2014 Year in Review - Copyright in the Courts, Legislation on the Horizon

This post is one in a series of reports on significant issues for startups in 2014. In the past year, the startup community’s voice helped drive notable debates in tech and entrepreneurship policy, but many of the tech world’s policy goals in 2014, from net neutrality to patent reform, remain unfulfilled. Stay tuned for more year-end updates and continue to watch this space in 2015 as we follow the policy issues most affecting the startup community.

As is only fitting in a policy area where the law consistently fails to keep pace with technological developments, we are not much closer at the end of 2014 to an overhaul of the nation’s copyright laws than we were in the spring of 2013 when Register of Copyrights Maria Pallante asked Congress to begin work on the “Next Great Copyright Act.” Despite the lack of large-scale reform efforts, 2014 was a fascinating year in copyright issues, with hints at prolonged policy debates to come.

Perhaps chastened by the SOPA/PIPA debacle, Washington took a cautious, deliberate approach to copyright reform efforts this year, getting a lay of the land from a multitude of stakeholders in a series of hearings, roundtable discussions, and panels hosted by the Judiciary Committee, the Copyright Office, and the USPTO. These fact-finding missions covered everything from the DMCA notice and takedown process to the application of the first sale doctrine in digital media. In July, we participated in one of the USPTO multi-stakeholder panels to discuss how massive statutory penalties for secondary copyright infringement can chill innovation and encourage copyright trolls. That policymakers took such a keen interest in soliciting opinions from interested parties about how copyright law needs to change in the coming years suggests that the contours of new copyright legislation will start to take shape in 2015.

While legislators pondered potential reforms, the judiciary was hard at work dealing with cutting edge copyright cases (and, unfortunately, coming to some troubling conclusions). In April, we filed an amicus brief with the Supreme Court in its review of Aereo’s TV streaming business. The Court ultimately ruled that by distributing free over-the-air broadcasts to Internet subscribers via dedicated miniature antennas, Aereo was infringing broadcaster copyrights. In doing so, the Court ignored the plain text of the statutes at issue, employing what amounted to a smell test: Aereo looked like a cable TV service, so it should be governed as one, subject to a compulsory license regime. The ruling injected even more uncertainty into a notoriously vague body of law, opening up avenues for idiosyncratic judicial opinions to shut down new technologies that are in textual compliance with existing statutes.

Even more concerning for startups everywhere, the Federal Circuit in May issued its opinion in the Oracle v. Google case, holding that software APIs—bits of code that allow different applications to communicate and work together—are copyrightable. The implications of this decision are far-ranging, threatening to undermine the competition and open exchange of ideas that helped drive the rapid growth of software and applications. Requiring entrepreneurs to enter into licenses in order to use common APIs will make it significantly more difficult to create widely compatible applications, leading to an increased balkanization of software services and applications. As interoperability decreases, so too does application innovation and consumer choice. Google has appealed to the Supreme Court, and we joined an amicus brief urging the Court to take the case, arguing that allowing companies to claim copyrights on APIs would greatly harm software innovation.

Recent weeks have seen even more salacious copyright news, with leaked documents from the MPAA suggesting that the so-called “copyright wars” of a few years back may return in a big way. The MPAA has apparently been working on reinterpreting the DMCA to accomplish some of the same nefarious goals that SOPA was meant to facilitate (e.g., DNS site blocking), and it has roped several state Attorneys General into taking up its cause of holding content-neutral websites accountable for copyright infringement rather than the folks actually engaging in the “piracy” the content industry so detests. As the SOPA/PIPA fight showed and these leaked documents confirm, the content industry has little regard for the collateral damage its anti-piracy efforts would do to non-infringing activities.

In light of these reports, it seems more and more likely that Congress will begin putting pen to paper on a Copyright Act update in 2015, and it’s crucial that the technology and startup communities help set the agenda, rather than merely reacting to the demands of the content industries. Key on that agenda is restoring sanity to the copyright damages regime, strengthening and clarifying safe harbors for companies that aren’t engaging in direct infringement, and ensuring that the costs of complying with secondary liability rules aren’t prohibitively expensive for startups. The SOPA/PIPA debate showed that the Internet community is paying attention to changes in copyright policy; the next great copyright debate must show that the tech world is ready and willing to advance a proactive agenda that fosters the next wave of innovative technologies.

