[Senate Hearing 115-301]
[From the U.S. Government Publishing Office]
S. Hrg. 115-301
NET NEUTRALITY: IMPACTS ON NEW HAMPSHIRE SMALL BUSINESSES
=======================================================================
FIELD HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
MAY 3, 2018
__________
Printed for the Committee on Small Business and Entrepreneurship
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
30-631 PDF WASHINGTON : 2018
COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED FIFTEENTH CONGRESS
----------
JAMES E. RISCH, Idaho, Chairman
BENJAMIN L. CARDIN, Maryland, Ranking Member
MARCO RUBIO, Florida MARIA CANTWELL, Washington
RAND PAUL, Kentucky JEANNE SHAHEEN, NEW HAMPSHIRE
TIM SCOTT, South Carolina HEIDI HEITKAMP, North Dakota
JONI ERNST, Iowa EDWARD J. MARKEY, Massachusetts
JAMES M. INHOFE, Oklahoma CORY A. BOOKER, New Jersey
TODD YOUNG, Indiana CHRISTOPHER A. COONS, Delaware
MICHAEL B. ENZI, Wyoming MAZIE K. HIRONO, Hawaii
MIKE ROUNDS, South Dakota TAMMY DUCKWORTH, Illinois
JOHN KENNEDY, Louisiana
Skiffington E. Holderness, Republican Staff Director
Sean Moore, Democratic Staff Director
C O N T E N T S
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Opening Statements
Page
Shaheen, Hon. Jeanne, Ranking Member, and a U.S. Senator from New
Hampshire...................................................... 1
Witnesses
Shoer, MJ, Director, Client Engagement and vCIO, Onepath,
Bedford, NH.................................................... 7
Zakon, Robert, Chief Technology Officer, Zakon Group, LLC, North
Conway, NH..................................................... 12
Pearson, Nancy, Director, New Hampshire Center for Women and
Enterprise, Nashua, NH......................................... 16
Luse, Zach, Founder and CEO, Paragon Digital Marketing, Keene, NH 19
Drake, Lisa, Director of Sustainability Innovation, Stonyfield
Farm, Inc., Londonderry, NH.................................... 23
Cyr, Joshua, Director of Acceleration and Education, Alpha Loft,
Portsmouth, NH................................................. 26
Alphabetical Listing
Cyr, Joshua
Testimony.................................................... 26
Prepared statement........................................... 28
Drake, Lisa
Testimony.................................................... 23
Prepared statement........................................... 24
Information Technology and Innovation Foundation
Article dated May 2018....................................... 44
Internet Service Providers
Letter dated May 9, 2018..................................... 64
Luse, Zach
Testimony.................................................... 19
Prepared statement........................................... 21
Pearson, Nancy
Testimony.................................................... 16
Prepared statement........................................... 17
Risch, Hon. James E.
Prepared statement........................................... 4
Shaheen, Hon. Jeanne
Opening statement............................................ 1
Shoer, MJ
Testimony.................................................... 7
Prepared statement........................................... 10
Zakon, Robert
Testimony.................................................... 12
Prepared statement........................................... 14
NET NEUTRALITY: IMPACTS ON NEW HAMPSHIRE SMALL BUSINESSES
----------
THURSDAY, MAY 3, 2018
United States Senate,
Committee on Small Business
and Entrepreneurship,
Durham, NH.
The Committee met, pursuant to notice, at 10:03 a.m., in
Room 158, Memorial Union Building, University of New Hampshire,
Hon. Jeanne Shaheen presiding.
Present: Senator Shaheen.
OPENING STATEMENT OF HON. JEANNE SHAHEEN, RANKING MEMBER, AND A
U.S. SENATOR FROM NEW HAMPSHIRE
Senator Shaheen. Good morning. I'm actually going to sit
down in just a minute because we have an official format we
have to follow, because this is an official field hearing of
the Small Business and Entrepreneurship Committee. So we will
be following the guidelines that we have as a field hearing.
But I want to first welcome everyone, and you should feel free
to move up if you would like, if you have trouble hearing.
I wanted to thank the University of New Hampshire for
hosting us this morning. We have Stan Waddel, who is UNH's
Chief Information Officer who is here, and he will say a few
words because he is also very interested in these issues.
So, Stan, before we officially open, I'm going to ask you
to say a few words.
Mr. Waddel. Certainly. Thank you. Thank you very much.
First, I would like to offer each of you a warm welcome to
the University of New Hampshire. The University of New
Hampshire is the State's flagship research and education
institution, home to 13,000 undergraduate students and 2,500
graduate and professional students, and an estimated $1.5
billion economic impact on the State of New Hampshire.
As a technology professional in higher education, I can
tell you that colleges and universities are watching this issue
with great concern. We have concerns around whether or not the
impacts will increase our cost of delivering content for
students in the education of students. We have concerns whether
or not it will impact the cost of our research endeavors and
just in general have an impact on the ability to have a free
exchange of ideas and information on the internet.
So we are watching these developments with concern, and I'm
pleased that you guys are here to discuss this very important
matter. Given that, I'd like to welcome the panel and Senator
Jeanne Shaheen.
Senator Shaheen. Thank you.
Mr. Waddel. And I'll be brief and just say welcome and good
morning.
Senator Shaheen. Thank you, Stan.
As you can tell, Stan is not from New Hampshire, but we're
delighted that he's here, and he said he's actually made it
through three winters now.
Mr. Waddel. I have.
Senator Shaheen. So he's here to stay.
Thank you very much, Stan.
At this time I would like to officially open the Small
Business Committee's field hearing in Durham to explore the
impact of net neutrality on New Hampshire's small businesses.
Now, before we turn to our witnesses, I'm going to
introduce a few of the people in the audience today.
First of all, we have New Hampshire's head of the Small
Business Administration, District Director Greta Johansson.
Greta, very nice of you to join us today. Thank you.
We also have the--I don't know if we have Warren Daniel
here? Yes. Warren, thank you. Nice to have Warren here.
And do we have Jason Cannon, the Acting Director from the
Small Business Development Centers? No.
So, thank you all very much. It's really important to have
representatives from the SBA here to listen to the testimony
about the impact on our small businesses.
Is Carol Miller here? She is the Broadband--there you are,
Carol. Thank you. She's the Broadband Specialist at the New
Hampshire Bureau of Economic Affairs.
And Liz Gray from Live Free and Start. Nice to see you,
Liz. Thank you for being here.
Let me also finally recognize Mike Shultz, who is the Vice
President for Regulatory and Public Policy, and Ellen Scarponi,
Senior Director of Government Affairs at Consolidated
Communications. Thank you both for being here, as well.
I also want to introduce the staff of the Small Business
Committee who are here. Despite what you may have heard about
divisions in Congress in Washington, at the Small Business
Committee we actually work very well together on both sides of
the aisle to promote the interests of small business. So we are
delighted to have staff from both the majority and the minority
represented here today. We are very glad to welcome Skiffington
Holderness, who is the Majority Staff Director for the
committee. He was sent by Senator Jim Risch, who is the
Chairman of the committee from Idaho. Again, we're delighted to
have you here. We're hoping that he will stay and spend some
money while he's here.
[Laughter.]
We're also joined by Becky McNaught, who is the Counsel on
the minority staff for Senator Cardin, who is from Maryland and
is the Ranking Member. I have a note here that says this is the
first time for both of you to be in New Hampshire, so we hope
you will stay and enjoy yourselves a little bit.
And finally let me introduce the Clerk of the Small
Business Committee, Kathryn Eden, who is here to make sure that
all of the notes from today's hearing are properly recorded.
Again, I want to thank Chairman Risch and Ranking Member
Cardin not only for sending their staff but also for their
cooperation in today's hearing.
