Because every American
should have access
to broadband Internet.

The Internet Innovation Alliance is a broad-based coalition of business and non-profit organizations that aim to ensure every American, regardless of race, income or geography, has access to the critical tool that is broadband Internet. The IIA seeks to promote public policies that support equal opportunity for universal broadband availability and adoption so that everyone, everywhere can seize the benefits of the Internet - from education to health care, employment to community building, civic engagement and beyond.

The Podium

Blog posts tagged with 'Economy'

Wednesday, November 19

The Economic Reality of Title II

By Bruce Mehlman

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“The Impact of Title II Regulation of Internet Providers On Their Capital Investments” is a 22-page study penned by economists Kevin A. Hassett and Robert J. Shapiro. It was submitted to the FCC as part of an ex part by the US Telecom Association. If you care about the future of the Internet, you need to add it to your reading list.

For the study, Hassett and Shapiro approached the question of Title II reclassification armed with numbers. Specifically, an alarming drop in projected private investment should the FCC choose to reclassify. As the economists write:

If the status quo continues, with data services unencumbered by Title II regulation, the several ISPs in our sample are expected to spend approximately $218.8 billion in new capital investments over the next five years in their wirelines and wireless networks. In contrast, under Title II regulation of all wireline data services, these ISPs’ wirelines and wireless capital investments over the next five years would drop an estimated range of $173.4 billion to $190.7 billion. Title II regulation of ISPs thus reduces these companies’ total investments by $28.1 billion to $45.4 billion (between 12.8 percent and 20.8 percent) over the next five years. Wireline investment by these firms would be 17.8 percent to 31.7 percent lower than expected.

That’s a lot of numbers with the word billion attached, but the main focus should really be on the percentages. You don’t have to be an economist to realize that a reduction of total investment dollars of 12.8 percent to 20.8 percent (and wireline investment dollars of 17.8 percent to 31.7 percent) would have a profound effect on America’s communications infrastructure. And by profound, I mean decidedly negative — not just for network expansion and upgrades, but for innovation across the Internet board.

The blow to innovation, Hassett and Shapiro argue, would be particularly hard on wireless networks. Again, from the study:

[T]he network managements practices which Title II regulation would potentially bar enable wireless investment and innovation, because wireless networks face serious capacity constraints. Thus, regulations that discourage or bar those practices raise the risk of introducing new products and applications: Without those practices, carriers would be less able to manage unpredictable changes in network demand associated with their introduction, and so maintain the quality of network services for all of its users.

In other words, the next big app or service could cripple wireless networks, and under Title II, providers would be hamstrung by regulations to solve the problem in a timely manner. Want to launch an innovative new streaming video app? Good luck gaining users when your app meets a road block of network congestion.

Too often the debate surrounding net neutrality is one of extremes, and I freely admit the above scenario falls within that category. But also too often, the economic realities of building, upgrading, and maintaining networks are either ignored or downplayed. Net neutrality doesn’t have to be an emotional issue; we all benefit from the Internet continuing to be open. The question is, how best do we ensure that happens while at the same time encouraging the investment necessary to keep networks growing. As Hassett and Shapiro’s study makes clear, the numbers show Title II would do more damage than good.

Thursday, June 26

Heavy Investors

By Brad

Via Mike Dano of Fierce Wireless, a new report predicts that investment in wireless networks won’t be slowing down anytime soon — assuming policymakers don’t throw a wrench in a well-oiled machine, that is. As Dano writes:

According to a new report from the Telecommunications Industry Association, U.S. wireless carriers will spend a total of $159.3 billion on wireless network equipment and infrastructure during the next four years, up fully 40 percent from the $113.9 billion in cumulative spending during the previous four years.

Wireless carriers have been some of the biggest investors in America’s economy for years now, which is one of the reasons placing heavy-handed regulations on the industry is a really bad idea.

