Internet Radio Bill Good for Innovation, Startups

While the internet and startups play a critical role in driving innovation in content industries, the relationship between incumbent companies and their young competitors has never been harmonious. From the advent of radio to the launch of Napster, disruptive technologies have experienced legal barriers to markets. The Internet Radio Fairness Act of 2012 -- introduced by Oregon Democratic Senator Ron Wyden in the Senate and Utah Republican Representative Jason Chaffetz in the House -- will help boost web-based music services by leveling the playing field for all radio broadcasters.

Internet radio broadcasters pay higher rates to play the same songs than other music distributors using different technologies. An August Brookings Institution paper on the rate differential concluded that the policy discourages new companies from entering the market. The paper notes that internet radio companies may be compelled to pay a larger share of their revenue to acquire the rights to play music than other radio services using different technologies, such as satellite radio.

Constant innovation drives the music industry. Where iTunes and Pandora began disrupting through digital distribution, companies like Grooveshark, TuneIn, and Spotify continue to push the envelope. Young businesses often have the greatest difficulty maintaining steady revenue flow. Government shouldn’t be in the business of increasing barriers to entrepreneurship and propping up incumbent industries. We welcome Senator Wyden and Representative Chaffetz’s bills and encourage Congress to pass legislation that promotes competition in all markets.

Watch Commissioner Brill @ Engine for State of the Net West

Commissioner Julie Brill of the Federal Trade Commission joined us yesterday to discuss issues impacting technology companies at an event co-hosted by Engine as part of the Congressional Internet Caucus’ State of the Net West series. The commissioner heard from entrepreneurs, policy wonks, journalists, and activists in the technology and startup ecosystems. You can watch the event in full here:

FTC Commissioner Julie Brill @ Engine from Engine Advocacy on Vimeo.

We are encouraged by federal regulators’ increased interest in connecting with entrepreneurs on policies that influence their businesses. Q&A from the crowd touched on a number of tech policy subjects including Do Not Track standards, the Children’s Online Privacy Protection Act (COPPA), the commission’s work on mobile app privacy, and its actions against larger companies like Facebook and Google. The conversation primarily centered on regulations’ impact on innovation across the internet economy.

The FTC has focused on providing guidelines to developers to better and more clearly inform mobile app users. A recent Pew Internet and American Life Project survey found that more than half of people that use apps decided not to download a program based on information about the data it would need to collect to operate. It will be important for the commission to keep in mind the sophistication of users as it continues to pursue guidelines on the amount of information and disclosure imposed on mobile developers.

We will continue to host events that connect entrepreneurs and startups to policymakers and we hope to continue our partnership with the Congressional Internet Caucus in the future. If you would like to find out more about Engine events join us as a member and we’ll keep you in the loop.

Startups: Talk Data Reg with FTC Commissioner Brill

Engine is excited to host a townhall with Commissioner Julie Brill of the Federal Trade Commission Wednesday at 4:00 pm. Join us for the event at The Hattery in SOMA (414 Brannan Street, San Francisco, California). Video will be available after if you can’t attend. We’re bringing together startups, entrepreneurs, policy wonks, and lawmakers to talk about data, privacy, and other policies that impact small businesses and technology firms. Commissioner Brill’s visit is part of the Congressional Internet Caucus’ State of the Net West series.

Why should startups care about the FTC? The agency has been working to create guidelines for businesses on consumer privacy, releasing its “final report” on the subject March 26. Data exchange is central to the relationship between internet-based businesses and their consumers. Maintaining and enhancing trust between innovators and users will be critical to the continued success of startups across the web.

While the commission has focused on large tech companies, search engines, internet service providers, data brokers, and web browsers, perspective from dynamic young companies may help in the construction of policies that preserve the internet ecosystem that has opened doors for entrepreneurs.

Large companies tend to have established practices that are easily conveyed to users and the government. Startups, on the other hand, often change strategy, business model, or size rapidly and require a great deal of flexibility. Policymakers must be mindful of these difference as they consider rules that would affect tech companies of all ages and sizes.

Data’s regulation is one of the areas addressed in the issue book we circulated at the party nominating conventions a few weeks ago. So far, the government has taken a relatively low-impact approach to the regulation of data in the form of privacy, cybersecurity, and data breach rules. Calls for the government to become more involved have intensified in recent years. It’s critical that startups and entrepreneurs make their voices heard in this debate to ensure that the opportunity to innovate remains open.

Dialogue between entrepreneurs and lawmakers like Commissioner Brill will be critical to the success of government and business. For new rules to effectively protect customers, businesses must be able to grow, innovate, and offer new products to consumers. Engine’s goal is to foster these connections, inject startups into the policy dialogue, and promote entrepreneurship in Washington and beyond.

Photo courtesy of Priya Deonarain.

