PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

SBE Council Files Comments on FCC’s “Safeguarding and Securing the Open Internet”

By at 14 December, 2023, 8:25 pm

Comments before the

Federal Communications Commission

Washington, D.C. 20554

 

In the matter of:

Safeguarding and Securing the Open Internet

WC Docket No. 23–320

 

Comments of the Small Business & Entrepreneurship Council

December 14, 2023

 

The Small Business & Entrepreneurship Council (SBE Council) is pleased to submit comments on the Notice of Proposed Rulemaking (NPRM), “Safeguarding and Securing the Open Internet.”

SBE Council is a nonpartisan, nonprofit advocacy, research and education organization dedicated to protecting small business and promoting entrepreneurship. With more than 100,000 members nationwide, SBE Council is engaged at the local, state, federal and international levels where we collaborate with elected officials, policy experts, entrepreneurs and business leaders on initiatives and proposals to enhance business competitiveness and improve the environment for business start-up and growth. For 30 years we have worked on a range of issues to strengthen the policy ecosystem for entrepreneurship. Technology and telecommunications issues have remained core priorities since SBE Council’s founding, as the efficiencies and opportunities made possible through advanced technologies, broadband, and the growth of the digital economy – with all of its tools and access points – are critical to entrepreneurship, small business success, and the health of U.S. economy.

Driving the Federal Communication Commission’s (FCC’s) push to regulate broadband services under Title II (including rate regulation) is the idea that there is a problem to be fixed. The actual facts demonstrate the opposite as we note in these comments. In addition, SBE Council is quite concerned that the proposal emphasizes “national security” as justification to expand its regulatory authority. The FCC is proposing to regulate and act far outside its scope of expertise, not to mention its delegated authority. The “Safeguarding and Securing the Open Internet” proposal will have major economic consequences and impact, and the FCC lacks the clearly delegated authority to regulate in this space and in the far-reaching manner it has proposed. This matter of authority is for Congress to determine, not for the FCC to merely assume or seize.

U.S. Broadband is Robust and Competitive: What is the problem?

Robust private sector investment and innovation are the foundations for America’s technological and competitive advantage. As we all experienced during the COVID-19 shutdowns, digital connectivity became a daily, direct lifeline for most Americans in accessing work, goods and services, school and educational pursuits, customers, health care, social networks and family during an extended period of isolation and economic shut-down. Pro-investment, pro-innovation policies encouraged significant private investment in building the high-quality broadband networks that effectively withstood extraordinary use and pressure during the pandemic, and much better than other nations: “U.S. broadband networks were able to better accommodate the COVID-19 crisis traffic surge compared to other nations,” according to a July 2020 report by the Internet Innovation Alliance. As noted in the report, “traffic ticked up between 20 and 40 percent” during the pandemic and “U.S. providers were able to maintain the same levels of service with almost no drop in performance.” Furthermore, U.S. broadband prices have decreased over the past several years, according the 2022 Broadband Pricing Index.  This is quite extraordinary, especially during a sustained period of inflation.

The broadband industry’s investment of more than $1.9 trillion in its networks (and ongoing investment of tens of billions of dollars directed toward expanding and improving high-speed internet access every year) is responsible for this record of achievement and success. In short, private investment has created significant value for consumers and small businesses. Moreover,  widespread, competitive high-speed internet is available to 97% of Americans (according to the FCC). Nearly all Americans – 99.2% – have access to broadband through at least one provider.

To that end, universal access to high-quality broadband is not yet a reality in the U.S. and where the FCC should focus its work to ensure rural and underserved Americans have access to the tools and opportunity linked to the digital economy. Accelerating the reach and benefits of broadband are critical to economic development, economic opportunity and growth. The FCC has robust authority towards promoting universal connectivity, as well as authority to help providers fulfill future demand through its spectrum authority. Positive action that encourages adoption, deployment, capacity and innovation will help our economy and small businesses. Efforts to tie up broadband providers with complex and superfluous regulation will deeply erode investment, which will harm entrepreneurship, small businesses and local economies.

A December 2023 study published by the Phoenix Center documents the effects of the previous Title II regulatory threat, which reduced investment by $8.1 billion annually ($81.5 billion over a ten-year period) and “reducing employment in the information sector by about 81,500 jobs and total employment by about 195,600 jobs (many of them union jobs), reducing labor compensation by $18.5 billion annually.”

Similar to how small businesses across sectors are disproportionately burdened by regulation and regulatory threats, the same will occur with small to mid-size (SMB) broadband providers under rules proposed in the “Safeguarding and Securing the Open Internet” proposal. SMBs dominate the telecommunications industry, as well as related industries. These firms, which are essential to ensuring competition in the industry and the connectivity of rural and exurban customers, will be hardest hit by new regulatory costs and requirements. According to the latest Census Bureau data (2020), 95.63% of these firms have 100 employees or less, and 85.31% have 10 employees or less. These new and costly rules come at a time when inflation is eating away at profitability and capital has become more scare and expensive. Imposing new costs on SMB providers will harm competitiveness, possibly new services for customers, and accelerate consolidation – an outcome the Administration is working to prevent through the President’s executive order focused on competition.

Moreover, costs and time dedicated to regulation and regulatory compliance, means fewer resources dedicated to universal connectivity. Through its proposal, the FCC is undermining this critical goal by undermining the capacity of providers to dedicate every possible resource to deployment and innovative solutions that will help our nation meet universal broadband access.

In comments filed nearly ten years ago, SBE Council asserted that innovation, entrepreneurs and small business win “under the continuation of a ‘light regulatory touch’” and that the FCC should stand down from its proposed “open internet” proposal. The facts continue to support that same approach today, and we urge the FCC to withdraw its current proposal. It is up to Congress to determine “net neutrality” rules and Title II authority. Without that determination and certainty, the potential regulatory ping-pong when Administrations change will only drive uncertainty, the quality and stability of broadband networks, and ultimately harm the U.S. economy and competitiveness.

Respectfully submitted by,

Karen Kerrigan, President & CEO

 

 

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