Information Technology and Innovation Foundation

A key reason for the contentious fight over net neutrality regulation, and the source of its partisan strife, is that the way we classify broadband Internet access for legal purposes could have weighty long-term implications: Do we want a broadband system more like a public utility under Title II of the Communications Act, or do we want to rely on private companies to drive the evolution of broadband, with relatively light oversight from the Federal Trade Commission (FTC)?

To most observers of US broadband policy, the regular and increasingly heated debates in this area appear to be about an evolving set of discrete issues: net neutrality, broadband privacy, set-top box competition, usage-based pricing, mergers, municipal broadband, international rankings, and so on. As each issue emerges, the factions take their positions—companies fighting for their firms’ advantage, “public interest” groups working for more regulation, free market advocates working for less, and some moderate academics and think tanks taking more nuanced and varied positions. But at a higher level, these debates are about more than the specific issue at hand; they are subcomponents of a broader debate about the kind of broadband system America should have.

One side wants to remain on the path that has brought America to where it is today: a lightly regulated industry made up of competing private companies relying on a variety of technologies. Another side, made up of mostly public interest groups and some liberal academics, rejects this, advocating instead for a heavily regulated, utility-like industry at minimum and ideally a government-owned system made up of municipal networks. The Information Technology and Innovation Foundation (ITIF) firmly believes the former model—lightly regulated competition—is the superior one. But if we are to get broadband policy right going forward, it’s this broader strategic issue we need to identify and debate, not just narrow tactical matters.

Broadband networks are a critical part of America’s digital technology system and, as such, the issue of how to continue to drive investment and innovation in these networks is worthy of robust and sustained debate. But the broadband policy debate should be transparent about what it really involves: Is America better off with an ISP industry that is structured the way the vast majority of the U.S. economy is structured (private-sector firms competing to provide the best product or service at a competitive price, with the role of government to limit abuse and support gaps where private-sector competition does not respond), or do we want to transform this largely successful industry model into either a regulated utility monopoly model or government-owned networks? As we ponder this question, policymakers need to understand what the debate is fundamentally about and what is at stake as broadband populists push for each one of their thousand cuts.

One way to accelerate development and adoption of the Internet of Things is for the US federal government to be an early adopter. However, in addition to being an early adopter, the US government has a significant opportunity to support private-sector efforts at building the Internet of Things through other activities, including programs to provide technical resources; strengthen cybersecurity; develop industry-friendly regulations; ensure spectrum availability; support research, development, and demonstration; and coordinate stakeholders. Many of these programs are underway, although they often lack the coordination and scale necessary to support the Internet of Things as completely as possible. The purpose of this report is to shine a light on these activities, so policymakers have a better understanding of what is being done today and where gaps exist.

Now that the election is over, it is time for the prose of governing. In this memo, we revisit the themes of innovation, productivity, and competitiveness, and we offer a set of actionable proposals that the new administration can accomplish in its first year through executive authority or by working with Congress on discrete legislative measures that would be comparatively easy to accomplish. Cutting across all of our recommendations is a basic recognition and a core conviction: America’s economic future will depend on successfully driving innovation, productivity growth, and competitiveness, and to do that, the federal government will need to adopt new and more creative approaches to public policy.

[Commentary] Republicans all too often focus on limiting or denying government’s contributions to bolstering US innovation and competitiveness, while Democrats often seem more interested in shackling rather than harnessing the power of American enterprise. Each side argues that if the country would just pursue the menu items in their respective agendas, then US competitiveness and innovation will be restored and all will be well. But there are two major problems with these perspectives.

First, because neither side wants the other to receive credit for their items, little gets done. Second, even if one side would acquiesce to the other to get some things done, it would not be enough. We need a wide array of policy reforms. Each side ultimately must bend if we are to restore or maintain US economic greatness. In general, the left needs to accept the fact that successful companies that innovate and compete globally are not the enemy, and that public policy should help companies succeed in creating new products, services, and jobs domestically. For its part, the right should abandon its opposition to government’s role in promoting competitiveness. All the tax cuts and regulatory relief in the world will not enable the United States and its enterprises to succeed in global competition if the country lacks a robust national innovation policy that includes partnerships with the private sector.

[Commentary] A free and open Internet is not antithetical to website blocking, as not every website—those actively facilitating child pornography or terrorism are two examples—has a right to exist. Blocking websites to stop copyright infringement should not be considered any differently.

The Federal Communications Commission’s recent proposal to impose a sweeping new privacy regime on broadband Internet services has sparked debate over whether or to what extent providers should be able to offer discounts in exchange for permission to use consumer data commercially.

Critics decry the concept as “pay-for-privacy” and argue it ought to be banned, even when the data is anonymized. But the truth is prohibiting price differentiation would hurt consumers and slow broadband adoption. This type of price differentiation based on exchange of consumer information is an incredibly common cornerstone of online activity. The gathering of user-information allows many online services to be made available for free. Consumers benefit this arrangement, and many would gladly choose a discount in the context of broadband access as well, even if it doesn’t make the service completely free. Consumers privacy preference vary considerably, but can be placed into three general categories: privacy fundamentalists, who guard their privacy carefully; those unconcerned about their privacy; and the largest group, the privacy pragmatists, who are willing to share their personal data in exchange for benefits. Advocates calling for a ban on financial inducements to share broadband data speak only for the fundamentalists. A prohibition would adversely affect the great majority of U.S. citizens willing to consider the tradeoffs involved in sharing their data, especially when direct savings are involved. These advocates seek to deny consumers choice in the matter, and based on unfounded hypotheticals.

The FCC should recognize that privacy-based discounts clearly have the potential to benefit consumers and refrain from limiting the use of this practice by broadband providers.