2014 Year in Review — Net Neutrality: Where We've Been, and Where We're Going

This post is one in a series of reports on significant issues for startups in 2014. In the past year, the startup community's voice helped drive notable debates in tech and entrepreneurship policy, but many of the tech world's policy goals in 2014, from net neutrality to patent reform, remain unfulfilled. Stay tuned for more year-end updates and continue to watch this space in 2015 as we follow the policy issues most affecting the startup community.

Of all the tech policy issues that got major airtime in 2014, few resonated so deeply with the general public as the fight over net neutrality. The net neutrality debate highlighted both the strength of the Internet community’s voice and the ample work we must still do to make sure Washington heeds our message. Thousands of companies that depend on the Internet’s open playing field and millions of Americans who recognize the threat posed by unchecked ISP gatekeepers mounted a sustained and effective campaign throughout the year to influence the FCC’s net neutrality rulemaking. While these efforts have been enormously successful in getting the FCC to take net neutrality seriously, the task is not yet finished.

This year’s net neutrality fight was not the first time the FCC grappled with these questions. Though the FCC in 2002 (wrongly, we believe) classified broadband Internet as an “information service” under the Communications Act of 1934, rather than a “telecommunications service,” broadband Internet has always been governed by net neutrality principles. Under such principles, ISPs are obligated to treat all sources of data equally and not block or degrade traffic from particular edge providers. The FCC enshrined these principles as enforceable rules in its 2010 Open Internet Order, which established regulations against ISP discrimination.

Earlier this year, an appellate court in D.C. threw out out these 2010 rules not because of any inherent infirmity with the logic of net neutrality itself but on something of a legal technicality: only “common carrier” services could be subject to bright line rules against discrimination, and since the FCC neglected to classify broadband as a common carrier telecommunications service, it could not now bar ISP discrimination. The court held that any rules issued pursuant to the FCC’s section 706 authority—a statutory mandate to enact policies that promote the adoption of broadband—could not include a ban on paid prioritization arrangements or other forms of access fees unless the FCC first reclassified broadband as a common carrier service under Title II of the Communications Act. Faced with this rejection of its 2010 rules, the FCC was asked yet again to reconsider how and whether to protect a neutral Internet.

Reports earlier this spring suggested that the FCC was not considering any plan involving reclassification, which signaled to the Internet community that the FCC was essentially turning its back on net neutrality altogether. The reaction to these reports was swift and effective. Engine, along with the Open Technology Institute at the New America Foundation  sent a letter to the FCC with nearly 200 major Internet company signatories demanding that the Commission issue rules sufficient to block discrimination and paid prioritization. The FCC got the message, and its notice of proposed rulemaking solicited comments on whether to reclassify broadband under Title II in order to establish meaningful net neutrality rules.

Even as the FCC discussed the possibility of reclassification in its proposed rules, few believed that reclassification had any chance of going forward. Unwilling to accept a world in which ISPs could abuse their gatekeeper power to impose rent-seeking access fees, the Internet community got to work. The path from toothless rules under section 706 to the imminent possibility of full-fledged net neutrality regulations under Title II was paved most visibly by a stunningly large public response. Nearly 4 million commenters wrote to the FCC about its consideration of new net neutrality rules, a majority of whom supported calls for stronger regulations to prevent ISP misconduct. Recognizing that the high cost of access fees that ISPs could charge edge providers would ultimately get passed on to consumers, citizens fought back against allowing ISPs to serve as gatekeepers to the Internet.

Startups also played a key role in shifting the FCC’s consideration of net neutrality rules towards more meaningful regulations under Title II. Despite having limited resources and time to devote to challenging the lobbying might of cable companies, startups from across the country worked hard to keep the Internet open for permissionless innovation, filing comments with the FCC, participating in an Internet-wide protest, and flying to Washington, D.C. to gin up political support for real net neutrality. As the dire consequences of abandoning net neutrality would be felt more deeply by smaller companies rather than larger, more established tech firms, startups took on an outsized role in the net neutrality fight.

In the face of this massive popular response, the FCC moved haltingly towards a Title II-based solution, leaking news that it was considering a so-called “hybrid” net neutrality proposal that relied in part on Title II authority, but would have entailed significant risk of being rejected again in court. Under such hybrid proposals, the FCC would divide every Internet communications into two distinct components—a communication between an end user and her ISP and a communication between the ISP and the edge provider the user wants to access—and regulating only this second communication under Title II. While news that the FCC was finally considering Title II in some form was encouraging, the Commission’s failure to recognize that full-fledged Title II reclassification represented a far cleaner path to strong net neutrality was frustrating.