Wednesday, January 08

Number(s) of the Day

By Brad

$480 million and 20,000, which is the amount and number of projects crowd-funding startup Kickstarter handled in 2013. Not too shabby for a company just a few years old. Just goes to show how an idea and an Internet connection can create an entire industry seemingly overnight.

Monday, December 02

Happy Clicking

By Brad

Today is “Cyber Monday,” the busiest online shopping day of the year. As Mae Anderson of the Associated Press reports, retailers are expecting big things this year:

The National Retail Federation, a trade group, predicts more than 131 million people will shop online on Monday, up about 2 percent from last year.

And research firm comScore expects Cyber Monday expects sales of $2 billion, up from about $1.47 billion last year. Online sales account for about 10 percent of total holiday spending, which is expected to grow about 3.9 percent to $602.1 billion for the months of November and December.

Not too shabby, considering Cyber Monday has only been around since 2005. Of course, as we’ve shown with our annual “Top Ten Areas of Saving” report, shopping online can save you a bunch of cash every other day of the year too.

 

Tuesday, October 29

Our Updated Cost Savings Infographic

By Brad

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Visit here for the methodology and an embed code.

Thursday, September 19

Graphic of the Day

By Brad

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The U.S. Investment Heroes of 2013, courtesy of the Progressive Policy Institute.

Leading in Investment

By Bruce Mehlman

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Today, the Progressive Policy Institute released its 2013 list of Investment Heroes. This year, like last year, the telecom and cable sector is a big winner. 

AT&T and Verizon once again lead the way in domestic investment, and telecom is second only to the booming energy sector in total U.S. investment. PPI shows that these two companies combined invested nearly $34.5 billion to build-out nationwide high-speed broadband networks and infrastructure. AT&T alone invested almost $19.5 billion. As a sector, telecommunications and cable invested $50.5 billion last year, over a third of the nearly $150 billion invested by the Fortune 150 last year. Such levels of investment are remarkable, but not surprising. With each passing day, Americans witness and benefit from the emergence of the nation’s “data-driven economy,” all driven by U.S. telecom and technology company capital investment. Our data-driven economy is at the forefront of creating new jobs in entirely new industries — like mobile apps — and is a driving force in improving cost structures and the delivery of services in sectors such as healthcare, education, and agriculture.

Broadband providers have done their part to improve the path to economic recovery, demonstrated by their significant investments in America.  The progress we’ve seen, however, needs to continue. Billions of dollars of additional private investment is necessary to bring ubiquitous high-speed broadband to every American.

For this to take place, government should adopt policies that create an environment for sustained investment. As PPI notes, government can ensure that upcoming FCC wireless spectrum auctions proceed in an open manner and allow all carriers to bid equally and without restrictions. No one company should be given favored treatment to the disadvantage of its competitors. Moreover, government can also proactively promote additional investment by eliminating existing regulatory barriers and helping to speed the upgrade and modernization of our nation’s antiquated telephone networks, so that more Americans can benefit from the high-speed Internet and video services that next generation broadband networks offer.

It is uncertain that the nearly $50.5 billion in existing telecom and cable investment will continue unless government helps promote additional regulatory and business certainty by adopting wise and timely pro-market investment policies. In the meantime, we owe our gratitude and thanks to the tech and telecom companies who invest in America and help spur innovation, create jobs, and contribute the nation’s economic growth. 

