Commentary: With 'net neutrality' rules, the FCC would smother a growing sector

By Karen Kerrigan
Monday, November 1, 2010

There is no shortage of opinion on who is to blame for our nation's economic woes or the glacial progress of recovery. There are, however, steps Washington can take to protect the broadband marketplace -- one sector of the economy that remains relatively innovative and healthy.

The Federal Communications Commission is poised to impose new rules on the Internet using an outdated regulatory regime originally designed for the monopoly telephone system of the 1930s. Fearful of the impact that such an intrusive system would have on jobs and investment, members of Congress from both sides of the political aisle want to rein in the FCC. Seventy-four House Democrats and 171 House Republicans are on record expressing their concern about the FCC's plan to reclassify broadband as a telecommunications service and impose "net neutrality" rules on the industry.

Essentially, government regulations and bureaucrats would now direct how traffic over the broadband Internet flows rather than privately managed networks -- they would also dictate what type of speeds, services and prices consumers should have (one size fits all) rather than let the market and innovators determine those things.

It would be wise for Congress to pass legislation that clearly defines what the FCC can or cannot do. Without congressional action, the FCC does appear ready to slap intrusive and job-killing regulations on broadband, which will negatively impact investment and innovation in this critical sector.

Access to broadband has been a transformative development for our members, which include small-business owners in communities across the United States. The array of tools made possible through the Internet and broadband have helped countless firms grow, innovate and become more competitive.

As Evelyn Nicely, president of Springfield-based Nicely Done Kitchens, says: "Small businesses such as ours depend on every tool we can use to succeed. Undoubtedly, our strongest ally in terms of client communication, marketing, and product specifications comes from the use of broadband and the Internet. It has given us the ability to compete with anyone, even the larger and better-funded players in our industry, through our Web site and its innovative tools, which enable us to effectively market our services to the public."

Despite this success and the fact that the FCC has not proven market failure or consumer harm in the broadband marketplace, the net neutrality lobby appears determined to advance stifling regulations.

Net neutrality rules would give the FCC new powers to micromanage the operations and pricing and service levels of the privately owned and financed broadband networks that are the physical heart of the Internet. This is a strategy for chasing away the billions of dollars that broadband network operators (principally the telecom and cable companies) plan to invest in broadband infrastructure and new technology.

Thankfully, a bipartisan majority in Congress believes it's a terrible idea to let three unelected FCC officials decide the fate of America's broadband networks and jeopardize jobs and economic recovery in the process. With the national unemployment rate at 9.6 percent and an economy that remains fragile, let's hope Congress reengages in this debate to keep net neutrality regulations as far from small business as possible.

Karen Kerrigan is president and chief executive of the Small Business & Entrepreneurship Council (SBE Council), a nonpartisan advocacy and research organization dedicated to protecting small business and promoting entrepreneurship.

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