With the FCC expected to circulate a final draft rule only weeks after news of the “hybrid” plans leaked, the time for action appeared to be running out. And then, almost overnight, the conversation changed when President Obama called on the FCC to use Title II reclassification to protect an open Internet. The President’s announcement was game-changing; the once-impossible prospect that the FCC would invoke full Title II reclassification became plausible, perhaps even likely. Politicians rallied behind the President’s plan in droves, and many of the largest tech companies in the country vocally supported the President’s call for full Title II. Even conservatives, often assumed to be opposed to net neutrality, overwhelmingly supported real net neutrality.

But, despite the FCC’s apparent shift from weak net neutrality under 706 to full-fledged Title II reclassification, the net neutrality fight is not yet over. All indications from the FCC suggest that it will circulate its proposed rule this spring. Though most believe that the FCC will propose reclassification (and apply net neutrality principles to mobile broadband—an important protection omitted from the 2010 rules), there is no concrete proof that the FCC will follow the clear will of the people and the Internet economy to enact real net neutrality. While it is crucial that the FCC makes sure that its new rules are strong and sufficient to withstand the inevitable legal challenge from ISPs, we must continue to pressure the FCC to do what’s right and do it promptly, lest carriers use the delay to sap the FCC’s courage to stand up to ISP malfeasance and protect the open Internet.

And, even if the FCC reclassifies broadband in order to craft strong net neutrality rules, the debate will likely continue in the new Republican Congress, which has already signalled its opposition to meaningful net neutrality. Whether Republican opposition is genuine or a knee-jerk reaction to the President’s statements remains to be seen. In the next year, we will keep the pressure on policymakers, reminding them of how crucial net neutrality has been to the momentous growth of the Internet economy and how the millions of Americans who have benefitted from the Internet’s prosperity are fully engaged and ready to fight to preserve the neutral Internet they know and love.

Utah v. Zenefits: The Case for Smart Disruption

“Disruption” is a word that’s thrown around often and without consequence, but when you take a second to think about what it really means—upending the status quo—you can understand why it’s so important that we encourage responsible disruption. Because, quite often, doing away with the status quo also means progress.

The latest battle that has our attention is in Utah: there, Zenefits is under fire from the state Insurance Department for offering free software from which people can obtain insurance and other HR-related services. The state claims that offering the free software violates state laws regulating insurance brokers. Yet, we find it hard to come up with any rationale for this decision, other than the fact that Zenefits’ product makes it harder for long-time insurance brokers to compete. (For what it’s worth, Utah’s Lt. Governor publicly stated last week that Zenefits has not been banned from the state, but it’s fair to say Utah is not a hospitable place for the growing startup right now.)

Here’s the thing about Zenefits: It provides an incredibly useful service. (We at Engine should know, since we use if for our own team.) Through an easy-to-use UI and streamlined process, Zenefits makes it significantly easier for startups and small businesses to navigate the HR and insurance process, which—as anyone who has tried to do that before can tell you—is a beast. This is a good thing for at least two very important reasons: 1) it allows small businesses to more easily give their employees access to not just health insurance, but other HR benefits (like FSAs, commuter benefits, etc.); and 2) it frees up valuable resources, primarily time, so that a business can get back to the hard work of building a company.

As we see it, Zenefits and other companies simplifying the HR process are good for just about everyone, except for those who benefit from a messy and expensive system that requires incumbents with entrenched market power to navigate. Which is why we’re so concerned about what’s going on in Utah.

This is not to say that the insurance industry should not be regulated, or that Zenefits should be able to compete without following smart regulations that exist to protect consumers. It is to say, however, that relying on antiquated regulation to stymie innovation—what the Utah Insurance Department seems to be up to here—sets dangerous precedent that will only harm our startup ecosystem and recovering economy.

Success of FCC Spectrum Auction Reflects Boom in Mobile Internet Market

The FCC’s auction of new wireless spectrum—the biggest auction of its kind since 2008 —has vastly exceeded revenue expectations, surpassing $40 billion in bids as of Wednesday morning. Considering most analysts predicted that the auction would fetch somewhere between the FCC’s reserve price of $10 billion and $15 billion, the auction appears to be a resounding success.  The auction is for mid-band spectrum that carriers can use to help deploy 4G LTE networks. The success of the spectrum auction is particularly notable in light of arguments from wireless carriers in recent months that the application of net neutrality rules to wireless broadband would diminish their incentives to invest in infrastructure. Although the FCC has indicated that it is considering applying net neutrality rules to both wireless and wired broadband, carrier interest in bidding on the available spectrum surpassed all expectations.

