H.R. 2666: “No Rate Regulation of Broadband Internet Act”

By SBE Council at 15 January, 2016, 10:01 am

UPDATE: On March 15, 2016 the House Energy and Commerce Committee advanced H.R. 2666 by  vote of 29-19.

The Honorable Adam Kinzinger

U.S. House of Representatives

Washington, D.C. 20510

Dear Representative Kinzinger:

On behalf of the Small Business & Entrepreneurship Council (SBE Council) and our nationwide membership of entrepreneurs and small business owners, I am writing you to let you know of our strong support for H.R. 2666, the “No Rate Regulation of Broadband Internet Access Act.”

The bill is elegant in its simplicity – stating that “the Federal Communications Commission may not regulate the rates charged for broadband Internet access service” – and powerful in its implications for innovation, investment, and small business.

In early 2015, the FCC reclassified broadband Internet access service in order to regulate it under Title II of the Communications Act of 1934. This meant that the FCC grabbed the authority to regulate the rates charged for broadband. The current FCC and President Obama, though, have said that they oppose such rate regulation. At the same time, however, the FCC’s order did not explicitly rule out using its enforcement powers to regulate rates, as the Communications Act explicitly provides the power to the FCC to ensure that telecommunications service rates are just and reasonable.

For good measure, the current FCC’s pledge to forbear from regulating prices for broadband services in no way binds future FCCs.

Of course, it is always dangerous when government decides that it can set prices in the marketplace. Economic theory and experience make clear that price or rate controls mean reduced investment. Indeed, the mere claim of such power creates uncertainty in the marketplace, with results including diminished investment and innovation as governmental power to limit prices means government being able to limit potential returns.

Limiting investment in broadband due to the FCC’s claiming the power to impose rate regulation obviously would be a clear negative for small business. After all, small businesses across industries have benefited tremendously from the great advancements and innovations in broadband services, for example, as consumers and content providers, in the management of their firms, and in their ability to reach new markets and customers.

For good measure, the telecommunications sector itself is overwhelmingly populated by small businesses. According to Census Bureau data (2012 the latest), of the employer firms in the telecommunications sector, 98.1 percent have fewer than 500 employees, 94.8 percent less than 100 workers, and 84.2 percent have less than 20 workers. That’s small business.

Undermining the incentives to invest and innovate due to rate regulation means undermining small business.

Elected officials on both sides of the political aisle have proclaimed their support for an open Internet that is free from rate regulation. H.R. 2666 is an important piece of legislation that would ensure exactly that, by explicitly prohibiting the current FCC and future FCCs from regulating the rates charged for broadband Internet service.

H.R. 2666 is a vital piece of legislation for entrepreneurs and small businesses. Please feel free to contact SBE Council if we can be of further assistance in helping you to advance the bill through the U.S. House and into law. Thank you for your leadership and support of America’s entrepreneurs.

Sincerely,

Karen Kerrigan, President & CEO