Senators Call for Startup Hearing

Yesterday, members of the Senate Committee on Small Business and Entrepreneurship called for a hearing on the state of entrepreneurship in America, citing the need to support U.S. job creators at a period in time when new startup formation is slowing.

New firm establishments are the driving force in the U.S. economy, responsible for virtually all net new jobs created in the past three decades. Senators Jerry Moran from Kansas, Scott Brown from Massachusetts, and Marco Rubio from Florida requested the hearing in a letter to Chairwoman Mary Landrieu, citing America’s significant decline in international rankings of startup friendliness. “Once in the top five, the United States has dropped nine places in international rankings...in just four years,” the Senators wrote.

How are the Senators suggesting we regain our edge? With startup-friendly policies to encourage entrepreneurship and new firm foundation. Specifically, with Startup Act 2.0, a bipartisan bill introduced in both houses of Congress earlier this year, and co-sponsored by Senator Moran.

Startup Act 2.0 contains provisions to ease the way for foreign-born entrepreneurs to remain in the country after graduating from U.S. universities, so they can start their businesses on U.S. soil and create local jobs. It provides incentives to get R&D from our universities on the market. And it provides tax incentives that could encourage investment in startups to create new jobs, boosting startups in driving economic growth and employment. Engine has been a strong supporter of the policy measures proposed in Startup Act 2.0, with information and a tool for action here. 

We encourage Chairwoman Landrieu to convene this hearing on entrepreneurship in America. Congress needs to hear from the founders and innovators driving the economy and creating the products that will keep America globally competitive.

Engine @DNC Day 3: Education Takes Center Stage

A rainy Tuesday at the Democratic National Convention saw speeches from candidates, elected officials, and celebrities with a particular focus on the importance of education to the economy. Engine has pursued greater support for education in the United States and the speeches last night in Charlotte drove home the importance of this resource to American ingenuity.

Keynote speaker Julian Castro, mayor of San Antonio, put a sharp point on the issue, saying “you can’t be pro-business if you’re not pro-education.” First Lady Michelle Obama, Massachusetts Governor Deval Patrick, and actor and former White House liaison Kal Penn each made calls for continued support and reform of the education system from pre-K to Pell Grants.

Our recent work with the Bay Area Council Economic Institute highlights the critical role technology jobs play across the country. We can’t continue to fill these jobs without qualified workers graduating from U.S. schools. The strength of our economy is dependent on the quality of the students we graduate, particularly in the science, technology, engineering, and mathematics disciplines.

Engine is excited to hear more about plans to boost education and will be continuing our conversation with elected officials and delegates throughout the convention season. Stay tuned here for updates from Charlotte and don’t forget to look through our primer on issues that matter to startups. 

Kent Walker: Embrace the Future, Fix a Broken Patent System

The future of America’s economy depends on policymakers embracing and fostering technology, according to Google’s Chief Counsel Kent Walker, who spoke at an open forum about the intersection of technology and policy earlier this week. Around 200 attendees gathered in Aspen, Colorado for an annual gathering of the Technology Policy Institute -- a Washington, DC-based policy think tank -- to discuss the most pressing policy issues the innovation economy currently faces.

Near the top of that list is how we think about software patents. As many startups have discovered in the course of building innovative products, our current system is largely broken. Walker, who has a long history of serving with some of the leading names in American innovation, from Netscape to AOL, identified three areas of policy development that would better serve the innovation community.

First, we should re-engineer the patent system to support, rather than attack innovation. Google made some news on that front last week by unveiling its Prior Art Finder database, a tool that examiners and applicants alike can use to search earlier patent applications and avoid duplicative applications. Walker asserted that further steps would be necessary, including re-thinking the utility and viability of the software patent overall, but resetting the system to be one of support is a good first step.

Walker also suggests extending a provision in The America Invents Act that weeds out counterproductive financial business model patents, to include software patents. This measure, along with working directly with the Patent and Trademark Office to discontinue issuing these types of patents in the first place, could ease the burden on examiners and applicants alike.

Finally, Walker warned that innovators must work against the expansion of the current system of litigation that is driving much of the conversation on patents. As a community that has been besieged by a broken patent system, we can and should fight to make serious public policy inroads to better serve the needs of our industry. As Walker says, we must embrace the future, and heed the Samuel Morse telegraph case of the 1800s, by seeking not to define and codify law according to what we know today, but to take care not to impede progress in areas which we haven’t yet explored and discovered.

Walker’s full remarks are available here. Engine will continue to explore opportunities to influence public policy around patents and will continue to update. If you have a patent story to share, let us know about it. info@engine.is

FCC Report: More Americans Have Access to Broadband

The Federal Communications Commission announced Tuesday that more Americans are connected to broadband, signaling an important step forward for startups and small businesses across the country. The commission released its Eighth Broadband Progress Report -- a congressionally-mandated overview of expansion of broadband -- that reported about 19 million people lack broadband access, seven million fewer than in its 2011 overview.