The reason carriers are scrambling to buy up available spectrum is quite simple: consumer demand for wireless data has exploded in recent years, due to a robust market for mobile applications and services. The global market for mobile apps and advertising was worth $38 billion in 2013, up from about $6.8 billion in 2010. This latest spectrum auction shows what the FCC has described as the “virtuous cycle of innovation” at work: the more and better wireless services and applications are available to customers, the more consumers will demand sufficient capacity to use these services, and the more incentive carriers have to invest and expand their networks. Startups and entrepreneurs always find creative ways to make use of greater bandwidth and faster speeds, creating new applications to harness advances in infrastructure, further increasing consumer demand for more applications and more network capacity.

The key to all this innovation growth, of course, is robust competition and sound policy managing the finite public resource that is wireless spectrum. To ensure that the the wireless market remains competitive and innovative, the FCC and other regulators must work to promote policies that encourage wireless providers to use their spectrum efficiently and fairly, including taking steps to protect Open Internet principles in wireless networks and preserving spectrum for unlicensed use. The success of the auction is an encouraging sign for the future prospects of the US wireless market, but regulators should continue to work to ensure that sufficient spectrum is preserved for unlicensed use and not exclusively controlled by a few carriers.

Congressional Hearing Highlights Troubling Practices at the Patent Office

Bad patents hurt innovation. This is especially true when they end up in the hands of patent trolls, who often use them indiscriminately to extort settlement payments. While we are glad to hear the Patent Office (PTO) has been increasing its efforts to improve the patent examination process and, in turn, patent quality, a recent government oversight hearing in Congress on telework abuse brought to light several PTO management practices that can’t help but hurt progress toward increased patent quality.

Some background on the joint House Judiciary and Oversight hearing: The PTO has long been recognized as a leader in telework, allowing employees the flexibility to work from home, and has leveraged it recruit and retain examiners. A few years ago, serious allegations surfaced regarding time and attendance fraud and ineffective oversight regarding the telework program. In response, the PTO conducted an internal investigation and issued a report in July 2013. Unfortunately, that report was considerably watered down from a more critical draft report, which—perhaps not surprisingly—was never released.

At the hearing, Oversight Chairman Issa, who has a few dozen patents of his own, emphasized the importance of patent quality; he even joked that he was sure some of his patents were invalid. Judiciary Chairman Goodlatte and Congressmen Connelly and Cummings zeroed in on PTO practices that hinder quality, and called for a reassessment of performance metrics to ensure that quality is not sacrificed to quantity. We couldn’t agree more.

Chairman Goodlatte and others expressed concerns about the examiner “count system,” which creates a series of incentives for examiners, essentially giving them credit for accomplishing certain tasks, e.g., approving a patent application. The count system is often criticized for pushing examiners to not give patent applications the time they really deserve and, as a result, issue unworthy patents. There have been efforts to reform the count system, however any real change has gotten mired in negotiations with the Patent Office Professional Association, otherwise known as the Patent Examiners Union.

Another issue that came up was "end-loading” of work by examiners at the tail end of each quarter and how that practice undermines quality. Supervisors, who have limited time to review the quarter’s work, cannot effectively monitor the quality of work submitted when it comes in a flood of end-of-quarter submissions. Apparently, the practice is rampant. At the hearing, PTO representatives reported that they were in discussions with the Union to address end-loading, but no details were provided as to how or when that would happen.

The patent system in this country is not working, and startups and small inventors, faced with a growing patent troll problem, shoulder the resulting costs. As Congress and the courts work to fix the problem, the Patent Office, too, must do its part. The mismanagement that came to light during the recent congressional hearing leads directly to more low-quality patents, which are a patent troll’s favorite weapon.

The good news is that President Obama recently nominated Michelle Lee to direct the Patent and Trademark Office. Michelle Lee, who currently acts as the agency’s deputy director, would not only be the first woman and first minority to hold that post, but she has a background rare in a long lineage of PTO directors: a patent lawyer from Silicon Valley who has worked for and at companies who operate in the software space. For all these reasons, and more, we strongly support Michelle’s nomination, and recently said so in a letter to Senators Leahy and Grassley.