Top 25 Nonfinancial Companies by Estimated U.S. Capital Expenditure

1. AT&T - $19.5 billion
2. Verizon Communications - $15.0 billion
3. Exxon Mobil - $12.2 billion
4. Chevron - $10.7 billion
5. Intel - $8.8 billion
6. Walmart Stores - $8.3 billion
7. Occidental Petroleum - $7.6 billion
8. ConocoPhillips - $6.1 billion
9. Exelon - $5.8 billion
10. Comcast - $5.7 billion
11. Duke Energy         - $5.4 billion
12. Hess - $4.7 billion
13. Sprint Nextel - $4.3 billion
14. Union Pacific Railroad - $3.7 billion
15. General Motors - $3.7 billion
16. Enterprise Products Partners - $3.6 billion
17. Time Warner Cable - $3.1 billion
18. Microsoft - $3.0 billion
19. Amazon - $2.9 billion
20. CenturyLink - $2.9 billion
21. Ford Motor - $2.7 billion
22. Walt Disney - $2.7 billion
23. FedEx         - $2.6 billion
24. Apple- $2.6 billion
25. Target - $2.3 billion

Total Economic Investment - $149.8 billion

Monday, September 16

The Public Twitter

By Brad

Last week, Twitter announced it would be filing for an IPO. At Ars Technica, Casey Newton breaks down how going public could change the social networking company. For the most part the move could benefit both Twitter and users, but as Newton points out, there are some potential landmines:

A focus on new business lines could distract the company from the product that brought everyone to Twitter in the first place. Continued changes to the timeline could alienate the user base. And the company’s plans to rule the mobile advertising world could be swatted aside by Google, Facebook, or another competitor.

There’s also the looming question of what becomes of Twitter’s third-party clients, like Twitteriffic and Twittelator. The apps run without advertising, making them free riders on Twitter’s ecosystem, and are widely viewed as an endangered species. Going public may add pressure on Twitter to eliminate apps whose own view of the service increasingly differs from its own.

Wednesday, August 28

The New Advertising Boom

By Brad

Over at GigaOm, Om Malik reports that Facebook seems to have the whole advertising thing down:

Facebook will nearly triple its share of global mobile advertising in 2013 compared to 2012, according to research firm eMarketer. They forecast that Facebook will have about 15.8 percent of the total global ad market, ahead of Pandora, Twitter and others. Google, however, is still the big kahuna with 53.17 percent of the overall market, up from 2012.

Malik also reports that mobile ads across the board are set to reach $16 billion this year, a jump of close to 90% from 2012. Not too shabby for a market that was struggling just seven years ago. That’s the power of mobile broadband for you.

Monday, June 24

Lively Debate Reveals Need for Careful Decisions, Fast Action

By Bruce Mehlman

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This week, the Washington Post hosted a live panel discussion titled “Spectrum Supply and Demand.” Debate was lively; however, there was no disagreement on the need for additional spectrum for the nation’s wireless and digital economy. When leaders of industry, competing companies, and government can agree on anything, it is worth taking notice.

Spirited discussion on the panel regarding wireless policy shared a common premise: The urgent need for more spectrum, a valuable resource that has transformed industries and lives. Additionally, most panelists argued that government action can help by reallocating spectrum for commercial wireless use.  Debate arose, however, on the specifics and details of where and how to get more spectrum.

Wireless carriers can acquire more spectrum in three ways: by auction, through government reallocation of spectrum and transfers of spectrum between private entities. The FCC will conduct an incentive auction within the next year or two that will provide broadcasters the opportunity to sell some of their spectrum to mobile carriers. Secondary market transactions allow wireless providers to sell spectrum to other companies who are equipped to use that resource to serve consumers quickly.  Both options present a number of challenges not the least because they both rely on government management.  Government is the largest holder of spectrum and has the power to bring that to market for consumer use.

On-going inaction by government quickly emerged as a shared frustration, prompting an energetic discussion about the government’s role in reallocating spectrum for consumer use. Initiatives to reallocate government spectrum for consumer use and the need for speed, according to many on the Washington Post panel, are long overdue. 

President Obama recently released a Memorandum calling for a federal spectrum inventory to identify possible opportunities for allocation of federal spectrum for consumers. This new initiative could present potential solutions, yet panelists were not hopeful that it would provide a quick fix to the existing spectrum crisis. At bottom, the inventory would help in providing an authoritative account of how much spectrum exists and who holds it within the federal government. Hopefully this will result in meaningful action by government not only to complete an inventory of spectrum but take steps to reallocate spectrum for consumer high-speed broadband use to help stave off the imminent spectrum crunch poised to impact America’s cities, including Washington DC, New York, Chicago, Los Angeles and San Francisco as soon as the next year.