While Google Fiber gigabit speeds in Kansas City have grabbed headlines in recent weeks, vast areas of the United States lack access to adequate internet services. Rural communities in particular are cut off from communications infrastructure, limiting entrepreneurial opportunities for web-based businesses in these areas.

Broadband is the most basic tool startups require to succeed. Whether a young company is developing ground-breaking software, creating the next best-selling video game, or simply setting up an online storefront, businesses need connection speeds that support the services they need.

Inadequate dial-up or expensive satellite link services are the only options in many areas, limiting the connectivity of current devices. Economically, many far-flung communities are difficult to connect for telecoms, as they offer little or no return on investment. The economic stimulus passed by Congress in 2009 allocated billions of dollars to alleviate this pressure, but administrative requirements and the seasonal nature of construction has hindered the deployment of internet services to neighborhoods and homes.

The report is good news, but more needs to be done to connect the 19 million Americans cut off from broadband opportunity. Engine will continue to advocate for innovative strategies to close the broadband gap, including TV white spaces, subsidy reform, and municipal fiber. There isn’t one simple solution for closing the broadband gap, but these tools are available to policymakers and should be explored and tested.

Image via broadbandmap.gov

Mars Rover Brings Curiosity Back to Earth

 A week and a half ago, NASA landed its Curiosity rover on Mars, opening a new stage of exploration on our neighboring planet. The mission opens doors for the next generation of Americans to experience the boundaries pushed by NASA as images of the Martian landscape are posted across the web.

Carl Sagan’s Emmy and Peabody award-winning 1980 series Cosmos highlighted the power of astronomy, cosmology, and exploration and inspired a generation. Sagan has again become popular on the internet, on YouTube and in memes lately, alongside Richard Fenyman and Neil deGrasse Tyson. Users are attempting to recapture the spirit of Cosmos and evangelize science and technology anew. While I have many favorite moments in the series, one video that sticks with me is Sagan teaching children in a Brooklyn classroom about the universe. I would easily trade all of my schooling to be in that classroom on that day.

You may be wondering why all of this matters to startups. It’s

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hard for me to look at individuals like Bobak Ferdowski, Flight Director for the mission, or Sagan, Feynman, or deGrasse Tyson without dwelling on the importance of education to the future of innovation and technology in the United States. Despite a revival of enthusiasm for these scientific public figures, fewer students are graduating with high tech degrees. According to the Department of Commerce, fewer than forty percent of students entering college pursuing degrees in science, technology, engineering, and mathematics leave with a degree in one of these fields.

The U.S. needs STEM graduates to build more than Mars rovers. One stereotypical image associated with startups is of enterprising college dropouts building businesses in garages, but the fact is that STEM graduates are needed to build the next generation of American businesses. Recent debate over immigration reform for high skilled workers demonstrates the need for more students ready to take on the technical challenges posed by businesses that harness technology -- whether computer science-based or in fields such as health and energy -- to create a new class of disruptive products.

The discussion of education and U.S. schools’ priorities have lagged behind the debate about NASA’s funding in a time when the economy dominates U.S. politics. Lawmakers need to make a stronger connection between education, scientific achievement, and the progress of the economy as a whole. Startups and high tech firms help drive job growth beyond STEM degree holders. Research has shown that startups that survive and become successful companies create millions of jobs, most of which include administrators, accountants, and executives.

Though its easy to focus on our differences in an election year, the success of NASA serves as a reminder of our commonly held values and the importance of pushing boundaries, exploring, and innovating. We need more than the space program to inspire students to reach for the stars. Lawmakers need to make sure this generation of American students have the resources, encouragement, and opportunity to launch the economy of tomorrow.

Image via NASA.gov

Innovation Should Drive IP Enforcement Strategy

On June 25, the United States Intellectual Property Enforcement Coordinator, Victoria Espinel, reached out for public comment on their Joint Strategic Plan on Intellectual Property Enforcement. Today, Engine, alongside many other groups from the startup and open internet communities, submitted its public comment.

We advocate for an “innovation first” policy, advising that the administration focus on protecting entrepreneurs building enterprises rather than seeking a new, more aggressive approach. It’s a shift in strategy that we believe could fundamentally change the conversation on IP. We ask that the administration consider the high costs of enforcement to startups and other disruptive businesses.

You can read our full comment here and please add your own thoughts here on how you think the U.S. government should approach IP enforcement.

EIR Program Works on Immigration Policy

For the past 3 months, I have been working on improving the state of our immigration system with a group of entrepreneurs, investors, and other experts as part of the Entrepreneur in Residence program held by the U.S. Citizenship and Immigration Services.

This Monday, we discussed some of our findings and recommendations for improving the immigration process for entrepreneurs at an event at Georgia Tech. The event was attended by faculty, students, immigration professionals, and others interested in the issue.