We’re hopeful that under strong leadership, the PTO can clean up the problems that plague it and, in turn, return to its core mission of issuing patents that actually incentivize innovation instead of hindering it.

President Obama's Executive Order on Immigration: A Small But Important Step Towards True Reform

Tonight, President Obama announced that he will sign an Executive Order that will, among other things, expand immigration options for foreign-born entrepreneurs and make it easier for high-skilled workers awaiting Lawful Permanent Resident status to change jobs. While the President’s actions fall short of the legislation we had hoped for, we are encouraged to see some movement toward fixing a broken immigration system that plagues all aspects of our economy.

In particular, we applaud the President’s efforts to bring more high-skilled workers to the United States. As the President said, we must promote policies that allow immigrant entrepreneurs “to stay and create jobs here, create businesses here, create industries right here in America.” While the political debate on immigration has long been contentious, one thing has always been clear: there is widespread and popular support for expansion of the H1-B visa program and other efforts to bring skilled workers, particularly those skilled in technology, here.

We are simply turning away far too many talented people that want to come to the US to grow businesses. This year, more than 100,000 high-skilled workers were turned away because of limitations on the number of H1-B visas available. As studies show that immigrants are twice as likely to start businesses as native-born citizens, failing to accommodate the many immigrants that want to come to the US to start businesses unquestionably harms the American economy.

Our potential for growth is limitless when the world’s best and brightest minds are here in America, building American companies, creating American jobs, and recreating the American dream for every new generation.

We wish tonight that we could celebrate real, comprehensive legislation that would fix all facets of a broken immigration system, but policymakers have not yet been willing to take up the difficult, politically fraught task of true reform. While the President’s Executive Order is a step towards meaningful reform, some worry that the President’s actions make a bipartisan compromise harder to achieve in the short term. We remain hopeful that the enormous economic benefits that will flow from comprehensive immigration reform will encourage policymakers on both sides of the aisle can put party politics aside and take lead by finding solutions to the myriad problems with our immigration system that still remain.

Engine's Response to FCC's Reported Net Neutrality Plan

After many months of public debate, the FCC appears close to deciding on new net neutrality rules to replace those vacated earlier this year. Though the issue has to date been framed as a binary choice between the Chairman’s original proposal featuring toothless rules grounded in the Commission’s authority to encourage the deployment of broadband under section 706 of the Telecommunications Act and strong net neutrality regulations based on a full reclassification of broadband as a common carrier service, recent reports suggest that the FCC is settling on what many think of as a so-called hybrid solution.

According to the Wall Street Journal (sub req’d), the FCC is leaning towards adopting a framework that treats all Internet communications as the product of two separate and distinct relationships: 1) a relationship between an end user and an Internet service provider (ISP); and 2) a relationship between an edge provider (i.e. an Internet content provider like Netflix or Amazon) and an ISP. These separate relationships would get different regulatory treatment, but in theory, the plan could support non-discrimination rules that protect both sides of the communication.

The biggest problem with the plan outlined in the Wall Street Journal article is not the authority the FCC may invoke to justify the rules it wants to create (more on that below), but rather the proposed rules themselves. According to the article, the Commission will not ban paid prioritization but will instead allow priority deals so long as they are offered equally to all comers.

In this sense, the FCC’s proposed plan as reported in the Journal is an abandonment of net neutrality principles and will put startups at an enormous economic disadvantage. Enacting net neutrality rules is a two step process—first creating a workable framework for agency authority and then using that authority to create meaningful rules—and the FCC’s proposed plan appears to fail miserably at this second step.

Now for the really wonky part: Under a so-called hybrid proposal, the FCC would regulate these two separate relationships—ISP/end user and ISP/edge provider—differently. The relationship between an ISP and end user will keep its current classification under rules that have been in place since 2002, while the FCC will recognize a new relationship between an ISP and edge provider and classify it as a common carrier service, meaning that the FCC could then impose strong net neutrality rules on ISP/edge provider activities, such as a ban on ISPs charging edge providers for access to Internet fast lanes. According to proponents of hybrid rules, because every Internet transaction necessarily involves an interaction between an ISP and an edge provider, regulating only the ISP/edge provider relationship under Title II is more or less the same as regulating all broadband under Title II.

If this all sounds hopelessly convoluted, that’s because in many ways it is. The legal approach that the FCC is considering is novel, untested, and conceptually complicated. The plan carries significant legal risk and could end up getting thrown out in court.

