Brookings

[Commentary] There are economic issues that may arise as the “internet of things” IoT matures; Here are six that bear watching:

1. Economic Productivity: some believe now that IoT can boost productivity growth by increasing the efficiency of traditional business operations such as manufacturing, transportation, and retail.
2. The Nature of Competition: In antitrust terms, many more kinds of products and services could occupy adjacent levels of a value chain in a “vertical” relationship. This occurs where consumer demand for two products is closely related.
3. How open will IoT be? History suggests that policymakers may scrutinize any IoT players that wield excessive power over consumers, perhaps in the antitrust context or as a separate question of regulation.
4. Who Owns Big Data, Your Data? Big banks and Silicon Valley are waging an escalating war over your personal financial data.
5. Standards Set Terms of Competition: An established standard can boost competition by allowing different devices to communicate with each other. It can also grant the winner a big marketplace advantage.
6. Economic Regulation and the Impact on Competition: Regulation can either intentionally or inadvertently shape competition.

[Sallet is a visiting fellow at Brookings in Governance Studies. Previously, he served as deputy assistant attorney general for Litigation at the U.S. Department of Justice’s Antitrust Division from 2016-17. Prior to joining the Division in 2016, Mr. Sallet was general counsel at the Federal Communications Commission.]

Beyond communication, smartphones have become indispensable for everything from banking to transportation in the decade since the launch of the iPhone. Through mobile broadband or Wi-Fi, smartphones deliver internet access that is increasingly important in today’s economy. The devices can also improve healthcare outcomes by reminding patients of their appointments and treatments. Given the ability of smartphones to connect users to government services, lawmakers should consider making them more widely available.

The North American Free Trade Agreement (NAFTA) with Canada and Mexico is expected to be at the top of the list for renegotiation under the Trump Administration. The treaty’s telecommunications provisions include a “bill of rights” for providers and users of telecommunications services that cover access to public telecommunications services; connection to private lines that reflect economic costs and availability of flat-rate pricing; and the right to choose, purchase, or lease terminal equipment best suited to their needs. These free-market principles reflect American values.

Barriers such as international roaming rates for mobile calls, restrictions on cross-border transfer of digital information (such as electronic payments and digital signatures), and the forced localization of data centers have a detrimental impact on American companies. Consequently, the Trump Administration would be well-advised to advocate for a broader bill of rights that adheres to the notion of freedom of choice. It should uphold the ability of US companies to offer their world-class information services in Canada and Mexico. Such a position may be easier to gain in a renegotiated agreement since the other items on the NAFTA version 2.0 agenda (e.g., tariffs) undoubtedly will receive greater scrutiny and are likely to be far more contentious.

The public interest standard has governed broadcast radio and television since Congress passed the Radio Act of 1927. However, decades of successive court cases and updated telecommunications laws have done little to clarify what falls into the public interest. The Radio Act gave local broadcasters monopolies over specific channels of electromagnetic spectrum to reduce interference on public airwaves. In exchange for control over a limited resource, the text of the law instructs broadcasters to operate in the “public interest, convenience, and necessity”. A recently released paper by Center for Technology Innovation Nonresident Senior Fellow Stuart N. Brotman outlines the legislative, judicial, and regulatory history of this public interest standard and offers some recommendations for how it might be reformed.

For the first time in 25 years, Congress conducted hearings in Feb to reauthorize the National Telecommunications and Information Administration (NTIA). This Department of Commerce agency is tasked with advising the president on matters related to telecommunications and information policy. Consequently, its influence reaches the White House, either directly or through its sub-cabinet reporting structure. This makes NTIA a unique agency with two masters, able to speak on behalf of the executive branch or even the president himself under appropriate circumstances.

NTIA’s current budget appropriation is $39.5 million. This represents the tremendous bang for the buck that NTIA has delivered, as illustrated by these examples spanning several decades. The vital role that telecommunications and information plays in job creation and economic growth makes an easy case for why the agency should continue to receive sufficient financial resources. Equally important, the Trump Administration’s to-be-named NTIA Administrator should bring a zeal for keeping the agency both relevant to our times and important to the President’s own policy initiatives.

Who has access to broadband in America, and who reaps the benefits of broadband competition? Data from a recent Federal Communications Commission study provides insights into both important questions.

First, the importance of access. For the very first time, the FCC concluded in 2015 that the disparity between urban and rural access to broadband provided the basis for direct agency action. Time has proven that conclusion right – and increasingly important. As my colleague Nicol Turner-Lee recognized immediately after the 2016 election, the Americans who lack access to broadband services – more rural, more middle income, less likely to have attended college – are the same ones who voted for change in economic policies.

