Colleen Chien Patent Research: Startups Paying the Price

Patent lawsuits create big problems for small companies and startups which pay a larger share of their revenue and resources fighting them than larger companies, according to research published by Santa Clara University Professor Colleen Chien.

In July, Chien testified before the House Judiciary Subcommittee on Intellectual Property about the need to change a patent system that harms entrepreneurs and innovators more than it helps. Afterward, Engine sent out a call for startups who had been affected by patent litigation to share your stories with Chien to assist with a study into the impacts of patent litigation on startups. Chien listened to your stories, tabulated the survey results, and used them concurrently with her comprehensive analysis of patent litigations from 2005 to present. The findings:

• Small companies are more likely to experience “significant operational impact” due to patent demands.
• Monetization of software patents is an iffy investment. Few software patents are actually valuable, and the patent market is a risky lottery type situation rather than something investors or companies can rely on. 
• Most startups don’t patent anyway because of the expense.
• Startups are often targeted because they are users of technology -- like retail or hospitality outlets that have WiFi.

Startups and small companies are among the most negatively impacted by patent litigation. The need to protect America’s startups, and to create an environment that isn’t chilling to new firm establishments, is vital to our continued economic growth and job recovery.

Chien notes that existing proposals, like the SHIELD Act, may work differently for startups than they do for larger and more established companies, who are more constrained by time and resources and thus cannot bear even the lessened drain on resources that these reforms provide. The SHIELD Act functions on a “loser pays” system in which the costs of invalid suits or non-infringed cases are paid by the bringer of the case. However, in the case of a small startup, the resources and time drained in order to prove that the suit is invalid or prove non-infringement may still be too high.

Policymakers need to be aware of the high costs patent litigation imposes on startups under the current system and under proposed reforms. The entrepreneur community should guide policies that lessen potential negative effects on startups and young businesses. Startups are the key to economic growth and global competitiveness in this country, and government regulation needs to reflect this.

FCC Auction Rules to Impact Startups

Startups should keep an eye on the launch of the incentive auction system which the Federal Communications Commission will address in its open hearing Friday. The FCC, the independent government agency charged with oversight of communications technologies, is reconvening after the usual summer lull in Washington. The agency is tackling issues startups should monitor, including rules for new spectrum auctions.

Startups are generally less concerned as to how spectrum is made available than with how quickly it is made available. The importance of the airwaves to entrepreneurs is clear; wireless communication has propelled the growth of a new segment of the economy with the introduction of smartphones and tablets. The sooner more spectrum can be made available, the sooner more new companies can develop products and services for customers.

The FCC auctions airwaves for exclusive use by companies like AT&T and Verizon. It also opens them to “unlicensed” use which allows innovators to create technologies on particular frequency sets. Incentive auctions function by relocating television broadcasters to shared or unused channels to open new swaths of LTE-capable spectrum. This move, however, may squeeze frequencies approved for unlicensed technologies between television channels that are called white spaces.

Rulemakings introduced by the FCC starting Friday will impact three areas critical to innovation:

• Sharing spectrum with government users. The FCC is moving forward with a plan to allow commercial and government entities to share the same airwaves, increasing the amount of available spectrum for innovative applications.
• Incentive auction rules. A rulemaking has been proposed that will address the incentive auction system. Auctions are complex and rule-driven. Any tweaks may protect or endanger unlicensed spectrum proposed for open use by innovators and startups.
• Satellite spectrum regulation. The commission is considering a rulemaking to reduce the regulatory burden on satellite services with the goal of encouraging the development of new consumer satellite communications technologies.

The FCC is aware of startups concerns. We asked FCC Chairman Julius Genachowski during a September 11 Twitter town hall about the

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commission’s plans to boost startups. Genachowski pointed to the incentive auction plan to create a nationwide band of unlicensed spectrum for experimentation as a critical step in innovation and entrepreneurship in the wireless ecosystem.

