The Big Story: FCC kicks off net neutrality rewrite
The country’s top telecom regulator is starting a process to restore net neutrality rules which, before they were repealed in 2017, prevented Internet service providers from blocking or slowing subscribers’ access to content online and prevented them from charging websites and other Internet companies—including startups—for better, faster access to their users. In a speech this week, Federal Communications Commission (FCC) Chair Jessica Rosenworcel announced that the agency would be kicking off the months-long rulemaking process following the confirmation of FCC Commissioner Anna Gomez earlier this month, which gives Democrats the 3-2 majority necessary to advance progressive priorities like net neutrality rules.
Net neutrality protections keep the Internet a level playing field for startups, and Engine and startups have long supported having net neutrality rules on the books. If ISPs were to charge companies so that their Internet traffic has preferential treatment on ISPs’ networks—or “paid prioritization,” sometimes described as “fast lanes”—startups on bootstrap budgets would struggle to pay to compete for that preferential treatment against larger companies with deeper pockets. For instance, the website of a startup that couldn’t afford to pay its ISP more might load slower than a larger competitor’s.
Previous attempts at establishing net neutrality rules have drawn significant public support but significant opposition from Republican policymakers and large telecom companies, who have challenged the rules in court. Critics say they amount to regulatory overreach and, specifically, say the 2015 rules’ reclassification of broadband as a “Title II” service opens the door to more intrusive government regulation, including price setting, despite the FCC’s efforts to write the rules narrowly. This new net neutrality proceeding—which will require months of comment and reply comment periods—is sure to be met with similar backlash, and the agency’s Democratic majority is only guaranteed until the end of this calendar year, when Democratic Commissioner Geoffrey Starks has to leave the agency if he isn’t confirmed again by the full Senate. Policymakers should prioritize restoring net neutrality protections for startups, and the Senate should quickly confirm Starks to ensure the FCC’s ability to get new rules across the finish line.
Policy Roundup:
Congress is failing women in entrepreneurship and the workforce. Despite the fact that women startup founders are critical drivers of innovation and economic and job growth, they face several obstacles on their path, including having to balance entrepreneurship and the majority of family care responsibilities. And policymakers are making that burden for women founders worse. Congress has failed to pass legislation to avert the “child care cliff”—when pandemic-era funding for child care facilities expires at the end of September, which will result in thousands of child care facilities closing and child care becoming more expensive and less accessible—and it has yet to permanently expand a the child tax credit that helped women pursue entrepreneurship and kept children out of poverty. Motherly Media founder Elizabeth Tenety and Engine Executive Director Kate Tummarello shed light on this critical issue in a recent op-ed, echoing the 60 women startup leaders who wrote to Congress earlier this month calling for the expansion of the child tax credit as a means of providing much-needed support to working mothers and women entrepreneurs.. Women-founded companies are integral to our economy, generating approximately $1.8 trillion annually. Nevertheless, women founders face numerous barriers, with child care costs being a significant deterrent.
Engine warns of proposed premerger notification expansion harm to startup success. This week, Engine submitted comments to the Federal Trade Commission on their effort to update and drastically expand the information parties are required to submit ahead of consummating an acquisition. By expanding the filing requirements, the proposed changes add significant time and cost, burdening transactions like startup acquisitions. Acquisitions are a critical component of the startup ecosystem, and the Commission should rethink its approach to the form updates to avoid unjustifiable burdens on beneficial transactions.
Startups face uncertainty as the government nears shutdown. The U.S. government barrels toward a shutdown this weekend following unsuccessful attempts to pass a deal through both Congressional chambers. Startups and small businesses stand to struggle amidst a shutdown, as critical government functions—like Small Business Administration services and government contracts—may be affected and confidence in the U.S. economy wanes. While large businesses have a greater financial cushion and are generally better positioned to weather economic uncertainty, many small businesses, including startups, are not. And as securing support from banks has become more challenging following the fall of Silicon Valley Bank and others, startups may not have access to the same resources to hold them over.
New reporting on content scanning proposals reveals technical shortcomings. New investigative reporting out this week on the EU’s proposal to proactively scan for child sexual abuse materials documents the influence of content scanning technology providers and the inherent problems with the proposal. Academics, technologists, and other experts quoted in the piece describe how the proposal will undermine encryption, expose Internet services to malicious attacks, privatize law enforcement functions, generate large amounts of false positives, and lead to general scanning for unrelated content in the future, all while failing to adequately reach the outcomes that scanning technology providers claim they can achieve.
Startup Roundup:
#StartupsEverywhere: Milwaukee, Wisconsin. The Way Out offers a fresh start to people impacted by the justice system by connecting them with employers through an unbiased selection process. We heard from Co-Founder and CEO Eli Rivera on how his background and young adult life prepared him to serve in this space, the ways that policymakers can prevent recidivism and encourage entrepreneurship among justice-impacted individuals, and how his business has been impacted by a patchwork of varying state privacy laws.