But, putting aside for a moment concerns about the legal viability of hybrid approaches, it’s important to recognize how far we’ve come in getting the FCC to this point. Hybrid rules are, after all, grounded in Title II and would likely give the FCC authority to block paid prioritization arrangements. Though full Title II reclassification would be a far easier and simpler way to preserve an open Internet, hybrid rules could offer functionally similar protections.

Any net neutrality rules absolutely must prevent ISPs from extracting rents from edge providers and creating Internet slow lanes. While we’re encouraged that the FCC is moving in the right direction in considering rules grounded in Title II authority, the FCC’s consideration of actions that do not include banning paid prioritization deals renders its move towards Title II meaningless. Whether the FCC opts for full reclassification or a hybrid approach, it must use its authority to establish rules that protect startups and consumers or its efforts will have been in vain.

FCC Pauses Review of Comcast - Time Warner Merger

The FCC once again slowed down its review of the proposed merger between Comcast and Time Warner Cable, indefinitely pausing the comment period because certain content companies—including CBS, Disney, Time Warner, and Viacom—refused to allow commenters to access information they deemed “Highly Confidential.” Most of the information that the content companies refused to disclose relates to agreements pursuant to which Comcast gets distribution rights for their content.

This is not the first time the Commission extended the review period for the mega-merger due to poor information disclosure by the companies at issue. In the beginning of October, the FCC pushed back its deadline for accepting public comments on the merger because Comcast dumped 850 pages of long-overdue data about the merger, but somehow still failed to include adequate responses to many FCC information requests.

These tactics should come as no surprise. Comcast—the “worst company in America”—is facing significant public opposition to its proposed merger, which would make Comcast-TWC the only provider of high-speed broadband service available to nearly 40 percent of current subscribers. The combined company’s monopoly power would be even greater in the market for truly high-speed broadband (>50 Mbps download speed). Giving a single company terminating access monopoly power over half of the country’s Internet users is an obvious problem that startups and consumers both recognize.

And yet, even as Comcast continues to obfuscate and intentionally conceal important information about the merger, it boldly argues that the merger should be approved because opposing commenters “don’t cite any credible, specific facts that refute the extensive evidence” Comcast has put forward. Withholding information while chiding opponents for not citing enough information is the definition of chutzpah.

Beyond engaging in shenanigans with its information production, Comcast’s case in favor of the merger is rather weak, claiming that the combination wouldn’t be anticompetitive because Comcast and Time Warner don’t currently compete in any single market, so merging the two companies won’t give consumers any less choice. Of course, this is really just a concession that the high-speed broadband market is already anticompetitive; Comcast is essentially claiming that competition won’t decrease because there isn’t any competition. Twisted logic aside, several of the country’s leading antitrust experts wrote a letter to the FCC cogently outlining the merger's anticompetitive impact and arguing that the merger “should be blocked in its entirety because it would substantially lessen competition...and is not in the public interest.”

Even with minimal information available to evaluate the merger, it is clearly a bad deal for startups, consumers, and the economy. Allowing Comcast and Time Warner to merge would greatly decrease their incentives to build faster networks and would give the combined company immense power to discriminate against startups offering competing services. The merger is a significant threat to the continued viability of the Internet economy and should be stopped at all costs.

Alice Ruling Not Enough to Stop Patent Trolls

This post originally appeared in Roll Call.

The House and Senate bills were both carefully crafted to shift the playing field just a bit — to make it easier for small companies and individuals to defend themselves against patent threats while holding patent holders accountable for the lawsuits they file. Despite loud complaints from the traditional patent holder community, the bills’ provisions were actually quite modest, such as a requirement that patent holders set forth the basic framework of their case — who owns the patent, what product allegedly infringes the patent, and what parts of the patent are at issue. Or reasonable limits on discovery, usually litigation’s most burdensome and expensive phase that hits an operating company much harder than a non-practicing entity who has little to no information about its so-called business practice to share.

To be honest, I didn’t think the proposed legislation went far enough. But it represented an important compromise to fix a very serious problem.

Perhaps, most importantly, there was nothing in either bill that would prohibit a patent holder with a strong patent and a legitimate claim of infringement from bringing a lawsuit. Ownership of a patent alone should not be a blank check to, as President Obama said, extort money out of an operating company. This is not to say that patents do not have a place in today’s economy or to condone infringement. It is to say, however, that the current system is skewed way too heavily in favor of patent owners and this has to change.