The FCC’s upcoming incentive auction presents a faster solution to the spectrum problem but with no less controversy. Auction design provoked spirited reactions from the panelists. Congress previously mandated that qualified bidders could not be prohibited from participating in the auction and that a portion of the auction proceeds would fund FirstNet, a nationwide public safety broadband network for America’s first responders. As FCC Commissioner Ajit Pai emphasized during the panel, the auction rules must be designed so that the auction is successful for buyers, sellers, public safety and the U.S. Treasury.  A complex endeavor.

With this in mind, many believe auction rules should be structured to maximize both participation and proceeds. Establishing fair rules that allow all carriers to participate without restriction will capitalize on the hypercompetitive state of the wireless market. If certain bidders are limited by rules that prevent them from buying needed spectrum (counter to Congressional intent), then auction proceeds would be reduced, jeopardizing revenues, broadcaster participation, and FirstNet’s funding.

By contrast, some panelists favor restrictions on bidding. However, that would lead to reduced proceeds and likely not guarantee greater competition. The companies that would most benefit from bidding restrictions, T-Mobile and Sprint, are both well equipped with spectrum and well-funded by their parent companies. For instance, T-Mobile is owned by Deutsche Telekom, a partly state-owned German company, and by the time the auction takes place, Sprint could have a well-capitalized foreign owner under Japan-based SoftBank. Both companies can reasonably be expected to bid competitively for valuable spectrum without U.S. government intervention to favor their spectrum acquisition goals.

The mobile revolution has transformed modern life and the American economy, and it will inevitably dynamically shape the future, too. But without additional spectrum to meet consumer demand, this could all be at risk. Leaders from a variety of companies, organizations, and government entities agree with that fundamental premise. Yet the mobile revolution can’t change an underlying fact: Ensuring both highly competitive bidding and fair, open rules of the auction will increase the benefits to our country’s broadband infrastructure, and ultimately, to U.S. consumers.

Thursday, June 20

Pushing For Skilled Workers

By Brad

With Immigration Reform a hot topic inside the Beltway, Jennifer Martinez of The Hill reports the effort is getting a big boost from some big players in the tech industry:

More than 100 top tech executives and heads of tech trade organizations — including Yahoo CEO Marissa Mayer and Cisco CEO John Chambers — urged senators to pass the Gang of Eight’s immigration bill in a letter sent to The Hill on Thursday.

The tech leaders said the measures in the bill will help companies fill thousands of empty technical jobs with skilled workers and also address the current skills gap in the United States by creating a so-called STEM fund that’s dedicated to improving American education programs in science, technology, math and engineering. The money for the STEM fund would be culled from higher fees that companies would have to pay under the bill for visas for highly skilled workers.

Also signing the letter were leaders from Google, Facebook, and Microsoft. The letter Martinez cites is available here.

Thursday, May 23

The Mobile Shopping Experience

By Brad

Sue Marek from Fierce Wireless reports that the world’s biggest retailer is putting a lot of focus on mobility:

Walmart is looking to mobile technology to redefine the shopping experience for its retail customers. Speaking at the CTIA Wireless 2013 conference today, Gibu Thomas, global head of mobile at Walmart, said that the company’s goal is to create mobile tools that are “indispensable for the customer when shopping in our stores.”

Specifically, Thomas said that the company will leverage big data to do such tasks as develop automatic shopping lists and other advanced capabilities that will improve the shopping experience.  “Our goal is to create shopping tools that are second nature,” Thomas said. “The true power of mobile is re-inventing capabilities with mass appeal.”

