The Big Story: Internet affordability funding to run out, reversing progress on digital divide
This week, supporters of a federal subsidy for high-speed Internet are making yet another effort to save the program expected to run out of funding later this month. White House officials, the Federal Communications Commission, and hundreds of outside groups are urging Congress to extend the Affordability Connectivity Program (ACP) to continue making high-speed Internet service less expensive for families. Without additional funding, the program is set to expire on April 30, impacting over 23 million households and the startup ecosystem. Despite bipartisan support for the program’s extension, legislative action has stalled, and millions of Americans are at risk of no longer affording the access they need to conduct their lives.
Affordable broadband access is critical for startup founders across the country and the ACP plays a key role in closing the digital divide for startups and diverse communities, as we highlight in a new blog post this week. Startups, their founders, and their users reside in communities all across the country, but they do not enjoy equitable access to Internet services. Without programs like the ACP to make Internet service more affordable, some communities are unfairly shut out of the startup ecosystem, hindering innovation and economic growth. For example, Charisse Smith, founder of Columbia, Missouri-based virtual tour software company CAPTVR3D, recently highlighted insufficient broadband access as a limitation to sales growth, especially in rural areas. And lack of sufficient Internet access is not just a problem for this generation of innovators, but for future generations as well, because today’s middle school student with an interest in STEM fields can’t be the founder of tomorrow’s biotech startup if she doesn’t have adequate Internet access at home.
The federal government has taken recent steps to close the digital divide and bring more equity to broadband access, but there is still more work to be done. Now is not the time to let effective programs lapse. Policymakers must fund the ACP ahead of its expiration and legislation already exists to do that, including the Affordable Connectivity Program Extension Act. Closing the digital divide is crucial for a diverse, thriving startup ecosystem.
Policy Roundup:
Unresolved issues on tax treaty will lead to digital services tax woes for startups. This week, the Organization for Economic Cooperation and Development missed a March 31 deadline for agreement on a final global tax deal. Failing to implement a deal will likely result in the proliferation of digital services taxes (DSTs)—taxes on revenues from digital services that largely target American technology companies. The costs of digital services taxes will have both direct and downstream impacts on startups. While most DSTs target large tech companies, some scope in smaller businesses. Moreover, the cost of the taxes is expected to be passed down to customers that rely on low-cost digital services supplied by companies subject to the taxes. For startups, navigating higher costs can make entering new markets on a tight budget even more challenging. Policymakers must continue to work to combat the imposition of new and existing DSTs so that startups can better innovate without facing mounting costs.
Telecom agency set to vote to reinstate net neutrality rules. This week, the Federal Communications Commission announced its decision to vote on reinstating net neutrality rules during its April 25 Open Meeting. Prior to their repeal in 2017, the protections found in the 2015 Open Internet Order prevented Internet service providers from engaging in actions like blocking, throttling, and paid prioritization or practices that could inhibit startups’ ability to reach their users. Reinstating net neutrality rules will ensure a free and open Internet that provides an even playing field for startups.
AI hub bill a bright spot among restrictive state AI proposals. This week, Engine and other organizations sent a letter in support of a California bill to facilitate collaboration among government agencies, academic institutions, and private sector partners on AI research. The bill, SB 893, would establish the "California Artificial Intelligence Research Hub" to help lower barriers around compute resources and improve access to government agency data. The measure stands in contrast to another AI bill that passed the California Senate’s Judiciary Committee this week. That bill, SB 1047, includes measures that are likely technically infeasible, imposes steep liability and penalties, and will restrict open AI resources that benefit startups—harming innovation.
EU-U.S. Tech Council has ongoing role to play for transatlantic cooperation. European and U.S. officials held the sixth and perhaps final Trade and Technology Council (TTC) ministerial meeting this week in Belgium, where they underscored collaboration on emerging technologies like AI and 6G. The TTC was created to help repair the U.S. and European relationship and coordinate approaches to trade and technology policy. Though the TTC has not addressed all transatlantic trade issues facing startups and sometimes gotten bogged down in ongoing trade irritants, it has led to beneficial outcomes, including cooperation and a common taxonomy around artificial intelligence. The future of the TTC likely depends on the outcome of elections this year on both continents, but it should be continued as a forum to find common ground and a fair playing field for startups.
Startup Roundup:
#StartupsEverywhere: San Francisco, California. Titan is committed to empowering individuals with its wearable AI-enabled badge to enhance overall well-being. We talked to Founder and CEO Isaac Reed about AI and data privacy, hard tech manufacturing, and how serial entrepreneurs learn from previous ventures.