We will only see this change through legislation. Strong champions of real patent reform — President Barack Obama, Sens. John Cornyn, R-Texas, and Charles E. Schumer, D-N.Y., and Rep. Robert W. Goodlatte, R-Va. — know this. So do the countless victims of patent trolls. Which is why the prospects for reform look especially good in the 114th Congress. It can’t come soon enough.

President Obama Reiterates Support for Strong Net Neutrality

Yesterday, President Barack Obama unequivocally stated his support for real net neutrality, putting to rest any doubts about where he stands on the issue, emphatically opposing any rules that would allow ISPs to enter into paid prioritization agreements and create fast and slow lanes on the Internet:

"I know that one of the things people are most concerned about is paid prioritization, the notion that somehow some folks can pay a little more money and get better service, more exclusive access to customers through the Internet: that is something I’m opposed to," Obama said.

The President’s latest comments come as the FCC begins the process of sorting through the 3.7 million comments filed in response to FCC Chairman Tom Wheeler’s proposed rules to replace the Commission’s Open Internet Order that was vacated by a court ruling in January. President Obama’s position is consistent with the vast majority of those commenters, over 99% of whom want the FCC to institute strong net neutrality rules.

This is not the first time the President has publicly supported net neutrality. As recently as this summer, he trumpeted the importance of an open Internet. Yet the President’s strong words yesterday left no room for doubt: it is clear the Administration supports Title II reclassification.

Which is why, in opposing Internet regulations that would permit companies to pay ISPs for priority access, President Obama voiced his opposition to the FCC Chairman’s proposed net neutrality rules. Under the Chairman’s proposal, the FCC would permit any paid prioritization deals that were “commercially reasonable.” While it is entirely unclear what “commercially reasonable” paid prioritization deals would entail (one of many major problems with the proposal), the Court of Appeals that vacated the FCC’s prior rules made clear that, unless the FCC reclassifies broadband under Title II, any new rules will have to permit paid prioritization. If, as the President said, he wishes the FCC to refrain from promulgating rules “creating two or three or four tiers of Internet,” the FCC must act in accordance with the overwhelming tide of public opinion and reclassify broadband as a common carrier service under TItle II. Having the President reiterate his strong commitment to net neutrality rules should remind the FCC of the importance of its decision and the widespread desire for meaningful rules preventing ISP discrimination.

Engine's Response to Today's FCC Hearing on Net Neutrality Economics

We at Engine watched with interest as the FCC held a hearing today on economic questions related to its proposed net neutrality rules, focusing on “incentives to provide high quality open Internet access service and the relevance of market power.” Distressingly, though the hearing tackled many important questions about the economic incentives new rules would affect, relatively little time was spent addressing the immense negative impact on investment in startups that would follow from an abandonment of strong net neutrality rules. Too many witnesses—with Professor Nicholas Economides of NYU and Professor Jonathan Baker of American University as notable exceptions—failed to grasp the chilling effect on innovation that the paid prioritization model would cause.

Contrary to Hal Singer from the Progressive Policy Institute’s stunning claim at the hearing that allowing paid prioritization schemes would have no negative impact on companies that could not afford to pay for priority access unless ISPs actively degraded all non-prioritized traffic in absolute terms, paid prioritization unquestionably harms startups. Even with a so-called “baseline” service requirement, startups will be disadvantaged if their Internet speeds drop relative to established companies. Myriad studies show that consumers respond to even the most minute changes in website speeds. Millisecond differences in loading times can be a huge detriment to a startup’s growing business.

Simply put, allowing paid prioritization would greatly increase the cost of application development. In turn, higher costs would discourage entrepreneurs from starting risky companies and dissuade investors from putting money into startups that operate in such an imbalanced marketplace where wealthier incumbents pay for priority access.

The threat to innovation isn’t hypothetical. More than 100 of the world’s most prominent venture capitalists explicitly said in a letter to the FCC that they would be less likely to invest in startups that compete in established markets if the FCC permitted paid prioritization. If the FCC fails to understand that allowing ISPs to create and profit from Internet slow lanes will necessarily disincentivize investment in the next wave of startups, it will be putting the future of these companies and the Internet economy in grave danger.