Monday, May 20

The Tech Boom

By Brad

Via Zack Colman of The Hill, Ben Bernanke is bullish on the tech sector:

Federal Reserve Chairman Ben Bernanke touted innovation and information technology as drivers of economic change in a Saturday commencement speech at Bard College in Massachusetts.

Humanity’s capacity to innovate and the incentives to innovate are greater today than at any other time in history,” he said.

Bernanke also touted advancements in biotech, health care, and clean energy as helping keep the tech boom from becoming a bubble.

Monday, April 29

Tweeting a Crash

By Brad

When the Associated Press’ Twitter account was hacked last week, false tweets that the White House had been attacked led to a tumble in the markets. Examining the fallout, Amy Chozick and Nicole Perlroth of the New York Times report financial institutions are taking a good look at the effect social media can have on the stock market:

On Tuesday, the Commodity Futures Trading Commission plans to hold a public meeting in Washington with a couple of dozen high-frequency traders to discuss whether there should be additional safeguards to protect against the effects of social media on markets.

Even as markets rebounded on Tuesday, some investors lost money on the quick decline while others made money if they bet on a sharp drop.

“In 2010, we passed Dodd-Frank, the big financial reform bill, but nowhere in there do they mention high-speed trading or technology,” said Bart Chilton, a member of the trading commission. “That’s how quickly markets are morphing. Now, here we are three years later, woefully unprepared.

Monday, April 22

A Legion of Coders

By Brad

Over at Read Write Web, Lauren Orsini looks at the growing market to teach non-techies how to code:

Within the last two years, more and more companies have saturated the market with the express purpose of teaching everyone and anyone our generation’s hottest new job skill: programming. Now it’s become a fundraising race to the top of the pile.

This April, learn-to-code startup Treehouse announced that it raised a “war chest” of new funding. In a Series B round led by Kaplan Ventures, the Portland, Ore., company added another $7 million, for a total of $12.35 million.

For CEO and founder Ryan Carson, the money couldn’t have come at a better time. Competition between learn-to-code startups is rising, and Carson plans to press his advantage by adding more employees to Treehouse’s current 55 workers.

Friday, April 19

Telecom Undergirds the Entire Economy

By Brad

Our Co-Chairman Jamal Simmons recently talked with Marc Strassman of Etopia News about our look at the evolution of March Madness online, the IP transition, the need for spectrum dedicated to wireless, and more. Here’s the final clip.

The full interview is available at Etopia News.

Tuesday, April 16

Building Out Broadband Will Be Big Economic Boost

By Brad

Our Co-Chairman Jamal Simmons recently talked with Marc Strassman of Etopia News about our look at the evolution of March Madness online, the IP transition, the need for spectrum dedicated to wireless, and more. Here’s one of a number of clips we’ll be posting over the next few days.

The full interview is available at Etopia News.

Thursday, March 07

Commissioner Pai Strongly Supports Pilot Programs for IP Transition

By Brad

At an event hosted by the Hudson Institute earlier today, FCC Chairman Ajit Pai discussed the transition to all-IP networks. During his speech, Pai spoke of two paths the Commission could take when it comes to regulations and technology. One path is rooted in the past — and outdates rules — that could hinder investment and innovation. The other path leads to the future, or the “all-IP world,” as he called it, which has great benefits for health care, education, public safety, and most of all consumers.

Noting that the FCC up until now had a foot on each path, Pai didn’t shy away from his belief that the Commission should be working toward the future, stating the FCC’s decisions around the IP transistion will have “dramatic and real world consequences.” He then made plain his preference for a pilot program — put forward to the FCC by AT&T — to upgrade legacy copper networks to all-IP. As John Eggerton of Broadcasting & Cable reports:

“The FCC has sought and received comments on a proposal to create an All-IP Pilot Program,” Pai said in a speech to the Hudson Institute. “I’ve reviewed the record carefully. And having done so, I am proposing today that the FCC move forward with this program.”