I have a statement from Chairman Risch that I will enter
into the record, and it's very helpful to have his support for
this hearing.
[The prepared statement of Senator Risch follows:]
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Now, today's format will be a roundtable discussion that
features our panelists, and because this is an official hearing
of the Small Business Committee, we will not be able to take
questions from the audience. I know a number of you here have
been at other field hearings, so you know that we're all here
to listen. But the official record will remain open for another
two weeks. Is that correct? So if anyone would like to submit
written testimony, we will make sure that that gets entered
into the record.
So again, let me welcome all of you. Thank you very much
for coming to the discussion this morning. This is an issue
that I think is a key for so many of our small businesses. It's
also a key for consumers. But as we look at the 99 percent of
employers in New Hampshire who are small businesses, this is
really critical. Net neutrality and the importance of
maintaining an open internet is very important as we think
about innovation and creativity that's going on with our small
businesses.
This week is also National Small Business Week. It's an
opportunity to celebrate the contributions of small businesses
to our economy. As I know everybody here knows, about two-
thirds of jobs that are created are created as the result of
small businesses, so anything we can do to help them prosper is
very important.
Net neutrality, as I think everyone here knows and as our
panelists will further describe, is the idea that broadband
providers should not be able to block or slow down access to
certain websites. Now, this is a principle that I think has
been key to a free and open internet. It has created a
marketplace that's robust and a level playing field for ideas
and commerce.
Unfortunately, the protections that have ensured net
neutrality are now at risk because of decisions by the Federal
Communications Commission last year that voted along party
lines to repeal net neutrality rules. As a result, unless
Congress acts, these net neutrality protections will disappear
later this year, and I think this is a decision that could
really have major ramifications for consumers as well as for
small businesses.
In discussions that I've had throughout New Hampshire,
small business owners have repeatedly expressed their concerns
about what the impact of these changes would mean on their
access to the internet. They're concerned that broadband
providers will create a pay-to-play system that would put them
at a competitive disadvantage. Small businesses in rural
communities are especially concerned. As most of you know, in
New Hampshire we have parts of our State that don't really have
access to high-speed broadband, and we have other rural
communities where they have access to only one provider.
So it's possible in the near future that the Senate will
consider a bipartisan Congressional Review Act resolution to
rescind the FCC's order ending net neutrality, and just
yesterday a coalition of small business owners across the
country sent a letter to Congress asking that we protect them
by overturning the FCC's decision to repeal net neutrality, and
that letter was signed by 6,000 small businesses across the
country.
So as Congress considers whether to let net neutrality go
forward, today's field hearing is an opportunity for us to hear
from small businesses in New Hampshire, from those who work on
this issue in New Hampshire, about what's at stake for them and
the communities they serve, and I'm looking forward to your
comments and the discussion today. I will take what I hear here
and not only will we have it for the record but I will share it
with my colleagues in Washington.
So let me begin by introducing our panelists today.
First we have MJ Shoer. He currently serves as Director,
Client Engagement, at Onepath, which is a nationwide managed
service provider with offices in New Hampshire and other
states.
Let me just point out that we have longer bios of all of
the panelists here on the table in the back of the room, so
please take those. You will be very impressed with the past
work of all of our panelists.
Next we have Robert Zakon. He is a technologist and
entrepreneur who specializes in a wide range of subjects,
including cyber security, enterprise architecture, cloud
computing, and the internet.
Nancy Pearson has more than 15 years of non-profit
management experience, and she brings expertise in program
development, delivery, and marketing at the Center for Women
and Enterprise in New Hampshire, where she is the Director.
Nancy, thank you for being here.
Zach Luse founded Paragon Digital Marketing in 2012 and has
more than 15 years of internet marketing experience, working
with and consulting for organizations of all sizes. Zach, thank
you for joining us.
And Lisa Drake serves as the Director of Sustainability
Innovation at Stonyfield, which is the leading organic yogurt
manufacturer based in Londonderry, New Hampshire.
And finally we have Josh Cyr. He's a UNH alum, and he has a
background in tech entrepreneurship and software development,
and he runs Alpha Loft in Portsmouth, which is one of New
Hampshire's premiere startup accelerators.
So we're delighted to have all of you here. Thank you very
much for taking time to join us this morning. We're going to
ask you to make opening statements of between 3 to 5 minutes,
and then hopefully we will have time for further conversation.
I'm going to ask MJ if you would start.
STATEMENT OF MJ SHOER, DIRECTOR, CLIENT ENGAGEMENT & VCIO,
ONEPATH, BEDFORD, NEW HAMPSHIRE
Mr. Shoer. Thank you, Senator. My wife and I are alums, as
is our oldest.
Senator Shaheen. Oh, good.
Mr. Shoer. My wife and I had our first date in this
building many moons ago.
[Laughter.]
It's a little surreal.
Senator, thank you so much for holding this hearing. I
think it's very important to share our concerns with our
legislators in a very direct way.
As the Senator said, my name is MJ Shoer. I'm the Director
of Client Engagement and vCIO for Onepath. We are a national
company, but by way of local color we have clients from the
Monadnock region to the North Country and all across the
Southern Tier, and very well concentrated here in the seacoast.
For 20 years, I ran a small business MSP in Portsmouth, and
then merged into a slightly larger company in Massachusetts,
which is both what's called a competitive local exchange
carrier, a CLEC, and an ISP. So we've lived and breathed this
for many years. In addition, all of our clients are directly
affected by this.
By way of a unique perspective, I also had the distinct
pleasure of serving on the Board of Directors of CompTIA, which
is the Computing Technology Industry Association, which is the
global IT trade association. I currently serve as the immediate
past chair, and over the last several years we've actually met
with our office staff in D.C. when we've come into town
annually to talk about technology issues. So I've got kind of
an interesting take on all this.
Perhaps most interestingly, back in 1995 I was a principal
in the first dial-up internet service provider in Portsmouth,
and in a matter of days--not months, not weeks, literally
days--we had multiple competitors who had also opened up, and
there was quite a bit of choice in Portsmouth at the time.
Now, fast-forward 23 years and there's almost no choice. In
the City of Portsmouth, it's really Comcast if you want high-
speed internet access. Now, for the business community there is
some choice, but for the consumer there really is not. So
choice is a big piece of net neutrality as well. While the
throttling and the controlling of content has been in the
forefront, the concept of choice has been a big part of this
equation.
To put a little color on it--and not to pick on any of
these companies but I'm big on word pictures--if there was a
white board, I'd be doodling, which you're very happy there's
not. But consider that Comcast owns NBC Universal, as an
example, and further consider that Verizon is one of Comcast's
largest competitors. Now, at home on Comcast with my TV
service, I can get to ABC's network, CBS' network, NBC's
network, whatever I want. But if I want to jump on the cut-the-
cord bandwagon and only have internet access and use streaming
services, Comcast is actually incented with the lack of net
neutrality regulation to limit where I can go. All of a sudden,
NBC will perform beautifully, but what about ABC or CBS?
In higher education, with everything that's going on with
the internet and being able to offer virtual courses in
conjunction with on-campus courses, similar issues could
happen. If a wealthy university, say a Notre Dame or a USC,
were to make a deal with providers to prioritize their
courseware at the expense of more moderately sized universities
like our own, our own UNH could be at a significant
disadvantage in the field of higher education. And even though
I'm biased, this is a pretty darn good school. We don't want to
see that happen.
