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Minority Groups Unite Over Broadband Issue

WASHINGTON - The following is a letter sent by the Minority Media & Telecom Council regarding minority businesses need to be able to pay for faster and more reliable broadband service.  Groups signing on to the letter include the National Association of Black County Officials, the National Black Caucus of State Legislators, and the National Conference of Black Mayors and others who are already on the record as having concerns about the FCC's plans to codify network neutrality rules.

 The Honorable John Rockefeller

Senate Committee on Commerce, Science and Transportation
253 Russell Senate Office Building
Washington, DC 20510

The Honorable Kay Bailey Hutchison
Senate Committee on Commerce, Science and Transportation
253 Russell Senate Office Building
Washington, DC 20510

The Honorable Henry Waxman
House Committee on Energy and Commerce
2125 Rayburn House Office Building
Washington, DC 20515

The Honorable Joe Barton
House Committee on Energy and Commerce
2125 Rayburn House Office Building
Washington, DC 20515

Dear Chairmen Rockefeller and Waxman, Ranking Members Hutchison and Barton:

Please accept this letter voicing opposition to the Federal Communications Commission (“FCC”)
regarding its “third way” proposal for reclassifying broadband Internet access as a common carrier
telecommunications service.

We agree with the FCC on where a carefully constructed and narrowly tailored policy can guide the
broadband market in the United States – towards ubiquitously available and affordable connections
for even the most destitute and geographically remote of non-adopters, robust adoption among
under-adopting minority groups, and effective utilization by minority and women owned business
enterprises (“MWBEs”) and socially and economically disadvantaged businesses (“SDBs”).
However, we disagree strongly with the FCC’s proposed means for achieving these goals. As
discussed at length in the accompanying Comments on broadband reclassification submitted by
MMTC on behalf of eight highly respected parties including itself (the “National
Organizations”),1 we strongly caution the FCC against pursuing its “third way” lest it hobble
critical efforts aimed at bolstering broadband availability, affordability, and adoption among
minorities and disadvantaged businesses. Alternatively, we contend that the FCC possesses
ample authority under the existing regulatory regime to realize all of the laudable goals for
broadband outlined in the Commission’s first-rate National Broadband Plan.
By pursuing a “third way” for broadband, the FCC risks halting the positive momentum toward
further empowering minority users, MWBEs, and SDBs via broadband. Indeed, the National
Organizations’ Comments highlight several negative impacts that will likely result if the FCC
implements its “third way” proposals. These include:
 Price Increases. The national organizations are concerned that the price of
broadband for consumers could increase by over 16% as a result of subjecting
broadband to a number of common carrier regulatory charges and fees that will
ultimately be borne by end-users. Increasing the price of broadband will thwart
the Commission’s efforts to achieve one of its core goals for broadband –
increased adoption among demographic groups that have cited the affordability of
broadband as a primary barrier to home adoption. This is of particular import to
minority and low-income consumers, many of whom would be disproportionately
impacted by an increase in the cost of broadband because these groups are more
sensitive to price changes than are others. Several recent studies have found that
affordability is one of the greatest impediments to minority broadband adoption;2
thus, broadband reclassification would sharply conflict with Congress’ and the
White House’s goals of closing the digital divide.

1 These organizations are the Hispanic Technology and Telecommunications Partnership,
Latinos in Information Sciences and Technology Association, MANA – A National Latina
Organization, Minority Media and Telecommunications Council, National Association of Black
County Officials, National Conference of Black Mayors, National Conference of Puerto Rican
Women, and National Puerto Rican Coalition, Inc.
2 See, e.g., Federal Communications Commission, Connecting America: The National
Broadband Plan, Ch. 9 (March 2010) (discussing the connection between income and broadband
adoption); Robert Shapiro and Kevin Hassett, A New Analysis of Broadband Adoption Rates By
Minority Households, at pp. 10-11, 17 (June 2010) (noting that “extensive research…has found
that price is the single largest determinant of broadband subscription” and that “lower income
households are particularly sensitive to higher broadband prices.” The authors concluded that “a
disproportionate share of African American and Hispanic households…[is] more sensitive to
such price increases than higher-income households.”)

 Decreased Investment Across the Broadband Environment. Implementation of
the FCC’s proposed policies would also likely have negative impacts on
investment decisions across the entire broadband ecosystem. Less investment at
the network level will not only deprive minority consumers and innovators of
more advanced connections, it will also chill investment at the edge of the
network. In a marketplace defined by regulatory uncertainty, investors will seek
to back only proven firms in order to decrease their risk exposure. Thus, new
firms will operate at more of a disadvantage as investment dollars will be even
scarcer in a heavily regulated market. This dynamic would disproportionately
impact MWBEs and SDBs, the vast majority of which already have difficulty
accessing adequate capital to launch and maintain new online enterprises.

 Less Consumer Protection from Dominant Online Firms. The FCC’s proposed
policies also fail to provide adequate protections for consumers and small
businesses from harms caused by large online content and application providers.
In particular, the “third way” would prohibit the offering of services tailored to
small businesses and minority entrepreneurs, and would prevent the Federal Trade
Commission from protecting online consumers.

The FCC’s proposed “third way” policy fails to imbue confidence that the Commission is serious
about tackling endemic problems in the minority community. The FCC’s failure to protect civil
rights in other realms adds to our concerns – for example, the FCC has all but shut down EEO
enforcement, having failed to issue a single EEO enforcement order for more than a year; it has
not assigned a compliance officer to enforce the advertising nondiscrimination rule for two
years; it has failed for five years to provide for multilingual broadcasting as part of its EAS
emergency broadcasting system, and it is nearly seven months late in submitting Congress its
triennial market entry barriers (Section 257) report.

Thus, we encourage you to ask the FCC to refocus its efforts on civil rights protections, hold its
net neutrality and reclassification proposals in abeyance, and defer to Congress for additional
guidance on broadband reclassification. FCC deference to Congress on reclassification has been
endorsed by bipartisan majorities in both houses of Congress and by a number of other
stakeholders across the broadband ecosystem. Deferring to Congress would assure that the
marketplace is afforded sufficient regulatory certainty going forward. Such certainty is
necessary at this critical moment in the evolution of the broadband market. Certainty drives
investment at the core of networks and at its edges. Certainty also encourages investors to take
more risks and back fledgling firms, a dynamic that has become central to the success of the
broadband ecosystem and to enabling MWBEs and SDBs to compete effectively.

David Honig
President and Executive Director

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