SBA: FCC's Wireline Broadband Ruling Will Cost Small Business $8 Billion

September 5, 2002
In a rebuke to the FCC's handling of broadband Internet service, the Small Business Administration says a recent FCC decision will stifle broadband competition and hinder small ISPs.

The SBA's Office of Advocacy, in an Aug. 27 letter to FCC Chairman Michael Powell, attacked the FCC's classification of wireline broadband as an "information" service as opposed to a "telecommunications" service, which would have placed the technology under a stricter regulatory framework.

Advocates of the FCC's approach said a less burdensome regulatory scheme would encourage investment and speed broadband rollout; opponents to the approach said it would lead to entrenched monopolies and hurt the rollout. Powell himself said he was closely following the law, not picking a classification for the sake of a particular outcome.

But the SBA said the decision could cost 7,000 small ISPs $8 billion in revenue.

The SBA urged the FCC to classify transmission of wireline broadband signals (i.e., high-speed DSL lines) as a telecommunications service, and the provision of Internet access as an information service.

The FCC's tentative decision removes the requirements for providers to allow ISPs access to their lines, the SBA said. The FCC has made a similar call regarding cable-modem services.

"Although [the Office of] Advocacy shares the commission's commitment to deregulation to bolster competition and sour economic growth, in this instance, complete deregulation will create impenetrable barriers to entry, eliminating competition from small businesses and removing customer choice," the office said.

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