But more importantly is how it impacts small and mid-sized
businesses in the State. It could be crippling without the
regulations in place. I always like to say it's like the
difference between Route 95 and Route 1. With net neutrality in
place, we're all driving on 95 to get where we want to go. But
if net neutrality is rolled back and I want to go stream a show
on ABC across Comcast internet, I'm forced down Route 1, and
I'm going to hit so many lights and so much traffic that I'm
probably just not going to bother going anymore, and I really
do believe it's that simple. That is the crux of the issue.
But let me just quickly share a slightly broader
perspective from the standpoint of CompTIA, which is that
CompTIA's membership spans the entire global IT industry. So
it's large providers, small providers, ISPs, edge providers,
and CompTIA firmly believe that congressional bipartisan
legislation is the only way to address this issue. Now, the CRA
is a great first step. It will get what needs to get done. But
I believe--this is my personal opinion, not CompTIA's--I
believe this is a tremendous bipartisan opportunity.
You're right, Senator, I think most of us out here in the
real world don't see anything but division and gridlock on this
side of the aisle or that side of the aisle, and I know I, for
one, would dearly love to see both sides of the aisle
collaborate on anything, and this could be a great start. And
who knows? Maybe it could be the tip of that snowball over the
top of the mountain.
But we definitely believe that permanent legislation is the
way to go because, as it stands right now, many states have
enacted executive orders, their own laws, and yet the FCC's
ruling preempts the states from doing anything to begin with.
So there's instant conflict going on with this.
I think the summary of it is it's a critically important
issue. I hope you are very successful in rolling back the
rollback. That's a double negative, but I think everyone knows
what I mean. And we do believe that if the CRA is successful,
the foot should not come off the gas pedal to get that
permanent legislation in place.
Thank you.
[The prepared statement of Mr. Shoer follows:]
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Senator Shaheen. Thanks very much, MJ.
Robert.
STATEMENT OF ROBERT ZAKON, CHIEF TECHNOLOGY OFFICER, ZAKON
GROUP, LLC, NORTH CONWAY, NH
Mr. Zakon. Good morning. My name is Robert Zakon. I'm the
Co-founder and Chief Technology Officer of Zakon Group, LLC.
Thank you for the opportunity to provide testimony here at this
hearing today.
Zakon Group is a technology consulting development firm
founded in 2002 and based in a rural county of New Hampshire.
We work with clients of all sizes in industry and government
and the non-profit sector, both regionally and around the
world. That is in large part possible because of the internet
itself. The majority of our work involves the internet in some
way, whether it's the application services we develop, the
content we host, or with the systems we work with.
The founding policy of net neutrality could very well
become outright impeded. Let me repeat that: It could be
hindered or outright impeded. This is something that many
people don't think of when they're talking about net
neutrality.
For example, the internet's openness has allowed our
company to develop an event management software application and
provided as a service globally. With users' attention span
nowadays being fairly limited, and delays of even a few seconds
resulting in loss of interest, had limitations been in place on
how fast an end user could access the application it is
unlikely our software, which has been used by events in over
100 countries, would have become as popular. As a fairly small
company, we're not in a position to negotiate enhanced network
rights for ourselves and for clients given the potentially
diverse providers involved.
As it is, some restrictions placed on internet services
outside the United States have resulted in the application
being less than fully useful to a few of our international
clients.
Also, we currently have a single choice of reliable high-
speed service. Again, I mentioned I'm in a rural county of New
Hampshire. If our provider should start charging more for some
of the services we offer or some of the services that we use
from others, it would be immediately felt in our bottom line
and leave us with limited alternatives.
Beyond my own business, I volunteer as a mentor with
Schoolwork, a non-profit association and resource partner of
the Small Business Administration that helps businesses start-
up and grow. In this capacity I have seen the benefits of
unrestricted access to the internet by other small businesses,
including those not in the technology sector such as a small
retail shop setting up an internet storefront or manufacturers
collaborating with clients and the like. Limiting the options
available to these businesses will only serve to stifle their
growth by causing them to not have or offer the best quality
service possible. Even the uncertainty of what providers may do
if net neutrality is not in place, as a client recently
remarked to me, could be disruptive in the crucial business
planning and funding stages.
Having completed a year of public service last spring as a
White House Presidential Innovation Fellow, I had the unique
privilege to see the many innovations brought about by small
businesses that were also of direct benefit to the government
at all levels. These innovations greatly benefited from and
were often only possible by an internet with an equal point of
view.
In the past few years Federal departments such as those of
Defense and Homeland Security have recognized the innovation
potential of small companies and stepped up ways to find them
and facilitate procurement of their services. Even the public
sector derives advantages from net neutrality.
I have watched and participated in the internet's growth
since the mid-1980s and for the past 25 years have authored an
updated timeline that provides a comprehensive history of the
internet. This work, which has been reprinted in thousands of
books, magazines, and other mediums, tracks the many
innovations that have been made thanks to an open internet. Had
roadblocks been placed in this information superhighway and
which is now so much more, many small businesses that have
become global corporations, and I'm sure you can name them,
would likely not have succeeded, and we would be limited to the
few innovations allowed by the companies controlling the toll
gates.
It is the smaller businesses, however, that have brought
many of the revolutionary innovations in the last couple of
decades, and much of what you use today just would not be
available otherwise.
Net neutrality is imperative to the success of small
businesses in this country as they continue to increasingly
rely on the internet, and for the benefits derived literally by
humankind from the innovations fostered by an open,
transparent, and equal-access internet. Thank you.
[The prepared statement of Mr. Zakon follows:]
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Senator Shaheen. Thanks very much, Robert.
Nancy.
STATEMENT OF NANCY PEARSON, DIRECTOR, NEW HAMPSHIRE CENTER FOR
WOMEN AND ENTERPRISE, NASHUA, NH
Ms. Pearson. Thank you so much for inviting me today on
behalf of the Center for Women and Enterprise. We're a small
business resource in New Hampshire. We operate the Small
Business Administration Women's Business Center. We are the
only statewide center dedicated to women entrepreneurs.
One of the things that is of concern for us is that many of
our clients are underserved in a number of ways, whether that
be from a demographic or an economic or a geographical
standpoint, and we provide services no matter where women are
in their business cycle, whether they're in the idea phase,
launch, start, or growth.
One place that is the great equalizer is and always has
been the internet, and it allows women to operate on a level
playing field where they normally can't operate. So the
potential concerns of the end of net neutrality raise a lot of
questions for us, and they all revolve around that equalization
issue, and I'm just going to touch upon a few bullet points
here.
If, for example, the large companies are able to block or
slow content in terms of video streaming services from rival
companies, and if they're creating fast lanes and other things
that we've read about, there's just no way that small and micro
businesses, which is the majority of what my clients are
operating, there's no way that they can compete.
All internet traffic needs to be treated as equal so that
small business has access to the same resources as the big
companies, and this is especially important for startups.
The end of net neutrality could affect businesses using
online services that are currently free. So Skype or MailChimp
or some of the online market research tools, if suddenly they
have to charge for their services and they were otherwise free
for small and micro businesses, that could have a significant
effect on already thin profit margins for small business.
And in New Hampshire especially, in rural New Hampshire,
small businesses rely on the internet for sales and for search
engine optimization because they're just not getting the foot
traffic that they would otherwise get. I would just like to put
that in perspective because that affects Cheshire County,
Sullivan County, Grafton County, Carroll County, Coos County.
That is the majority of the counties in New Hampshire.
So the bottom line for us is that New Hampshire small
businesses and micro businesses rely on the equalizing force of
the internet. Just to put that into perspective, women start
businesses at five times the rate of any other entrepreneur,
and for minority women and women veterans, that number is even
higher. So when we start putting additional barriers in the way
of these entrepreneurs, it can have a significant and, I think,
disastrous effect on the amount of small businesses that are
opening on a daily basis.
