spaces, is an opportunity to bring broadband to rural communities.  Microsoft has been testing its use in several areas of the country, and the initial results show great promise.  In its Rural Broadband Strategy whitepaper, Microsoft lays out a new Rural Airband Strategy, which includes specific steps the company is embarking upon to bring broadband connectivity to 2 million people in rural America by 2022.

As we have already witnessed, when government maintains a light regulatory touch and opens spectrum up to private investment, amazing things can happen that benefit consumers, entrepreneurs and their employees, and the overall economy.  That is why SBE Council is supporting the dedication of at least three usable channels (below 700 MHZ) to remain available in markets across the country.

The FCC is now considering this issue and many individuals and groups have weighed in to provide support, including a bipartisan group of House members who sent a letter to all FCC Commissioners in July 2017.

Advancing Progress and Opportunity with 5G

The next level of connectivity is upon us – 5G, the next wireless mobility standard.  With each new generation of wireless broadband comes faster speeds, lower latency and more innovation – all of which is good news for entrepreneurs and small businesses.  The full potential of the internet of things (IoT) will take off with 5G as will the use and application of Augmented Reality and Virtual Reality. Field trials are already being conducted by AT&T and Verizon, for example, but government policy will play a role in how fast 5G reaches the marketplace.

Sound spectrum policy is critical to 5G deployment, as is fixing regulatory barriers at all levels of government to address infrastructure needs.  SBE Council will be weighing in with the FCC on spectrum auctions, licensing issues and educating elected officials and policymakers at all levels of government about the importance of 5G to entrepreneurs, competitiveness and boosting America’s innovative capacity.

The federal government should not build the 5G network or attempt to “nationalize” it. That idea is being looked at by the Administration and was included within an “options paper” about network security and the need to protect our networks from bad players, specifically China.  This is a terrible idea. The 5G network is well on its way to becoming a reality, and the last thing we need is for the government to chase away or scare off the massive private sector investment that will be needed to bring 5G fully to market.

As noted, AT&T has been conducting field trials and already plans to launch mobile 5G service in 12 cities by the end of 2018.

Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council.

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