Reporter's Notebook

Paul Leonard can be reached at pleonard@vbjusa.com

A few words on regulation

In the annals of human history, it’s unclear when government regulation of commerce first began.

Was it Hammurabi of Babylon, author of his famous Code, written in Tigris River clay? Or the Roman Senate, spelling out the laws on long scrolls in ink?

However it was handed down, it’s a good bet that wherever there’s been regulation, there’s been a business owner scratching their head trying to make heads or tails of what surely must be, behind taxes, the most problematic of all human inventions.

In our own day, after a 30-year period of retreat beginning with the Reagan Administration, government intervention in U.S. markets has begun to stage a comeback.

The latest sign of the changing times came courtesy of the Federal Communications Commission, which this week proposed to reclassify the Internet as a telecommunications service, thus subjecting web traffic to increased federal regulation.

In this case, the stakes are high for all Internet users, not just businesses. After 30 years of what technology policy director Carl Gipson of the Washington Policy Center called a “lite-touch” web regulatory regime, Internet service networks have enjoyed phenomenal growth, with broadband penetration into U.S. homes at 57 percent in March 2008, up from 23 percent in December 2003, according to Leichtman Research Group.

Though Google supports the FCC’s proposed regulatory changes, calling it a “middle ground approach,” the Internet Service Providers responsible for building, expanding and maintaining broadband networks oppose the plan as stymieing innovation and investment.

Meanwhile, businesses looking to compete in an increasingly-integrated global economy are becoming more and more reliant on high-speed broadband – with many companies shedding in-house servers in favor of “cloud” storage of crucial documents, programs and services.

The fight between ISPs and the FCC and its allies highlights a question posed by businesses since at least as far back as ancient Babylon: How much regulation is too much?

With federal regulation of a $182.2 trillion derivative market looming, that’s a question in need of an answer all business owners and investors can get behind – and most importantly, profit from.