[The prepared statement of Ms. Pearson follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Shaheen. Thank you. Nancy, can you just define for
us micro businesses?
Ms. Pearson. I sure can. So, it's a little bit different
depending on where you look for information, but in general
we're talking about businesses with fewer than five employees,
with revenues under $400,000, in general, and generally
businesses that require less than $35,000 in seed money to
start up.
Senator Shaheen. Thank you.
Zach.
STATEMENT OF ZACH LUSE, FOUNDER & CEO, PARAGON DIGITAL
MARKETING, KEENE, NH
Mr. Luse. Thank you, Senator. I'm Zach Luse, Founder and
CEO of Paragon Digital Marketing. Thanks for allowing me to
share my perspective regarding net neutrality as it relates to
small businesses. I'm strongly opposed to----
Senator Shaheen. Excuse me, Zach.
Can you all hear in the back?
Maybe if you pull the microphone closer.
Mr. Luse. Is that better?
I'm strongly opposed to the recent decision to repeal net
neutrality protections. The lack of net neutrality tips the
scale in favor of large enterprises and puts small businesses
and startups at a severe disadvantage if large enterprises are
able to purchase fast lanes to speed up the delivery of their
websites to consumers. My company is an internet marketing
company and web development company that helps startups and
small to midsize businesses succeed and grow online.
I founded Paragon in 2012 in Keene. We've grown from a
startup of one, me, and now we're a team of 13 employees in six
short years. We have clients all over the country, a few
overseas, in a wide array of industries. At Paragon we've spent
a lot of time over the past few years making our clients'
websites load faster, and the amount of time we've spent
optimizing websites has increased substantially over the last
couple of years.
Website speed or load times have a major impact on our
clients' sales and leads. The issue is two-fold. The number of
visitors finding a business' website declines when the site is
slow, and the rate at which people sign up or buy something on
those sites also declines. That's known as the conversion rate,
which declines rapidly as the speed of the site slows down.
Data from Google, Amazon, and industry experts, as well as our
own data from working with our own clients confirms that
website speeds do have a big impact on the ability to attract
visitors to a website and keep them there long enough to buy or
sign up for a service.
The speed of a website directly impacts the search engine
rankings of a website as well. The slower a website is, the
less likely it is to appear at the top of search results. Free
traffic from search engines can be extremely important for
startups or small businesses. Receiving less free traffic from
search engines makes it harder for startups to gain traction
and for small businesses to compete if they don't have deep
pockets to pay for ads.
In addition, there is a direct correlation between the
speed of a website, commonly measured by page speed, and the
rate at which people make a purchase on a website. The
conversion rate declines rapidly as websites' load times
increase. A study by industry experts, Kissmetrics, shows that
just a 1-second delay on page speed can result in a 7 percent
decrease in conversion rates.
An internal Amazon study showed that for every 100
milliseconds, or a tenth of a second, you slowed down their
website, it would cause them a loss of 1 percent in sales,
which would cost the company about $1.7 billion a year. Amazon
is a very well-known and trusted brand. The impact on small
businesses that aren't as well-known or trusted is likely to be
greater.
Consumers expect fast and frictionless experiences online
and are becoming ever more impatient. This means that speed of
websites is likely to become more and more crucial over the
coming years.
The internet was a great equalizer, allowing small startups
to innovate and disrupt industries long controlled by large
corporations. America's small businesses and startups should
not be put at a disadvantage, and the next YouTube, Google,
Facebook, or Amazon should have a level playing field, the same
level playing field that was afforded to the very successful
internet companies that once were startups as well.
I certainly urge the committee to work to put net
neutrality protections back in place for small businesses and
our country so they can continue to compete on a fair and level
playing field, and continue to innovate and grow and create
jobs.
I appreciate the opportunity to testify. Your interest and
action on this issue is very important to the future of small
businesses across the country.
[The prepared statement of Mr. Luse follows:]
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Senator Shaheen. Thanks very much, Zach.
Lisa.
STATEMENT OF LISA DRAKE, DIRECTOR OF SUSTAINABILITY INNOVATION,
STONYFIELD FARM, INC., LONDONDERRY, NH
Ms. Drake. Thank you for the opportunity to provide
testimony regarding our company's concerns about the FCC's
decision to roll back net neutrality. Stonyfield is a yogurt
manufacturer based in Londonderry, and we work with small
businesses across the State and the region primarily to source
our first ingredient, which is milk.
As a business with strong ties to the rural and
agricultural business community, we share these concerns from a
business perspective. We regularly witness how small rural
businesses, including the farms and cooperatives that we source
from, already struggle with limited access to broadband and
limited options for internet service providers. The repeal of
net neutrality would compound the challenges faced by these
small businesses, adding cost and creating a competitive
disadvantage for running a successful business in rural
America.
Uninhibited access to the internet is a fundamental
necessity for operating a successful business in rural areas,
and this is only going to become more important into the
future. In our work with farmers in the State and the region,
we see how these businesses are increasingly reliant on the
internet for access to technical information and support, to
market information, and for communication with customers and
vendors.
Under this change, internet providers would gain new powers
to steer businesses and customers using access to the internet.
For example, internet access providers could charge new fees
for prioritized access, and while large businesses and farms
might be able to afford a pay-to-play prioritized fast lane,
small and medium-sized businesses may not be able to and put
them at a distinct disadvantage with larger competitors.
Without net neutrality, internet access providers could
charge rural businesses new fees for access, specifically to
websites or to services. They could favor certain businesses by
slowing down traffic or exempting traffic from data caps.
Tiered service plans could throttle user access to a limited
group of websites, or block websites outright. It could also
potentially limit or bias farmers' access to products,
services, and information that they need to run their business.
So these possible outcomes could create immense uncertainty for
companies in every sector of the economy who rely on open and
unencumbered connectivity as a key enabler for their business.
Ultimately, if the repeal of net neutrality is implemented,
it will have a crippling effect on rural economies, further
limiting investment in rural infrastructure and restricting
access to the internet for rural businesses, at a point in time
when we feel we need to expand and speed this access instead.
So I urge you to consider these impacts on the repeal of
net neutrality rules and focus on advancing policies that
foster fair competition.
[The prepared statement of Ms. Drake follows:]
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Senator Shaheen. Thank you, Lisa.
Josh.
STATEMENT OF JOSHUA CYR, DIRECTOR OF ACCELERATION AND
EDUCATION, ALPHA LOFT, PORTSMOUTH, NH
Mr. Cyr. Thank you, Senator. I really appreciate everyone's
comments so far. I just want to point out that there are so
many familiar faces in the audience here who are helping
businesses in New Hampshire, and I really appreciate everything
you've done and that you're here today and listening to this as
well.
I've worked with many startups throughout the State of New
Hampshire over the past several years, and there's a unique
aspect of a startup that makes them their own type of small
business. Startups, by definition, are attempting a new
business with many unknowns in their model.
I have to remove my glasses so I can read here.
Senator Shaheen. We sympathize.
Mr. Cyr. It's a new thing for me.
So startups, by default, startups have to do something
that's new, that's not a traditional business model. So they're
going to change their model, their product, or their approach.
Startups create opportunities through innovation. That
innovation lies either in new spin on an old business model or
on innovative products themselves.
Startups also have high growth potential. They don't
typically focus on a small geographic area, at least not at the
start. Ultimately, this means that competition is not their
local businesses but large businesses with broad interests.
Almost always, this competition has a substantially larger
financial resource. The repeal of net neutrality protections
enables a small handful of very powerful internet providers
tremendous control over what is delivered to consumers' homes
and the speed at which it's delivered. Without net neutrality,
the power and control these internet providers have will allow
them to create artificial market barriers. These barriers
stifle innovation and competition and serve to only protect
powerful incumbents and extract higher fees from consumers.