Pai also noted that in 2011 alone, there were over 317 million wireless connections in the U.S., and at least 47% of all households had “cut the cord” — meaning, dropped traditional landline service in favor of wireless or VoIP. This, he joked, pointed to the IP transition being as “inevitable as another reality series starring a Kardashian.”

You can watch a replay of Pai’s speech here.

Wednesday, March 06

Genachowski on Spectrum Auctions

By Bruce Mehlman

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In today’s Wall Street Journal, FCC Chairman Julius Genachowski goes over the many steps the Commission is taking to free up more spectrum from wireless use. Calling broadband the “engine for economic growth,” he starts out his op-ed by backing up that statement:

To sustain long-term economic health, America needs growth engines, areas of the economy that hold real promise of major expansion. Few sectors have more job-creating innovation potential than broadband, particularly mobile broadband.

Genachowski then highlights how the U.S. now leads the world in 4G LTE deployment (along with the fact that private investment in mobile infrastructure is “more than 50% higher than in Europe”), but warns that in order to keep both deployment and investment happening, more airwaves are critical. As he writes:

Spectrum is finite, and the demand for airwaves being created by data-hungry, Internet-connected devices is on pace to exceed supply. How significant is the spike in demand? Today’s smartphones generate 50 times more mobile traffic than a traditional cellphone. For tablets, it’s 120 times more traffic. As a result, American wireless networks are running at the highest utilization rate of any in the world.

One solution to this problem, Genachowski tells readers of the Journal, is the Commission’s upcoming spectrum incentive auctions, which have the potential to both free up airwaves and deliver much needed revenue to the Federal Government. That’s potentially a win-win, as they say. But as our own Rick Boucher wrote this past February, the key to making the FCC’s initiative successful for consumers and the economy is ensuring spectrum auctions are open to all bidders. Boucher:

History has shown that when the FCC has tried to pick winners and losers in the wireless market, American consumers have lost. Past attempts by the Commission to favor certain bidders and/or impose rigid regulations on auction winners have drastically diminished auction proceeds, left major blocks of spectrum unused, and led to what FCC Chairman Julius Genachowski himself has labeled “America’s looming spectrum crisis.”

The simple truth is America’s wireless industry continues to be fiercely competitive… Allowing the FCC to impose conditions on spectrum auctions will not make the industry more competitive. And the spectrum critically needed by all providers to keep up with increasing demand will not be put to its full use, leading to spectrum shortages, reduced investment and innovation, and higher prices for consumers.

Only through truly competitive, open spectrum auctions will America’s wireless industry continue to thrive. After all, the best way to ensure competition is to encourage everyone to compete.

Genachowski and the entire FCC deserve praise for their tireless work to keep this critically important issue on the front burner. But given mobile broadband’s benefits — not just to consumers and the economy, but to communities, education, and the health care industry — ensuring spectrum incentive auctions are open to all those willing to make the substantial private investment to keep rapid deployment going should be at the top of the list. As Genachowski himself wrote in his op-ed:

Private-sector innovation in mobile broadband has been extraordinary. But maintaining the creative momentum in wireless networks, devices and apps will need an equally innovative wireless policy, or jobs and growth will be left on the table.

Monday, March 04

Number of the Day

By Brad

19, which is the number of financial institutions that reported a “cyberassault” last year. As Ellen Nakashima and Danielle Doulas of the Washington Post report:

Almost all reported that they were targeted in last year’s highly publicized “distributed denial of service attacks” (DDOS) — efforts to disrupt access to Web sites by barraging servers with computer traffic. The assaults, which are ongoing, made headlines in the fall when U.S. officials said they believed they were launched by the Iranian government in retaliation for sanctions imposed because of Tehran’s nuclear program.

Nakashima and Doulas go on to say that some analysts calculate the cost of dealing with these attacks in the “hundreds of millions.”

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