Lofgren Seeks Further Regulation of Tech Sector

Published November 1, 2008

Influential congresswoman Rep. Zoe Lofgren (D-CA) says the next president should push for tech-savvy appointments on the Securities and Exchange Commission to regulate the market more strictly.

Lofgren’s comments, made at a Democratic National Convention panel in August in Denver, carry weight because of her legislative track record and her role as chair of the House Judiciary Subcommittee on Immigration, Citizenship, Refugees, Border Security, and International Law Membership.

Lofgren this year cosponsored legislation (HR 5994) amending the Clayton Act to enforce net neutrality—a policy that would prohibit broadband providers from using their discretion when managing content that moves through their networks. She also cosponsored legislation (HR 5353) requiring the Federal Communications Commission to study consumer tech issues with an eye toward more regulation. Neither bill has made it out of committee.

More Regulation with Obama

Lofgren will have great influence over the federal government’s approach to the tech sector if Sen. Barack Obama (D-IL) wins the presidency and the Democrats build on their majority in Congress. That concerns market analysts.

“Once the federal government camel gets it nose in the tent of the Internet, the other thousand pounds of the animal are sure to follow,” said Ken Ferree, president of the Progress & Freedom Foundation.

“One can expect that an Obama administration will be more inclined to regulate the Internet,” Ferree said. “They will do so in the name of fairness, but at the end of the day it will mean that the government will have more of a hand in picking Internet winners and losers. There is no such thing as just a little government regulation.”

Ferree points out some of Lofgren’s proposals would likely receive a warm welcome from the tech sector. The Silicon Valley legislator proposed changing the Sarbanes-Oxley Act of 2002 to soften the current regulatory environment that has led to economic difficulties for tech startups. In addition, Lofgren has sponsored several bills seeking a permanent moratorium on Internet access taxes.

Ferree said such measures would appropriately allow the market to reward people for “taking risks with capital.”

“The United States has the strongest hand to play in the international technology market,” Ferree said. “We should not be talking about folding our hand and effectively exiting the game by erecting barriers to foreign goods.”

Immigration Differences

Ferree and Lofgren share a concern about immigration restrictions the congresswoman said are “undermining our own technology economy.” Lofgren has been pushing for eased restrictions on immigrants with advanced tech degrees.

“We bring smart people here, educate them in our universities, and then kick them out while U.S. companies are starved for talented workers,” Ferree said.

New York Law School professor James Grimmelmann sees the role of federal regulations differently, arguing the government should provide “improved education and immigration policies” that would increase productivity in the American workforce.

“The FCC has entrenched the incumbent cable, telephone, and cellular providers in a system that protects them from competition but does not drive them to innovate,” Grimmelmann said.

Competition Debate

And that, experts say, is where the debate is headed: Does the tech industry need the federal government to spur competition through additional regulations, or should we trust the market to do the job?

“The effective level of competition among consumer Internet service providers and telecoms is abysmal, and we are seeing the results of not having competition,” Grimmelmann said.

Ferree disagreed. “The competition between cable modem and DSL services is intense and growing more so every day,” he said. “Increased competition from new entrants [has] improved technologies and enhanced applications for mobile broadband services. It is no coincidence that the United States remains the seat of innovation in all things Internet-related.”

Nicholas Katers ([email protected]) writes from Franklin, Wisconsin.