Government intrusions hurting small business

You can’t begrudge American entrepreneurs for tuning out Washington, D.C.  Their elected leaders are not addressing the real, daily concerns affecting their businesses. In fact, many policies are making matters worse and perpetuating the uncertainty that has plagued small business owners since the financial crises five years ago.  A recent survey conducted by my group, the Small Business & Entrepreneurship Council, found that 62 percent of entrepreneurs say their business outlook has not changed or has worsened compared to the outlook they had during the depths of the financial crisis. 

Entrepreneurs feel that Washington is dragging its feet on a range of issues where pro-growth reforms would make a difference for the economy. At the same time, it is intruding in areas where things should be left alone. On issues related to the Internet, for example, small businesses have not experienced any market failure. They are befuddled by those who believe good things will come from intrusive Internet regulation. A light regulatory touch has encouraged massive investment and innovation, producing critical tools and technologies that have benefitted their firms. Yet, some activists see the “end of the Internet as we know it” if government is not allowed to police the broadband Internet marketplace.

{mosads}After years of legal wrangling, the U.S. Court of Appeals for the District of Columbia Circuit held oral arguments in September in a proceeding set to determine whether the Federal Communications Commission (FCC) has the authority to regulate Internet Service Providers (ISPs) to protect “openness.” Contrary to its purported objective of “neutrality,” the FCC believes it should be able to dictate how information flows over privately owned and operated networks. Moreover, the FCC believes it should be able to assert its unfounded authority by shaping the types of services consumers receive and the prices they pay.

The FCC argues their position ensures that ISPs do not discriminate or interfere with any lawful Internet content, applications or services in ways that may harm consumers and competition. Although this may seem like a worthwhile goal, it is a solution in search of a problem. One, as many argue, that simply does not exist.

Those calling for greater FCC control and regulation over the Internet have yet to identify a single incident where such discrimination occurred that was not remedied almost immediately by competitive market forces. Consumers are the Internet’s primary arbiter so any potential anti-competitive action by an ISP that interferes with their ability to access content, in the manner they want it, would be met with immediate, public backlash. What’s more, today’s competitive broadband marketplace further empowers consumers by providing them a range of choices if they grow dissatisfied with the actions of their existing ISP. Consumers and the open marketplace – not government regulations – will preserve the “openness” of the Internet.

As such, “net neutrality” is not an issue that small business owners and entrepreneurs are concerned about.  Their concerns are focused on the Obamacare mess, access to capital, tax uncertainty and complexity, regulatory overload, the lack of sales traction and slow economic growth. Thankfully, they can rely on Internet technologies to help them through these challenges. They know that these innovative technologies were made possible by the private sector – private investment in our telecommunications infrastructure. 

The proliferation of new technologies, much of which harness the power of high-speed broadband networks, has transformed the way small businesses interact with their consumers and suppliers – connecting people and services in ways we never imagined.  This remarkable progress has happened in the absence of net neutrality rules, and despite the FCC’s unrelenting push to exert authority over the Internet.

If the FCC is allowed to apply rigid regulations, the dynamism of the Internet ecosystem will be stifled. This would set a dangerous precedent, perhaps mobilizing some of the Internet’s largest content providers to use their outsized influence to enshrine privileges that only benefit them. By gaming the system they could unfairly limit competition and marginalize new generations of entrepreneurs and innovators. This is what generally happens when government imposes unwarranted regulations at the behest of powerful interests.  

Policymakers should listen to the actual concerns of small business owners and entrepreneurs. If they did, they would learn that the one thing they’re not calling for is heavy-handed FCC intervention into a well-functioning, innovative marketplace that has allowed them to run better businesses and compete more effectively. 

Kerrigan is president and CEO of the Small Business & Entrepreneurship Council (SBE Council).