The EIR program is designed to bring together experts to find pathways to optimize the current immigration system for foreign-born immigrants who want to start or grow their businesses in the United States. These entrepreneurs represent a key factor in the growth of the U.S. economy, building successful businesses that generate revenue as well as creating American jobs. In a global economy, it is vital that this country retain the top worldwide talent and businesses in order to compete. I wrote more about the program at the beginning of my residency. 

Key areas that we have specifically looked into are the process include the confusing multitude of visa options, training of immigration officers, and policy.

One of the most confusing decisions for an entrepreneur is deciding which of the many visas they should petition for; there is H-1, L, O, OPT for recent grads, etc. We will be launching soon a web resource for entrepreneurs to understand what the requirements for each of those classifications are and what evidence to provide for support.

We also see the training of immigration workers to be a key area where we can implement change: we’ve designed and rolled out training for visa adjudicators on issues such as startup structures, financing, documentation, and operations.

There is still more work to be done in this initiative, particularly on the policy side, so we’ve decided to extend the program for an additional 9 months to continue on this effort. You can follow what we’re doing at USCIS, and stay up to date with other measures to reform immigration, like Startup Act, here on Engine.is.

Congress is Asking: Tell Your Patent Story

Members of Congress are seeking comment from the tech entrepreneurial community about how the current patent system impacts their businesses, a promising sign that policymakers are paying attention to the harmful effects patent litigation has on emerging growth companies.

Earlier this month, Santa Clara University Assistant Professor of Law Colleen Chien testified before the House Judiciary’s Subcommittee on Intellectual Property about the desperate need many startup founders and entrepreneurs face for reform of the patent system. Resulting from that discussion in Washington was a sense that members of Congress need input from our community with regard to what’s working and what isn’t with patents.

Professor Chien has put together a brief survey for those of you at startups who spend your time working on patent demands, to share your experiences with the current system. The survey responses will form the basis of opening a dialogue with members of Congress about what’s happening in our community, and what some of the solutions are to improving the system.

So, if you or your company is dealing with these issues, take a few minutes (Colleen promises it won’t take more than 15, and don’t worry, your answers will be kept confidential) to tell your story so we can start down the road of making changes in the patent system that work for startups.

White House Council Recommends New Approach to Spectrum

A group of advisors urged President Obama to take take new steps to open federally-controlled spectrum for commercial applications on July 20. The President’s Council of Advisors on Science and Technology -- a group that includes administration technologists, academics, and executives of technology companies -- recommended the President direct the government to share underutilized spectrum allocated to a variety of federal agencies.

“Shared spectrum” combines elements of the exclusive license system and unlicensed regimes. While the government may need to use spectrum to communicate with drones or operate radar in some areas, in others the spectrum is fallow. The new system would allow for the development of new devices on these chunks of underutilized airwaves.

The report emphasizes the ability of policymakers to shift the present spectrum crunch “from scarcity to abundance.” This theme is meant to convey the opportunity shared spectrum provides in alleviating the demand for wireless services. I wrote about this subject ahead of an event on unlicensed spectrum co-hosted by Engine a few weeks ago.

Spectrum is one of the most important public assets innovative companies can harness to create disruptive new products. Wireless device use has exploded in the last decade with the development of WiFi and the expansion of mobile technologies that drive the advancement of smartphones, tablets, and other consumer wireless services. Startups play a critical role in the wireless ecosystem, developing applications that maximize the value of these services to users and creating new devices for consumers and enterprises.

Spectrum ownership and regulation have evolved over the last decade. While wireless providers have become increasingly consolidated -- the Justice Department deemed there to be only four “national” carriers in its move to block AT&T’s purchase of T-Mobile in 2011 -- technologies allowing various users to share airwaves have advanced rapidly. These developments have elicited calls for regulators to accommodate innovative technologies while freeing more and more spectrum for wireless carriers, agendas that haven’t always worked well together.

The advisors recommend increased incentives to open the public airwaves for experimentation, noting that the process of moving incumbent users and organizing auctions for wireless carriers is “unsustainable.” Clearing the spectrum occupied by federal agencies has proven to be a painstaking process. Allowing federal and commercial users to harness software-defined radios and other technologies could bring more spectrum to startups faster.

Innovative technologies certainly offer the promise of a freer wireless future but obstacles remain. As the Wireless Innovation Alliance said in a press release, “The PCAST report is an important first step, but there is more work to be done in order to ensure more efficient use and expanded access to the nation’s spectrum resources.”

An encouraging aspect of the recommendations is the intent to let innovation, not incumbents, drive the future wireless landscape. Wireless carriers play a critical role in connecting users, businesses, and entrepreneurs, but they don’t play the only role. Striking the appropriate policy balance is challenging, but a generation of innovators is waiting for new spectral resources to open.