Second, the question of marketplace competition is important as well. It can be tempting to accept the view that, in an environment of scarce government resources and competing interests, merely ensuring broadband access from a single provider is enough – especially as an improvement on a status quo with little or no access at all. History tells a cautionary tale, though. In 1913, the U.S. Department of Justice settled an antitrust lawsuit against AT&T by essentially accepting AT&T’s monopoly in exchange for the build-out of the nation’s telephone system. AT&T worked hard to uphold its end of the bargain, but it was decades before competitive markets were free to serve consumers, stimulate innovation, and avoid unnecessary regulation. In other words, as a nation, we should embrace both expanded broadband deployment and expanded broadband competition. Without competition, the pressure from consumers for better and cheaper broadband will naturally ease, and rural America could fall even further behind.

[Commentary] This is the Scientific Revolution, but part of its reawakening is the recognition that truth-finding forms the basis for technological innovation, for capitalism and for democratic rule. All rest on the single, and simple, concept that individuals matter and that the very ability of individuals to think for themselves creates scientific propositions to be tested, technological innovations to be imagined, market outcomes to be respected and democratic outcomes to be treated as legitimate – even outcomes that some voters may deeply regret.

The March for Science on April 22 is not about partisan politics; it’s a time to stand on the shoulders of giants. And to remind ourselves to see what they foresaw.

[Jonathan B. Sallet is a visiting fellow in Governance Studies. Previously, he served as deputy assistant attorney general for Litigation at the US Department of Justice’s Antitrust Division from 2016-17. Prior to joining the Division in 2016, Sallet was general counsel at the Federal Communications Commission.]

The underappreciated but critically important E-Rate program faces a fork in the road in 2017. Created during the Clinton administration, E-Rate originally intended to make it easier for schools to purchase dial-up internet connections. However, the program languished for many years while internet and education technologies improved by leaps and bounds. In 2014, the Obama administration revamped the program by nearly doubling the available funding and incentivizing the adoption of 21st-century technologies. The funding mechanism and presumably better E-Rate results portend a positive year for the program, though political uncertainty under a new administration signals there may be some rough waters ahead.

E-Rate does not receive funding from the standard congressional appropriations process. A 1996 law requires telecommunication companies to contribute to the Universal Services Fund, which in turn provides the funding for E-Rate and other programs. Overall, this arrangement is equivalent to a tax, but it’s insulated from the tumult of the congressional budgeting process. The unique funding mechanism decreases the likelihood that E-Rate would attract negative attention from congressional Republicans. However, the new Republican leadership at the Federal Communications Commission could choose to cut spending. Returning E-Rate funding to pre-Obama reform levels, but keeping most of the modernization reforms, would be compatible with the position of new FCC Chairman Ajit Pai, a Republican. Pai has explained that his 2014 vote against the Obama E-Rate reforms was due to concerns about financial waste in the program rather than questioning the overall usefulness of the program.

Governments hoping to evade responsibility for war crimes and rights abuses are having a much tougher time of it these days. Denying entry to nettlesome investigators is still standard while many places are simply too dangerous to investigate. But even where investigators cannot go, digital technologies can sometimes overcome barriers to investigation.

A recent Harvard Kennedy School report published by the Carr Center for Human Rights Policy underscores how various digital technologies undermine attempts to hide abuses and war crimes. Commercial high-resolution remote sensing satellites, some capable of distinguishing objects on the ground as small as 30-cm across, allow human rights groups to document military forces deployments, mass graves, forced population displacements, and damage to physical infrastructure.

One unreported item regarding President Trump’s nominee for the US Supreme Court, Judge Neil Gorsuch of the US Court of Appeals for the Tenth Circuit, is that he would bring more private practice exposure to telecommunications law to the court than anyone in history. Judge Gorsuch spent a decade at one of DC’s premier law firms, Kellogg, Huber, Hansen, Todd, Evans & Figel PLLC. According to Vault, a reference source that profiles leading law firms, Kellogg Huber Hansen has “a particular depth of experience in the telecommunications industry, representing companies like Verizon and AT&T in both court litigation and dealings with the FCC.” This environment, which Gorsuch experienced daily as a practitioner, likely helped shape his view regarding the power of the Federal Communications Commission (FCC) and other federal agencies involved in regulatory decisionmaking.

At least as far as judicial review of FCC and other agency matters, Gorsuch clearly represents a philosophy that is more skeptical of regulatory overreach and more deferential to Congress. This may send a mixed message for political conservatives who are supporting his nomination—less regulatory intrusion, but perhaps a more activist judiciary. For political liberals, Judge Gorsuch’s assertion of a more powerful role for courts might inspire greater confidence that he would check executive authority by the Trump administration and its successors during what may be his very long tenure on the Supreme Court.