Startups may find the price to be paid for preferred access
to be too great at their earliest and most vulnerable stages,
yet many will feel that they have no choice as slow website
speeds will hurt their bottom line.
So study after study has shown that user balance rate,
which is the percentage of people who leave a site immediately,
rises tremendously--we've heard some stats on that, so I'm
going to skip what I had written here and just come to the
short part of this, which is that page speed is so important
that Google factors it into their search rankings. While search
rankings will not be impacted by speed shifting of internet
service providers, the intent of the ranking focused on page
speed still remains. Speed has an immediate impact on user
engagement.
Now, some may suggest that if consumers felt strongly about
the issues of net neutrality, they could simply vote with their
dollars, picking a provider in line with their needs. That
would presume consumers fully understood the detail of internet
plans, and even if consumers did, a responsive market would
require a healthy marketplace of options. Many U.S. consumers
do not have a choice in their high-speed broadband. Those that
do often find themselves in long-term contracts, limiting their
options. The FCC's own Internet Access Services Report this
February of 2018 showed that in many areas there's no high-
speed broadband at all. However, in areas with broadband speeds
of 25 megabits per second or higher, between 30 and 40 percent
of homes have only one option for a provider, and that's true
of the State I grew up in, Idaho, but also true of my home
State now, New Hampshire.
Consumers have little to no choice for their provider,
which means the market isn't being driven by consumer net
neutrality concerns. Consumers need high-speed internet access
even if the provider isn't providing the kind of service the
consumers want.
In summary, any net neutrality protections will be
detrimental to a healthy competition for small businesses,
including startups. Thank you.
[The prepared statement of Mr. Cyr follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Shaheen. Well, thank you all very much. You've
obviously given us a lot to think about, and I'd like to now
explore a little bit in further detail some of the issues that
you've raised.
I want to start with you, MJ, because one of the things you
said, and I hadn't heard this before, is that you think it's
not enough for us just to repeal what the FCC did, that you
think we really need bipartisan legislation that puts in place
net neutrality rules. So what should those include, and why do
you think that's so important? And I'm going to ask everybody
to jump in on that.
Mr. Shoer. Well, to the importance, it's simply that it
shouldn't be at the whim of who's in the White House, and
that's not a slam on the current Administration.
Senator Shaheen. Sure.
Mr. Shoer. But we're in this cycle now, this unfortunately
sustained cycle that every time the party in the White House
turns, various legislation is rolled back and put back in
place, oftentimes even without any modification. So the only
way to hedge that is with permanent legislation.
I also think, just because I consider myself a lost soul in
our political system, if you will--when I was here on campus I
was a die-hard Reagan Republican, conservative as could be.
Then I had kids. Then I matured a little bit and I became an
independent because while I am socially very liberal, I am
fiscally and in foreign policy very conservative. There's no
home for me in our political system today. There needs to be,
and the only way we're going to get there is if we can find
anything that Congress can come together on across aisles and
pass.
While I recognize that this really has some true partisan
division, that the Republicans by and large favor the repeal,
the Democrats by and large favor retaining the rules, if we
really step back and look at the engine of our economy, we all
know it's small business, and we have got to protect it. We
have seen innovation like we have never seen in our human
existence since the internet came to be in its current form,
and anything that changes that free and open access and limits
the competitive opportunities for that access will damage our
economy. There's no question about it. There are so many
studies.
So that's really why. I mean, I think it rises to the level
of warranting that kind of legislation. Quite frankly, we're
not here to talk about data privacy, but data privacy
regulations are the same thing. We've got every State in the
Nation creating their own regulations, and if we want to kill
small business and entrepreneurship, let's let every State
create their own regulation, and then let's go and explain to
every small business that those businesses in multiple states
have to comply with each State's set of laws. It's not a
sustainable model for growth.
Senator Shaheen. Can I ask if others want to jump in on
this?
Ms. Pearson. Sure. I would like to add that the best-case
scenario would be not only bipartisan legislation but a diverse
group of bipartisan legislation so that we have the voices and
perspectives of women business owners, minority business
owners, and other underserved, because unless you have the
perspective and the experience, the life experience and the
understanding of the barriers that each demographic, each
constituency creates, you're only going to have legislation
from one point of view, and one size does not fit all.
Senator Shaheen. Anyone else?
Ms. Drake. I would just add support for legislation to
create consistency for businesses in policy and the stability
that's needed for businesses to make decisions to determine
investments, in which communities they're going to settle in,
and knowing what resources they're going to have, including
internet as a tool.
Mr. Shoer. I think that's a great point, Lisa, because I
know the folks I've talked to with CompTIA have said the
biggest concern that they're hearing across the membership is
consistency, a consistent message so that they can plan,
because it's very difficult, even for the large companies,
ironically. You know, we're talking about the small businesses,
but even for the large companies out there, it's very difficult
for them to plan for uncertain futures.
Senator Shaheen. Right. Uncertainty, whether it's around
the internet or budgets or whatever it is, is a real problem
for business in general, and particularly for small businesses
that have less ability to weather ups and downs.
Anything else anybody wants to address with respect to what
ought to be in a piece of legislation around net neutrality?
[No response.]
Let me then go to another issue that came up, and that is
the need to optimize websites and reduce load times for
customers. Zach, you talked about the importance of this. Can
you talk about why this is such an issue for small business?
Mr. Luse. Yes, definitely. It's a big issue because,
frankly, slow websites are less effective, and if you slow some
down, there's nothing those people can do, aside from paying
the providers to be in a fast lane, to make it faster beyond a
certain point.
Senator Shaheen. Talk, if you would--I think everybody here
knows what we mean when we say pay-to-play and fast lanes
versus slow lanes, but can you explain that a little more for
people who may not be familiar with this conversation?
Mr. Luse. Yes. Fast lanes would allow players who have deep
pockets to go purchase faster speeds. Their websites and their
content are delivered to consumers faster, whereas the
businesses that are particularly startups and small businesses
may not have the ability to do that, especially startups who
are just scraping together the funds to make their ideas
happen. So it puts them at a severe disadvantage, and it also
allows those big players to block competition and stifle
competition, which is detrimental to our economy because so
many of those great ideas and innovations come out of small
businesses and startups.
Senator Shaheen. I'm always impressed with the fact that
small businesses have 16 times more patents per employee than
large businesses, which is an eye-opener, I think, for most
people.
Josh, talk about what--I mean, you and Nancy, and you too,
because you work with a lot of startups, are in a position to
be able to see what they could sustain in terms of increased
costs. So if net neutrality means an increased cost for access
to the internet, is there a percentage or a level at which you
think you then begin to price small businesses out of their
ability to continue to have access to the internet?
Mr. Cyr. It's a great question, and I think it would
probably really vary given the business. Let's say for a
startup, but I think the same would be true for any business,
if I'm having to pay--if we step back a second and think about
what Zach was saying about the fast lanes, all the traffic is
going through the internet service provider to the consumer
through the same pipe, right? There's not technically a
separate lane. But we know that the traffic from this website
is somebody that pays us so we can go faster than the others
that are going through the same pipe, so it gets channeled.
So if I'm a startup and I want to make sure I have really
good performance because people bounce off my website if I
don't have really good performance, I have to divert some sort
of money to that. Well, for every dollar I'm diverting to pay
for consumers to have a better experience on the exact same
thing that everybody else is using, that's one less dollar I
can spend for digital marketers to help provide really great
in-bound marketing services for me, or to hire a software
developer to finally build or modify my minimum viable product,
or to pay for advertising, or anything else, right?