Image: The White House

Karlo Dizon on Open Internet, Guam, and Effecting Change in Congress

Last week, Karlo Dizon, a 27-year-old Guamanian and graduate of Yale University, announced his candidacy for Guam’s non-voting delegate seat in the United States Congress. He did so in two ways -- the traditional means of filing paperwork with the territory’s elections office, and also by conducting an AMA, or ‘Ask Me Anything’, post on the popular social news aggregator Reddit. Mr. Dizon has made campaigning for a free and open internet a cornerstone of his run for office, so we asked him to talk about his run for Congress, his views on the internet and how they impact his potential constituents on Guam in a Q&A.

ENGINE: So, you’re running for Congress. Why?

KARLO DIZON: I ran because I was dissatisfied with the current Congresswoman but few were willing to step up to the plate. I have always believed in the ability of the democratic process to provide the best for our society, and consequently, I have grown uncomfortable with the direction and climate Congress has been taking for quite some time. In the spirit of being the change you want to see in the world, I thought it was time I try to affect change myself. I suppose that is really the primary reason: rather than hoping the current Congresswoman would listen to the growing concerns of the people of Guam, I would champion change directly by running for Congress.

E: A lot of the public discussion of your campaign is based around ideas of a free and open internet. How do you think this affects your constituency in Guam? Do you see it as a more national issue or one of particular local importance?

KD: Defending a free and open internet should be a fundamental priority for anyone who values democracy. As such I don’t know if I could separate the national and local effects as two different things. Just as I see my local heritage being influenced by and inseparable from national ideals of freedom, self-sufficiency, and democracy, so, too, do I understand the effects of legislation such as SOPA, PIPA and CISPA to be disastrous to the nation and my island. However, it should be stated that for a relatively remote island in the Pacific, there are specific worries for what CISPA would mean for Guam. Namely, if freedoms are curtailed and the use of the internet becomes associated with risking privacy, our dependence on the internet for consuming goods and information from the mainland would jeopardize our people’s ability to advance the pursuit of equality with standards of living enjoyed in the rest of the United States.

E: You announced your campaign to people worldwide in a Reddit thread. How have internet-based tools helped you broadcast your message to the electorate?

KD: Guam is still developing a sense of online presence for political outreach purposes. We hope that the way we’re running this campaign will encourage all future elections to tap into this resource, as it provides a forum for interacting with people on a more individual level. As of now, we’re primarily using Facebook and a campaign website that hooks to a backend database. I genuinely believe that Facebook is the next level of political communication--it provides the means for a two-way conversation and is instantly received by the voters on their screens or phones, compared to a website that voters have to actively access themselves.We have started to see individuals making their way up to us because they saw our online presence, agreed with our goals, and wanted to see how they could help. It reinforces our belief that providing open access to information online is pivotal not only for the democratic process but also in forging stronger ties with the community as a whole. And of course, we look forward to advancing an online political culture that utilizes more of the available tools in order to enfranchise younger generations.

E: What would your goals be if elected, especially with regard to internet openness, and what effect do you think you can have in Congress as a non-voting delegate?

KD: By and large my goals echo that of the Democratic Party, and even more so with regards to internet openness. I support the Obama administration’s defense of the American people’s privacy, data confidentiality and civil liberties, and I agree that the internet is public domain. I would fight to encourage the President’s current stance of vetoing CISPA, and proactively look into ways of preventing further legislation from ever getting this far. As per the vote, I do think it is important to remember that as the delegate from Guam, I would have a vote in committees. To the extent that I can influence committee decisions and authorship of bills, then, I think there is plenty of room to influence Congress. It is true that not having a vote makes it more difficult, but then, if I didn’t like a challenge I wouldn’t be running against a 10-year incumbent.

Congress, FCC, New America Foundation Focus on Broadband

Broadband plays a critical role in economic development and opportunity around the world. The United States, however, lags behind other countries in terms of the number of citizens reached by internet infrastructure. The U.S. ranks fifteenth out of 34 Organization for Economic Cooperation and Development countries in wired broadband subscriptions per 100 inhabitants, according to December 2011 data.

“The freedom and openness of the Internet has enabled small businesses in dorm rooms and garages to grow into some of the most successful companies in the world,” Federal Communications Commission Chairman Julius Genachowski told Congress in a hearing July 18. Genachowski testified before the U.S. House Committee on Small Business about the commission’s ongoing efforts to encourage innovation and investment in broadband along with other administration officials from the National Telecommunications and Information Administration and Department of Agriculture.

Genachowski’s testimony comes during a week in which broadband is at the forefront in Washington, D.C. July 19, the FCC released its second report on consumer broadband performance in the U.S. The same day, the New America Foundation released a report entitled, “The Cost of Connectivity” comparing the cost of broadband in 25 cities around the world.

In recent years the FCC has significantly reformed rules and programs in an effort to expand broadband penetration across the United States. One of the most wide-reaching, the overhaul of the Universal Service Fund, aims to encourage deployments of high-speed internet access to underserved communities. Other moves, including the commission’s net neutrality rules, seek to maintain the openness of the internet and preserve the system that has facilitated some of the world’s most dynamic companies.