Engine will continue to follow the FCC moves as it builds toward an entirely new auction system. We encourage the commission continues to recognize the importance of startups and to listen to entrepreneurs and makers of disruptive technologies as they consider new rules.

Image via Wikimedia Commons

CircleUp Cofounder Rory Eakin on JOBS Act

The passage of Jumpstart Our Business Startups Act in February was praised by entrepreneurs and investors as a long overdue update to the startup financial regulation landscape. The JOBS Act eases access to investors for startups raising capital by removing the ban on general solicitation and allowing equity crowdfunding. However rules need to be set by the Securities and Exchange Commission before these provisions can be taken advantage of by startups.

Rory Eakin, cofounder of CircleUp, a startup that connects startups and investors, testified at a Joint Session of the Committees on Oversight and Government Reform and Financial Services September 13 to urge government to rapidly implement provisions of the bill. He spoke to Engine about his experience as an entrepreneur engaging directly with policymakers about the issues that affect his startup. Eakin’s testimony served as a reminder of the spirit of the bill as well as a timely nudge to keep the implementation process in motion, and demonstrates the value of startups participating in the policy making process.

Engine: How was the experience of testifying?

Rory Eakin: It was tremendously exciting, and pretty encouraging to see the level of engagement and attendance from the two subcommittees and on both sides of the aisle. There was a lot of enthusiasm for the JOBS Act. Many people have different perspectives on the ways it should be implemented, but there’s a lot of unity on the overall mission to support startups and to help them grow.

E: In your testimony you talk a lot how JOBS Act might help to open the investor market up. How do you think this would help your business and other startups?

RE: One of the most important messages we were bringing to light at the hearing is how concentrated the early stage investment market is. When you look at the data, a lot of venture capital and angel investment is concentrated in technology startups and in specific geographies. The real benefit of the JOBS Act for CircleUp is being able to spread investment to broader geographic areas and to areas not historically associated with early stage investment. CircleUp connects high growth startups to networks of accredited investors -- the JOBS Act represents a great opportunity to lift some of the burdens associated with investment in companies or geographic areas not previously well served by investor networks.

E: The rules just came out for the changes to general solicitation last month -- what impact do you think this provision will have for startups?

RE: We haven’t seen a direct benefit yet because we’re still waiting for implementation. Title II (the change in general solicitation) to us is the most important part of the bill, because it will enable companies to reach out to their consumers, and others very familiar with the brand already, to inform them that the company is raising capital and there are opportunities to invest. It’s a way of making a more efficient marketplace where buyers and sellers can come together. We want there to be an ecosystem that attracts high quality companies and high quality investors. We’re also anxiously awaiting the rules for Title III, crowdfunding, which will be very important for a number of other startup companies in gaining access to investor capital which will allow their businesses to grow and thrive.

E: What advice would you have for other entrepreneurs about engaging with policy that directly affects their business?

RE: There’s a lot of receptivity in Washington for hearing the perspective of startups. We found our way to the panel through our own blog. It was a relatively smooth path from engaging with the issues through writing about the subject to then providing testimony. Legislators have so much on their plate -- the role of the startup in this situation is to make it accessible for them to understand how policy and legislation affects startups both negatively and positively. We take our knowledge on these issues for granted, but translating them for the legislator audience is key -- which is an important part of what you do at Engine. Implementation of JOBS Act is an ongoing issue, and we hope more folks pay attention to and recognize they can be influential in DC - I’d love to connect with anyone who is looking to do that through twitter @circleup.

Read or view Eakin’s full testimony

Congress: Pass Bipartisan STEM Visa Legislation This Year

Earlier today, Engine Advocacy released a letter to Members of both Houses of Congress, strongly advocating for legislation this year to increase access to visas for qualified, highly-skilled, foreign-born graduates of Science, Technology, Engineering and Mathematics disciplines from U.S. universities.

The letter can be read here, and we urge you to contact your Members of Congress as well, and tell them to move on important legislation this year.

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.