The two most valuable resources that a startup founder has,
a small business owner has, is their time and their money, and
anything we're diverting that isn't adding value back and
creating better value for consumers is a waste. It's a wasted
resource. Right now, we know what those are. We have a level
playing field and we know exactly how to plan for the future.
If I don't know what I'm going to have to spend, and I don't
know what to even tell startups what they're going to have to
plan and budget because we just don't know, that's a really
scary place.
So I guess the answer is that every single dollar that's
spent could have been put in a better place which could have
gotten them further along. If a startup I'm working with runs
out of money before they can build a new and viable product or
they can find the love with the customer, the product market
fit, they're not in business anymore, right?
And it's not simply a matter of a few hundred dollars a
month or a thousand dollars a month or whatever that is. That's
sort of making it about the money, and it's really about can I
survive long enough to get to a place where everybody wants to
buy what I have to sell, and then once I get there, do I have
enough money to actually get it into consumers' hands and
funnel the growth. We can talk about growth and investment and
all that stuff later on, but it's not a simple formula. It's
really complicated and scary.
Senator Shaheen. Robert, and then Zach.
Mr. Zakon. Sure. So, I'll pick up on the theme that you
heard a little bit there, uncertainty. That's a huge concern
for small businesses, something that I keep hearing over and
over again. Just a few weeks ago, touring a harness
manufacturer up in the Mt. Washington Valley----
Senator Shaheen. Harmon? Harness?
Mr. Zakon. Harness. They make leashes, those kinds of
products, and one of the big concerns for them is now having
more than half their sales online. But the other one is things
like sales tax, as well, and the concern about what can happen
there. So even though we're being told that if it goes away and
we no longer have a neutral internet, it does not necessarily
mean the next day that you're going to be charged that much
more. But it's the uncertainty that down the road it might
happen. As my colleagues mentioned, that could mean the
investment that could have been going somewhere else, or
perhaps a funder, as I mentioned in my intro, wouldn't be
willing to invest in your company because there's too much
uncertainty of whether you will really be in a position to
offer your service if someone comes in and charges much more
for them.
Senator Shaheen. Zach.
Mr. Luse. I would just add to that. That issue is
compounded by taking money away from whatever their core
business is because the marketing and advertising dollars are
going to be less effective because less of those people are
going to convert. Google's advertising platform actually
charges you more if you have a slow landing page. So you pay
more for the ads than your competitors with a faster website,
and then less of those people turn into customers. So it really
snowballs.
Senator Shaheen. It's a double whammy.
Mr. Luse. Yes.
Ms. Pearson. Some of the clients that we see are even
before this stage. They're operating their businesses using
already-existing platforms like Sea, like Facebook, like
Instagram, with the hopes that they can invest to the point
where they get to their own website and their own internet
sales. What I see as a great concern is that they will never
get there. That's just a whole class of businesses that are not
going to be able to work their way up into even the small
business community.
Senator Shaheen. Robert, you talked about how you have seen
work impeded, and you've seen that in some other countries
because of the way the internet operates in other countries.
Did I understand that correctly? And can you give us some
examples of what you've seen?
Mr. Zakon. Sure. So, our software initiative and
application, it integrates with software and services from
other companies. At times, these services that we utilize as
part of our software have been blocked in certain locations, in
some other countries around the world. When this happens, it
appears to be an issue of our software, so the client will
contact us. This can be pretty burdensome from an impact
standpoint in terms of tracking down the issue, providing
support, trying to develop workarounds, if that's even possible
when we're dealing with another nation altogether.
I expect if a U.S. internet provider ends up blocking or
throttling a service that we integrate with, or even our own,
the effect is going to be truly burdensome for us and for our
clients as well, even more so when you consider the number of
providers that we're really talking about here. I'm certain
that some large companies will evolve to offer a service to
bypass some of this, but that would likely mean us not being as
agile, as lean in the services that we're currently really able
to engineer for ourselves.
I realize that Nancy is talking about a different type of
small business. Our business, we understand the technology. We
can often kind of work around it. But again, with my score hat
on, and I do not speak for the organization, only for myself as
a counselor, I've seen too many businesses that can't even get
started with what's out there. When you talk about looking at
what are the terms of service, they have no way of even
comparing things like that. So it very much becomes an impact,
and when we look at it globally or internationally, it's a non-
starter.
Senator Shaheen. We had a small roundtable with a number of
businesses at Alpha Loft earlier this year, and we had this
whole conversation about the workaround because there were a
couple of people who said, well, if this happens, technology
will help us develop a workaround so we can avoid it. And we
had this conversation that lasted probably 20 to 30 minutes
about this whole issue, and at the end of it one of the
participants said look how much time we've been spending just
talking about this. Imagine if it happened how much time it
would take businesses to focus on this, to deal with it, and
the time it would take away from other things that they need to
do. So it's really not an option at this point, and it doesn't
make sense for us to do that.
Mr. Zakon. It certainly hits the bottom line.
Senator Shaheen. Absolutely.
So, several of you have talked about the challenges that
startups have with getting funding. I know it's a particular
concern for women-owned businesses, Nancy, but it's obviously a
concern for most startups. Can you elaborate on the impact on
startups with a repeal of net neutrality, what that would mean
for things like crowd funding and access to other investors who
might be interested in a startup?
Mr. Cyr. I'll go ahead, if you don't mind.
If you think about what investors are looking for, at the
very early stages they're investing in the team. They believe
the team has an excellent idea and they're going to be able to
make it, and they're going to use the resources they're given,
this investment, in a reasonable fashion to be able to get
there.
They're also, through all their due diligence and research,
seeking to reduce risk wherever they can. That's why they do
the due diligence. It would be the same for anybody giving out
money, really. So if you see a really compelling team and an
awesome startup and a great idea, and then realize it's going
to be enormously expensive just to pay-to-play to be able to
compete because of whatever constraints are put onto the
network, more barriers, is that a good use of those resources?
The reality is for a typical investor, it's not like they
only hear a dozen good ideas a year. A lot of ECs will receive
100 solicitations a day. They're evaluating hundreds of
thousands over the course of a year. So they're making good
decisions, and if they're seeing possible barriers, possible
issues, they have all these other good ideas. So it's just
knocking good ideas right from the start.
I think we don't want to see resources put to use simply to
pay fees when we could see those put to use to see growth or
build product. Those are the two things that any business has
to do at the very beginning stages, small businesses, and
specifically for startups. You're either building something or
you're selling something, and a lot of the other stuff that you
do around that is supporting that. If you're not doing those
two things or something that supports those two things, you're
probably putting resources at the wrong time. So you want to
make sure that money is put to those two things.
Senator Shaheen. Anybody else?
Ms. Pearson. Well, for us, the majority of our clients are
not really good candidates for that kind of startup funding
opportunity. But I will say that we spend a lot of time with
our clients exploring all the possible revenue streams and
sales channels. So if you take a whole channel away because of
the unknowns, that is a huge concern for the potential
viability of their business. So again, it's the unknown and the
barrier to entry.
Senator Shaheen. I think platforms like Ebay and Etsy have
really made a difference and provided opportunities. I have a
staff here that says 87 percent of Etsy sellers are female, and
we heard from one Etsy seller in New Hampshire, Gail Kimble,
who is from New Hampshire Bowl and Board. Some of you may be
familiar with that. They're in Webster. And she wrote--and I
think her quote is worth repeating here. She said, ``The e-
commerce world is super competitive, and the big guys have all
the advantages.'' You've all alluded to that in some way. ``Net
neutrality at least keeps the door open. Without net
neutrality, I'm quite sure my margin will shrink to the place
where I'll have no choice but to close up and give up.'' So it
really shows the impact on small business owners who are
looking at what will happen if we repeal net neutrality.