Competitive broadband markets, open internet protocols, and the speed of internet services make a big difference for startups. Competition creates incentives for providers to keep prices low, while high speeds create opportunities for consumers to harness products and services offered by innovative, young companies. Openness ensures a level playing field for internet platforms. Closing the broadband gap will create opportunities in communities that lack adequate broadband speeds across the U.S.

The New America Foundation report also takes a look at competition in other countries. Using Paris as a case study, researchers illustrate the impact of an “unbundling” policy undertaken in France to introduce competition to the state-owned monopoly France Telecom. New companies created competition and were able to offer services on the existing DSL infrastructure which brought down costs. Twelve years later, companies are laying new cables to “meet growing demand for faster speeds at low prices,” according to the report.

Startups aren’t limited to big cities like New York and San Francisco, a fact that was highlighted by Engine at Startup Day on the Hill last month. Broadband provides an opportunity for entrepreneurs to innovate and opens access to customers across the country and around the world. Efforts like those undertaken by Google in Kansas City to deploy next-generation fiber demonstrate the potential of even further advances in broadband technology boosting small business and startups.

Image by BigRiz via Wikimedia under Creative Commons Attribution-Share Alike license

Innovation Depends on Visa Reform

Foreign-born “computer professionals” represent the largest share of H-1B visa applicants, according to a study released this week from the Brookings Institution. The study explores the demand for the H-1B class of highly skilled professional visas across different U.S. metropolitan areas, assessing which geographical and professional areas rely most heavily on foreign-born talent.

The findings show that science, technology, engineering, and mathematics (STEM) occupations accounted for more than half of all H-1B requests in 92 of the 106 metropolitan areas studied, pointing to the disparity of United States STEM graduates and advanced STEM occupations needing to be filled. The Obama administration estimated in February 2012 that less than half of U.S. students pursuing a degree in STEM fields ultimately earn a degree in a STEM discipline. 

The H-1B visa system also plays a major role for small companies and startups which rely on these highly skilled workers to develop products and services. “Our study shows that private firms account for the vast majority, 90 percent, of requests,” Neil Ruiz, a co-author of the study, said in an email to Engine. The top 100 H-1B employers make up only 20 percent of these visas requests. “I would not be surprised if some of them [the remaining employers] are smaller companies or startups,” Ruiz said. For more from Ruiz, see his video. 

The study also noted that specialized skills tend to cluster in certain regions of the world. For example, 56 percent of the world’s engineering degrees are awarded to students studying in Asia, compared to the United States, which graduates just 4 percent of these degrees.

Clustering effects aren’t limited to skill set distribution. Innovation centers in the United States are situated near universities, metropolitan areas endowed with venture capital, and research and development hubs. These areas, from the tech hub of Silicon Valley to the Research Triangle Park in Durham, North Carolina, rely on the H-1B visa program to stock the talent pool for startups in need of highly skilled workers.

The H-1B visa is an essential tool for growing technology centers and the economic benefits they provide. The study’s recommendations include forming a non-governmental, non-political commission to assess the needs of metropolitan areas and assign H-1B caps accordingly.

Legislation proposed this year, including measures such as Startup Act 2.0, seeks to eliminate per-country visa caps, along with other measures designed to allow tech businesses easier access to the foreign-born talent they need in order to grow and thrive in a globally competitive market.

It has become more and more clear that domestic demand for highly skilled labor is outpacing supply. This gap must be addressed by policymakers before the lack of STEM-educated professionals dampens innovation, growth, and entrepreneurship in the U.S. economy. We support measures introduced by lawmakers to end the cap system that arbitrarily prevents talented individuals working for U.S. companies. Policymakers should also consider reforms of the immigration system that would make it easier for entrepreneurs to enter the U.S., start businesses, and create American jobs.

Image from the Brookings Institute.

Entrepreneurs Need Startup Act 2.0

Earlier this week, the office of Senator Jerry Moran, a leading co-sponsor in the Senate of Startup Act 2.0, released a short video detailing the need for reform of the immigration processes for entrepreneurs as would be enabled by Startup Act. 

In the video, Morpheus Medical Co-Founder and Engine member Fabien Beckers, a French citizen by birth, tells his story, and outlines why, despite receiving his education in the U.S. and founding a company here, he and his employees may be forced to close up shop because of his visa situation. 

Check out the video at Sen. Moran's YouTube page here, and remember to call your member of Congress today at http://engine.is/startupact and ask them to co-sponsor and champion Startup Act 2.0 in the House and Senate. With your voice, we can help make this law a reality for founders like Fabien all across the U.S. and keep startups thriving here at home.

Patent Lawsuits May Cost Startups Billions

Patent litigation is becoming an expensive hurdle for startups, and people outside the startup community are taking note. “It’s not clear that we really need patents in most industries” Judge Richard Posner told Reuters in an interview July 5 following his decision to end a patent suit between Apple and Google’s Motorola Mobility unit. The jurist and professor characterized the proliferation of patents in the technology industry and other high innovation markets as “a problem.”

