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Former FCC Commissioner: Startups face tougher odds without internet rules

Former regulator Mignon Clyburn believes technology startups will have a harder time thriving without federal regulations ensuring equal treatment of internet traffic.

Clyburn, who left the U.S. Federal Communications Commission in June after two terms as a commissioner, said that while established companies like Netflix Inc. and Alphabet Inc.'s Google LLC will continue to succeed, she worried about "the new kids on the block." Many entrepreneurs and startups lack the "economic or political wherewithal," or the relationships with internet service providers to establish thriving businesses for the future, Clyburn told attendees at a technology industry conference in New York on Oct. 4.

Clyburn was one of two Democratic commissioners to vote against the FCC's 2018 Restoring Internet Freedom order, which effectively overturned net neutrality rules that Clyburn had voted for three years earlier. Both the 2018 and 2015 FCC votes relating to net neutrality rules passed 3-2 along party lines. In 2018, the commission has a Republican majority; in 2015, it had a Democratic majority. The federal net neutrality rules eliminated this year prohibited network operators from blocking or throttling legal internet traffic or prioritizing certain traffic in exchange for payment.

Like many in the regulatory, tech, investment, distribution and content communities, Clyburn indicated that she is keeping a close eye on developments in California, where a newly passed state-level net neutrality law is facing multiple legal challenges. The law, signed by California's governor on Sept. 30, immediately faced a lawsuit from the U.S. Department of Justice, which claimed California's law improperly interferes with interstate commerce regulations and violates the clear intention of the FCC regarding internet regulations. Four major broadband trade groups that collectively represent the largest U.S. internet service providers filed a similar federal lawsuit against California on Oct. 3.

Clyburn said at the technology conference Oct. 4 that California, given its population, economics and expansive tech community, could serve as a bellwether for other states, 22 of which are weighing their own internet policies in the wake of the FCC repeal of federal net neutrality rules, she said.

California is the fourth state to adopt its own net neutrality law, following similar moves in Washington, Oregon and Vermont. Governors in six more states — Hawaii, New Jersey, New York, Montana, Rhode Island and Vermont — have signed executive orders on net neutrality. Telecommunication law experts have said California's law goes further than most other state actions to date, which have largely focused on rules governing companies that do business with the state. California's regulation, by contrast, applies to all ISPs that operate within its borders.