Lisa, one of the things, again, that people have referred
to--and we've got people here from all over the State--Keene,
Londonderry, North Conway, Nashua. But you talked about the
real impact for your rural providers for Stonyfield, and with
the exception of the cows, can you talk a little more about
what this means for rural entrepreneurs who really are often in
places in New Hampshire where they don't have access to good
internet, much less what it would mean if that access totally
goes away and costs more?
Ms. Drake. These are small family owned operations that we
work with. You may think of dairy farming as low tech. It's
cows eating grass. But really, technology is influencing
farming as much as it is many other areas of our economy. So
technology is a tool that farmers are using more and more to
manage their farm, to improve their operations, and to improve
the economic aspects of their operation. They use it to monitor
feed and monitor markets where they're buying feed. They're
using robotic milkers. They have all kinds of technology around
milk quality, and lots of communication needs with both vendors
and customers.
So all of this is an important means of functioning as a
business, and to add on top of living in rural areas don't have
necessarily consistently strong cell service either, so the
internet really, truly is--reliable internet is a connection to
the community. And just to go further on the technology front,
we continue to work on developing better software and tools for
farmers for data collection and monitoring and trending so that
they really have more intelligence about the operation of their
farm.
Mr. Shoer. Senator, I can share a story about a customer in
a rural part of the State. Their business is somewhat unique,
but what often gets lost is you have to think about the supply
chain of the business, which is somewhat what Lisa is talking
about. But in this case, this business found that over a period
of years all of their technical manuals, all of their resources
all went online. This used to be a business that could order--I
think back to when I was a kid and the World Book would show
up. They used to have the bookshelf full of their technical
resources. That's all online now, and they found themselves in
a very difficult position because there was no competition for
access, and their access was dreadfully slow, and it was
significantly showing impact.
Now, this business had to negotiate with a broadband
provider and had to spend over six figures to get that provider
to bring access to them, and it was a choice of spend it or
close the doors.
So back to the access piece of the equation, we have got to
find a way to get the competitive geographies expanded because
we've got businesses that are at significant disadvantage on a
regional scale, national, and in some cases global.
Senator Shaheen. Robert.
Mr. Zakon. I'll continue with the rural theme here, just to
give another view of it. It's been mentioned that oftentimes,
especially up in the North Country, some of the rural counties
in New Hampshire, there is no alternative. There is hopefully
one high-speed provider that you can rely on. For a client we
have who they pipe music and video from the internet into their
waiting area, if they can't get internet for that, not
critical. They still have radios around. They can turn it on.
But another client in the medical profession sends blood work
over the internet and instantaneously receives results on their
mobile app. So if they don't have the ability to do that
anymore because net neutrality is not in place, it becomes too
cost prohibitive for them. There is no alternative service. The
quality of care is going to suffer.
So as we look into tele-medicine and all the other
wonderful innovations that we have, and innovation has been a
theme here, it's much less likely for us to be able to deal
with that in a State like New Hampshire.
Senator Shaheen. Absolutely, and I want to get back to the
tele-medicine piece because it is so important in New
Hampshire. But before I do that, I have a statistic here that
the University of New Hampshire has done. They have a report on
the state of broadband in New Hampshire from 2015, and they
asked New Hampshire residents about their limited provider
options. When asked why they're using their current provider,
39 percent said it's the only option available to them. So,
think about that. Almost 40 percent of the State says we have
no other choice, and that doesn't count the people who don't
have a choice, who don't have a provider at all. There are some
parts of New Hampshire that don't really have a provider at all
unless it's dialup or so slow that it's really hard to use.
But I want to go back to the tele-medicine because that's a
really important issue that you raised. For, again, so much of
the State, because we're rural, it's the one way we have access
to different specialties and to information and expertise and
physicians that we wouldn't have otherwise.
I had a chance to visit the VA clinic up in Littleton, and
what they're doing, they're using tele-medicine to bring in
psychiatrists and psychologists for counseling there because
they can't afford it otherwise. But if they can do it through
their tele-health, they're able to make it available to all of
the veterans who come in. So, as you say, this would have real
implications for being able to do that in parts of New
Hampshire because if it costs more, what does that mean for the
physicians? They're either going to have to charge their
patients more or they're not going to be able to afford it.
So, do you want to elaborate on that a little more?
Mr. Zakon. Sure. I'll actually give the example that I keep
hearing, which is more from the opposite side of the argument,
which is, well, if we do away with net neutrality, the large
internet providers can now offer that high-speed route so that
you can have those kinds of services. Unfortunately, I don't
think that really pans out, because if I'm going to provide a
remote surgery, for example, I'm going to want a dedicated
circuit to be able to do that. I am not simply going to want
that network traffic going through the public internet overall
without some major paring agreements in there.
Just yesterday, there was a router outage in the internet
backbone. I think it was in Florida. And we got calls from
clients who couldn't access one of our data centers there. It
was not life and death, but again, that's where it really comes
in. So I think the whole remote surgery, tele-medicine, all of
that becomes a critical service, and I think necessarily it
means that it really should not just be a part of the standard
internet as we generally know it. You're looking more at
internet 2 capabilities that are out there.
Mr. Shoer. I think the other elephant in the room around
tele-health is that we've seen the consolidation going on in
the health care system and how few private practices are still
able to survive with hospital systems or insurance systems
buying up practices. So imagine a world without net neutrality
where either an insurer or a hospital system that has
significant cash resources can make deals with ISPs to
prioritize their preferred end tele-health provider. It could
significantly change that entire industry.
Right now, that is somewhat of an upstart level playing
field industry. We have clients that are using remote
radiologists that are in the United States, as well as all
around the world. For various reasons, that could go away or it
could change dramatically, and it could absolutely impact
quality of care.
Mr. Zakon. And an example from another industry, if all of
a sudden the electrical industry decides to say, you know,
we're going to start charging more to one brand of computer or
appliance going to the wall and the plug behind me here to get
your electrical service, I don't think we generally stand for
that. But that is, in large part, what we're talking about
here. It's limiting the choice. I may now no longer be able to
use one appliance brand but now have to use another one.
Or going back to when we had multiple phone services, and
I'm going back many, many years, before my time, I think----
Senator Shaheen. Some of us remember that.
[Laughter.]
Mr. Zakon [continuing]. Where you may have had multiple
telephones depending on who you wanted to talk to. So it's
between the party line and where we are today.
Senator Shaheen. We heard from an occupational therapist
named Rachel who is in Litchfield, and she wrote to us about
her concerns. She said, ``Ending net neutrality will cut off
resources from individuals who can't afford to pay extra for
internet services. It will be harder for these people to
communicate with others and receive information they
desperately need about their health. Additionally, ending net
neutrality will make it harder for my clients to access
resources that help them to cope with PTSD, depression, and
other challenges.'' You all have said it very well.
So, the one topic that we haven't yet covered is around the
argument that we should repeal net neutrality rules and let the
Federal Trade Commission do the actual enforcement. So when
there's a problem, small businesses can go through the FTC and
they can have their concerns addressed. Do you all think that's
realistic?
Zach.
Mr. Luse. My understanding is it's a terrible idea, because
the FTC is just going to be enforcing when somebody files a
complaint. They're not going to be out there policing. And the
process, from what I understand, is pretty tedious. Maybe small
business associations might be able to handle that, but a small
business isn't going to have time to really do that.
Mr. Shoer. It's a reactive stance.
Ms. Drake. I would agree. Our farmers need to stay on the
farm and focus on farming and not submitting complaints about
their internet service. It's really too much to ask of the
small business owner.
Mr. Shoer. It's shifting the burden in the wrong place, and
there are other laws on the books in states where they've
relied on FTC practice and precedence, and those laws have not
played out well because of that.