Posner, a judge on the 7th U.S. Circuit Court of Appeals and professor at the University of Chicago, is a prolific author on law and economics, including the book The Economic Structure of Intellectual Property Law.

His comments follow a recent Boston University study that estimated companies were subjected to $29 billion in direct costs from 2011 patent infringement claims filed by “non-practicing entities” -- companies that operate by collecting fees on patent licenses as opposed to making products. While large companies pay more of the overall settlement and legal costs, the expenses make up a greater share of smaller companies’ revenue, according to the estimates.

Lawsuits brought by entites like Lodsys, a company that has sued app developers for the use of in-app purchases and other fundamental technologies, demonstrate the vulnerability of startups to the high costs of patent litigation and settlement.

A June 25 article by Bloomberg’s Susan Decker highlighted the study co-author James Bessen’s impression of the effect of litigation on entreprenuers and innovation:

“I was surprised at the magnitude and how much of it is really hitting small companies,” said Bessen. “It’s having a bigger effect on innovation than we had thought.”

Startups need a patent system that fuels innovation and incentivizes invention. Money seeped away by lawsuits robs young, dynamic firms of the opportunity to create jobs, enhance their products, and reach new customers. Reforms in the America Invents Act, signed into law in September 2011, didn’t go far enough to protect entrepreneurs. We need new, well-considered legislation to address predatory lawsuits and the billions observed by researchers to be lost to settlements and legal fees.

UberX Threatened by DC Council Proposal

The Council of the District of Columbia is slated to vote tomorrow on a price-setting measure that, if passed, will block competition in the district’s transportation market. Uber, an Engine member and a startup that will be immediately affected by the proposal, is urging its users and concerned parties to call, email, and tweet to members of the council. For more information on how you can help, read Uber co-founder Travis Kalanick’s blog post. A petition has also been launched to oppose the measure. 

The so-called Uber Amendment contains language that sets a minimum fare for sedan drivers offering transportation services. Startups like Uber, who offer a popular and efficient service, would not be permitted to charge less than five times the fare of a taxicab. Sedan prices would be set by law higher than those of competitors. Under the proposal, UberX, a lower-cost car service the company unveiled July 4, would not be able to operate in the Washington DC market.

Not only does the proposed amendment stifle competition, it poses a danger to a healthy and vibrant economy by preventing the growth of startups and the jobs they provide in the DC market. Engine urges its members to support healthy competition and disruptive startups like Uber by voicing your concerns with council members.

Update 7/10/2012: After receiving thousands of notes from Uber customers, the DC Council has dropped its plans to add the minimum fare amendment. Report in full at the DCist.

DC City Council Set to Vote Against Lower-Cost Transportation

The City Council in Washington DC is set to vote tomorrow on a measure that would stifle progress in the transportation industry -- specifically it would prohibit startup company Uber from offering a competitive service in the sector. Join us in calling members of the Council to ask them to protect innovation by voting against this proposal. 

With a long, blighted history of corruption and malfeasance in the taxi industry, the city of Washington has long stood against progress in a vital area of transportation for the Nation's Capital. Earlier this year, Uber, who we're proud to say joined us last month for our Startup Day on the Hill event, launched their innovative, disruptive service in Washington alongside many other cities throughout the U.S. and around the world. Almost immediately, this move was met with resistance from the Taxi Commission, Mayor Vincent Gray and the City Council in an attempt to protect an existing taxi industry which has been fighting modernization for some time.

Tomorrow, the Council is looking to take another step backward against modernization of transportation in the District with the impending passage of a so-called "fare floor" for Uber riders. The proposal, according to an email sent earlier this afternoon by Uber CEO Travis Kalanick to the product's users, would set rates no less than five times higher than a minimum taxi rate. Instead of investing in a modern taxi fleet, or welcoming innovation in transportation in DC, Mayor Gray and the Council will instead seek to make an alarming move against innovation and a popular small business in DC by forcing rights sky high and making programs like the recently-announced UberX -- a lower-cost alternative to Uber's popular black car services that uses hybrid cabs -- impossible in the Nation's Capital.

Amidst the furor surrounding the impending votes, there is still an opportunity to change hearts and minds and keep transportation in Washington free for innovation and modernization. If you live in the District, or use Uber to get around DC, we are encouraging you to call members of the DC Council and register your displeasure with the proposed regulations. Here are their numbers, we hope you'll make the call.

