Entrepreneurs are Thankful For a Wise Regulator

By at 21 November, 2017, 10:11 am

FCC Chairman Ajit Pai’s actions are working to fuel the investment and innovation to bring communities and small businesses into the digital economy.

by Raymond J. Keating-

Thanksgiving is the time of year to give thanks for all kinds of things. Perhaps most surprisingly this year, entrepreneurs and small business owners should be thankful for a government regulator who is doing what he pledged to do.

Entrepreneurs and small business owners are thankful that FCC Chairman Ajit Pai is doing what he pledged to do. Reducing red tape and intrusive regulation is encouraging investment and opportunities for entrepreneurship and small business growth.

Of course, it’s easy for elected officials and their appointees to say things, but what happens when the rubber meets the road? Is there actual execution? Do things get done as promised?

Federal Communications Commission (FCC) Chairman Ajit Pai deserves thanks for carrying through on his early pledge to guide the agency’s regulatory process via principles recognizing that consumers benefit from competition, not preemptive regulation; that free markets deliver greater value to consumers than do highly regulated markets; and that rules and regulations should “reflect the realities of the current marketplace and basic principles of economics.” (See SBE Council’s piece covering Pai’s becoming FCC chairman).

Upon being appointed FCC chairman early this year, Pai made it clear he was looking to reverse a period of regulatory activism. That period of regulatory overreach raised costs, created uncertainty, and reduced incentives for investment and innovation for businesses – small, midsize and large – operating in the telecommunications arena, and therefore, for the individuals, families, entrepreneurs and small businesses using or consuming telecommunication services.

Small Businesses and Entrepreneurs are Big Players in Telecom

It needs to be kept in mind that the small business part of this regulatory story is significant. Not only are we talking about the entrepreneurial sector of our economy benefiting enormously from new and vastly improved telecommunications services, but also that smaller firms overwhelmingly populate the telecommunications sector itself. (In terms of defining this sector, as noted by the U.S. Bureau of Labor Statistics: “Industries in the Telecommunications subsector group establishments that provide telecommunications and the services related to that activity (e.g., telephony, including Voice over Internet Protocol (VoIP); cable and satellite television distribution services; Internet access; telecommunications reselling services). The Telecommunications subsector is primarily engaged in operating, and/or providing access to facilities for the transmission of voice, data, text, sound, and video.)

Consider that, according to the latest U.S. Census Bureau data (2015), 84.1 percent of employer firms in the telecommunications sector have less than 20 employees, 95.1 percent with less than 100 workers, and 98.3 percent less than 500 employees. So, when focusing on telecommunications policy, the direct and indirect impact on small business is significant.

FCC Action Under Chairman Pai

Under Chairman Pai, the FCC has made headway in establishing a regulatory process governed by sound economics, and one that promotes or maintains a pro-competition, pro-innovation, pro-consumer marketplace, as opposed to one controlled by political preferences and impulses.

Consider recent steps taken by the Pai FCC to reduce assorted costs. On November 16, the FCC voted “to remove barriers to wireless infrastructure deployment by determining that replacement utility poles that have no potential effect on historic properties do not need to complete historic preservation review.”

Another vote approved a set of reforms to “revise rules that needlessly delay or even stop companies from replacing copper with fiber and that delay discontinuance of technologies from the 1970s in favor of services using Internet Protocol (IP) technologies.”

These and other steps over the past several months have worked to reduce misguided governmental obstacles to investments in new and improved broadband networks.  A first-class broadband ecosystem is critical to U.S. competitiveness and economic growth, not to mention to entrepreneurs and small businesses that need affordable, quality broadband to compete and succeed in the marketplace.

Looking ahead, assorted reports have noted that the FCC will likely vote in December on a set of rules rolling back net neutrality regulations imposed by the Wheeler FCC. The Wheeler measures, in effect, regulate dynamic, competitive broadband markets and networks as if they were 1930s style monopolies. This regulation mess not only was unnecessary, as broadband providers have clear incentives to serve both content provider and content consumers well, but such regulation creates uncertainty that restricts investment and innovation, including by threatening government rate and business model regulation.

In comments filed with the FCC in July of this year, SBE Council President and CEO Karen Kerrigan noted, “When Title II regulation was first being considered under the previous leadership of Chairman Tom Wheeler, SBE Council and our members expressed our deep concerns and opposition to this archaic regulatory approach – that is, treating the broadband internet as a public utility by applying 1930s-era rules – and our belief that this overbearing and unnecessary approach would erode investment and innovation.  We communicated that this intrusive rulemaking would harm entrepreneurs, small businesses and the growth of the economy.  Unfortunately, our concerns, echoed by many others, were ignored.”

Ignoring the economic, business and consumer realities in the telecommunications marketplace is not a problem at the Pai FCC. Again, that’s something worth noting on Thanksgiving, as individuals, families, entrepreneurs and businesses benefit from the vast advancements being made in the broadband marketplace.

Access to affordable broadband is critical to small business success and dynamic entrepreneurship across America, and Chairman Pai’s actions are working to fuel the investment and innovation that will help make this a reality for the entrepreneurs and their communities that have been left out of the digital economy and its opportunities.


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.

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