Senator Shaheen. Absolutely.
Anything else, as we're getting close to wrapping up here?
Are there any other points that folks wanted to make that
haven't been made yet?
Nancy.
Ms. Pearson. I actually want to add to the health care
conversation. I just tallied up some clients that I'm currently
working with right now, in 2018. One is a physical therapist
who delivers pain management services online. I have two
nutritionists that deliver their services online. I have a
personal trainer, and I have a fertility coach. All of them are
working through tele-conferencing with their clients across
northern New England. The physical therapist who deals with
pain management has found a niche in addiction recovery.
So these are real implications that we're talking about,
because if people don't have access to these services that
their insurance won't necessarily pay for but it's cost
effective, it just has real-life consequences to more than just
small business but the quality of life for people and some
major, major issues going on in the State.
Senator Shaheen. Yes, it does, and we also don't really
know what all those implications are, as many of you have said.
We've asked the GAO to do a study on what the potential impact
is going to be on small businesses. Of course, we don't have
that report yet, but just among the concerns that you all have
raised, you can see the potential impact on small businesses
and the ripple effect that has through the economy as we're
thinking about job creation and development of new technologies
and innovation.
One of the things that we haven't talked about because
we've been focused on small businesses, but I think it's
important to think about as we look at the workforce challenges
that we have in New Hampshire right now. Everywhere I've been
in the last two years, the number-one issue has been workforce.
What does it mean for young people and for workers if net
neutrality changes and they aren't able to get information,
Josh?
Mr. Cyr. The way I see it is that states with more rural
residents will probably suffer the most. I mean, if you think
about I'm graduating from UNH and I'm looking to make my mark
in the world, internet access is really going to be important
to me. It's sort of foundational for how I grew up and what I
expect. I start shopping around and I find that there's no
broadband in certain areas, they're out. I'm not moving to the
North Country. I'm not moving to all these other areas. I'm
going to be moving to a place that has an internet service
provider with a record I know and want. Maybe there's somebody
who is voluntarily continuing with the net neutrality rules.
That's probably in really competitive markets.
So I think what we're going to see is new generations
moving, primarily motivated because of reasons like that, to go
to heavy competitive markets and skipping over the places that
may not be able to offer those sorts of services if they find
it's so important. And I think that we've heard time and time
again that they do. So I think it's going to be specifically
impactful for rural areas in a very negative way.
Senator Shaheen. Zach, did you want to comment on that?
Mr. Luse. Yes. I think for my business in particular, it
will impact it heavily. It's already hard enough to attract and
retain young workers in Keene. When they go home and they only
have one option, if they have one option, of a provider, and
you layer net neutrality on top of that where they might not be
able to stream the content they want, it just compounds the
issue.
Senator Shaheen. Lisa, you wanted to say something.
Ms. Drake. Yes. Just to take Josh's comments one step
further, I think that what he is describing about young people
making choices about where they're going to live, this is about
the vitality of our rural communities. We're already seeing an
exodus of young people from our rural areas, and it has a great
impact on the vitality and the longevity of those communities
and their health as a community. So I think if we don't want
the exodus of all our young people to urban areas, this is
something really important to consider.
Senator Shaheen. Yes, absolutely.
Mr. Shoer. I think there is also a significant risk to the
diversification of our workforce. In the tech industry, we are
very, very concerned about getting more women and disadvantaged
minorities into that workforce because it's typically been
coming out of those who can afford four-year college, but we've
proven with any one of a number of initiatives that those other
communities can more easily access the education to get them a
foothold in to build a career. If net neutrality regulations
are not in place, the large providers are going to start to get
into the areas of the business that, quite frankly, they don't
have any business getting into, and it could directly impact
our ability to encourage young women, young minorities to get
into technology fields.
Even in our case, we've had a handful of employees over the
last 18 months relocate for family reasons, and we've been able
to retain them because, thank God, they've been able to get to
an area where they had unfettered good broadband internet
access. If that weren't the case, we would have lost some
wonderful employees that we've actually been able to retain.
Senator Shaheen. Robert.
Mr. Zakon. And I would actually like to add another
category of individuals to the list, and that is the disabled.
Homebound individuals had startups before where we've had 20-
plus homebound individuals that were doing meaningful work for
us, for our company, in large part because there was an equal-
access internet. They were able to come use the services that
we have been using. There was no concern about, well, you're
with a different provider, you can't use the service that we
offer and therefore we cannot hire you. And that's really
critical across the board.
Senator Shaheen. That's a great point.
Mr. Shoer. Very good point.
Senator Shaheen. And, you know, the frustration for me is
the responses to all of the points that all of you have made
this morning have really been nonexistent. I mean, the biggest
argument that I've heard for repealing net neutrality has been
that, well, it will provide for more innovation. But, in fact,
I think what we've heard from all of you is that you all think
it would be less innovation. And the other implications for
what we might be looking at are some unknown but certainly much
more impactful than what we've heard from anybody at the FCC
and for those who are proponents of this repeal.
Robert.
Mr. Zakon. Yes. For me it really comes down to there was a
lot that internet providers could be doing already that they're
not, that we are in the world we are today with regard to cyber
security and privacy. That is something that they are empowered
to take actions on. They are our tunnel to the internet. They
can protect us, in large part, with regards to that. That is
not something that I think, in large part, is done. The
internet of things, we hear about how insecure they are. That
is something that internet providers are in a position, in
large part, to potentially help with. Yes, there are potential
privacy issues and the like in there, but the leadership has
not been there, and that will go a very long way with regard to
saying, yes, there may be some leeway here. But as of right
now, at least, I don't see it.
Senator Shaheen. You mentioned the phone company and the
changes when we deregulated the telephone industry, and the
innovations that developed as a result of that. We're seeing
that in the utility industry with the change in the way we
provide electricity and utility service to folks.
It seems to me that this goes in the wrong direction, that
instead of opening things up to provide more innovation and
more access, what we're talking about is closing things in a
way that reduces access, reduces innovation, and that's not
going to be good for anybody, I think, except the big players
who have the potential to make money and really have a monopoly
over what goes on.
Well, thank you, everybody, again. Any final comments that
someone wants to make that you haven't had a chance to?
Mr. Luse. I would just reiterate that with repealing net
neutrality, you're kind of changing the underlying fabric of
the internet that's been there since the beginning, and there
are probably so many implications that we can't even imagine.
If you look at where we were 10 years ago and where we're
going, we don't really even know how it could be detrimental to
the future.
Senator Shaheen. Well, again, thank you all very much.
Special thanks to our panelists and for those of you who came.
Many of you traveled long distances to get here, so we really
appreciate that, your willingness to be here.
I am looking forward to being able to take back what I've
heard this morning and share that with my colleagues in
Washington. I'm pleased that we'll have it as part of the
record of the Small Business Committee and look forward to
working to address both what the FCC has done and to think
about how we can do bipartisan legislation that will really
provide some certainty in the future.
As I said, we have, I think, two weeks for additional
questions and statements. So anyone in the audience who would
like to weigh in, we have two weeks to do that, and you can get
them--Chris, where should they send those?
Mr. Neary. They can send them to Kathryn, or they can send
them to me.
Senator Shaheen. So you can send it to our office or to the
committee. Both of those are available online, fittingly.
[Laughter.]
Yes, unrestricted, at least for the time being.
[Laughter.]
Thank you all for coming to join us in this conversation,
and I look forward to seeing how things progress because I am,
like all of you, very concerned about what the implications may
be.
Thanks very much. This hearing is now closed.
[Applause.]
[Whereupon, at 11:22 a.m., the hearing was adjourned.]
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