Phil Mendelson (Chairman), (202) 724-8064, pmendelson@dccouncil.us
Mary Cheh, Ward 3, (Chairperson of Committee on the Environment, Public Works and Transportation), (202) 724-8062, mcheh@dccouncil.us, @marycheh
Michael Brown, at-large, (202) 724-8105, mbrown@dccouncil.us,
@cmmichaelabrown

Jim Graham, Ward 1, (202) 724-8181, jgraham@dccouncil.us, @jimgrahamward1
Jack Evans, Ward 2, (202) 724-8058, jevans@dccouncil.us, @jackevansward2
Muriel Bowser, Ward 4, (202) 724-8052, mbowser@dccouncil.us, @murielbowser
Kenyan McDuffie, Ward 5, (202) 724-8028, kmcduffie@dccouncil.us, @kenyanmcduffie
Tommy Wells, Ward 6, (202) 724-8072, twells@dccouncil.us, @tommywells
Yvette Alexander, Ward 7, (202) 724-8068, yalexander@dccouncil.us, @cmyma
Marion Barry, Ward 8, (202) 724-8045, mbarry@dccouncil.us, @marionbarryjr

David Catania, at-large, (202) 724-7772, dcatania@dccouncil.us, @cataniapress
Vincent Orange, at-large, (202) 724-8174, vorange@dccouncil.us, @vincentorangedc

Unlicensed Spectrum Offers Innovation Opportunities for Startups

Next week, Engine will cohost “The Power and Potential of the Unlicensed Economy,” an event focused on unlicensed wireless technologies. While immigration and financial regulation have dominated stories over the last year about startup-focused legislation in Washington, new laws and proposed spectrum regulation may have a revolutionary effect on growth in the mobile device and application ecosystem.

As the four national carriers in the United States battle it out over download speeds and 3G versus 4G service, unlicensed technology has quietly carried the burden of the data services that many startups have harnessed to offer new products. For example, 47 percent of iPhone data traffic and 91 percent of iPad data traffic was observed to have been transmitted over WiFi networks (as opposed to 3G and EDGE networks), according to ComScore data cited in a November 2011 Yochai Benkler working paper. 

The Federal Communications Commission employs a variety of regulatory tools to prevent interference between spectrum users. The most prominent regulatory regime for smartphone users, in terms of cost, utilizes licenses that provide exclusive rights to spectrum in a given geographic area. These licenses are bid on in FCC auctions that have generated about $55 billion in revenue to the Treasury since their inception in the early 1990’s. Sprint, AT&T, and Verizon control most of these licenses, charging users a monthly fee to access their airwaves.

Unlicensed regulation flips this regime. Users can access a given band of spectrum in any place, assuming their devices follow particular technical standards and don’t overload the available bandwidth. WiFi is an example of a pervasive unlicensed technology; anyone with a WiFi compliant radio can access a hotspot anywhere in the U.S., so long as the number of users doesn’t overload the network. The same holds true for the airwaves that facilitate transmission between baby monitors, garage door openers, and RFID chips in ID badges and in mobile tap-to-pay cards and devices.

So why do these regulatory approaches matter to startups? You may have heard about the spectrum crunch in which the available bandwidth for users is outpaced by the demand for airwaves. While the demand glut for data services is a reality, there is spectrum that could be used by device manufacturers and carriers. The catch? The FCC, incumbent spectrum licensees, and other government agencies have to find ways to open more of these airwaves for new commercial applications.

Two approaches have been introduced this year to address the problem. One, called TV white spaces, allows devices to operate in the gaps of spectrum between the broadcast channels used by over-the-air television stations. The project was preserved by provisions of payroll tax legislation signed by President Obama in February. The second, proposed by the National Telecommunications and Information Administration in March, aims to allow commercial users to share spectrum with government transmitters such as the Defense Department and Coast Guard. Both approaches rely on the rise of software-defined radios and other new technologies which employ technological solutions to avoid interference with other transmitters. New, innovative wireless devices may face barriers getting old technology and incumbent users to cooperate.

White spaces applications face geographic challenges. Television broadcasters can crowd more than half of the 49 available full-power channels available in some metro markets covering multiple cities (i.e.: San Jose, San Francisco, and Oakland). New FCC auctions that will allow broadcasters to relinquish some or all of their bandwidth in exchange for portions of auction revenue could also limit the available white spaces spectrum. These factors, teamed with rules to protect broadcasters from interference, may limit the success of potential urban “super WiFi” deployments that have been touted by FCC Chairman Julius Genachowski.

The spectrum sharing proposal may face challenges in working with government spectrum users. The DOD, for example, employs a variety of spectrum across the country for different purposes, ranging from communication with drones to conventional radio. This leaves some federal users with little incentive to begin sharing spectrum with new devices that might disrupt critical military and government technologies.

With such a crowded playing field, startups need to be keenly aware of how the federal government is regulating spectrum. The impact of regulation will be vast. Even if this technology doesn’t reach the hands of consumers, opportunities to develop enterprise applications for logistics, fleet management, and smart grid are just a few examples of the potential opportunities for innovators to build products on reliable, free-to-access airwaves.

Engine aims to advance the debate on wireless regulation next week. We invite you to attend the event if you’re in the area or watch the live stream.