It's Time to Talk Net Neutrality for Mobile

Last week, two of the FCC’s five commissioners came to Sacramento for a public hearing on the future of net neutrality regulation. While most of the debate regarding the FCC’s proposed rules issued earlier this year centered on how and if the Commission should implement net neutrality rules, the Sacramento hearing—organized by California Congresswoman Doris Matsui, a vocal proponent of net neutrality rules—took a step back from arguments over Title II vs. Section 706 (the main legal debate surrounding net neutrality) to think about the broader policy goals that the FCC should focus on in deciding on rules to replace the now-vacated Open Internet Order, regardless of what regulatory mechanism they decide to use.

We praise Rep. Matsui and the commissioners who joined her. Considering how important net neutrality is to citizens and businesses throughout the country, it’s necessary that policymakers tasked with charting a path for the future of the open Internet take the time to discuss these issues with people outside of the Beltway who will be impacted by the FCC’s decision.

In her opening remarks, Commissioner Mignon Clyburn addressed a key net neutrality issue—one that has received short shrift in the debate thus far: the need for net neutrality regulations that apply to wireless Internet service. Under the 2010 Open Internet Order that was vacated in January by the D.C. Circuit Court, the FCC’s rules against ISP blocking and discrimination applied only to wired Internet service, leaving wireless Internet service outside the scope of the rules. While, as Commissioner Clyburn correctly noted, non-neutral wireless broadband presents significant problems for low-income Americans and communities of color (many of whom rely exclusively on wireless broadband for access to the Internet), the lack of any net neutrality rules impacting wireless threatens every community of Internet users, especially the startup community, much of which heavily relies on wireless to connect to new customers and users.

In 2010, when the FCC issued its Open Internet Order, the FCC decided not to apply to wireless carriers the full anti-discrimination and anti-blocking rules it created to regulate wired broadband. The FCC justified this action on the grounds that the mobile broadband industry was still rather young in 2010; there was more competition amongst mobile carriers than their wireline counterparts; and operational constraints on mobile networks necessitated a more lenient notion of “reasonable network management” practices. These arguments were weak in 2010, and as the mobile broadband marketplace has changed, the FCC’s logic for exempting mobile from its net neutrality rules makes even less sense today.

As Commissioner Clyburn noted, the mobile broadband market has grown significantly in recent years, with LTE deployed to more than 120 million subscribers today, up from just 200,000 when the Commission issued its 2010 order. Not surprisingly, this increased mobile access has spurred a tremendous boom in the mobile application market. The global market for mobile apps and advertising was worth $38 billion in 2013, up from about $6.8 billion in 2010.

Some may point to these encouraging figures and conclude that there is no need for net neutrality rules in the mobile space. But, part of the reason the application market has boomed so much is because mobile ISPs have not yet engaged in widespread discriminatory activity—a norm that is beginning to change. Recently, mobile carriers have been entering into deals with some edge providers whereby use of these edge providers’ services does not count against a consumer’s data caps. While this may look like a great deal to consumers who are finding themselves being pushed into capped data plans, it will have the same crippling effect on startups that the creation of fast and slow lanes on the Internet would. Upstart companies will find it difficult or impossible to compete with large incumbent applications that consumers can use without incurring data charges, discouraging entrepreneurs from entering the market and investors from funding new application startups. Consumers may initially like having low cost access to popular apps, but consumer popularity alone isn’t synonymous with sound policy. Consumers also probably like the low prices a monopolist can charge to undercut new entrants and stave off competition, but permitting monopolistic behavior will ultimately ruin markets and consumer choice, threatening—as President Obama said—“the next Google and the next Facebook.”

Whether the FCC goes forward with its currently proposed ill-advised “net neutrality” regulations or uses Title II to enact meaningful non-discrimination rules, it must apply such rules equally to wired and wireless service. Failure to enact rules governing mobile broadband carrier discrimination—including zero-rating schemes—will stifle the booming market for mobile applications and allow mobile carriers to serve as gatekeepers for the millions of Americans who rely on wireless Internet access.

Startups Head to Washington to Petition for Net Neutrality

After a week that saw a nationwide day of action prompt more than 300,000 phone calls to Congress regarding net neutrality and more than 3 million comments filed with the FCC in response to the Chairman’s problematic net neutrality rules, startups from around the country came to Washington to make the case for meaningful net neutrality rules in person. With all the attention paid to net neutrality in recent days, we had to make sure that voices from the startup community—including and especially the small businesses who need an open Internet—were being heard in the debate. Representatives from Etsy, Imgur, Meetup, Kickstarter, General Assembly, Dwolla, Vimeo, and Distinc.tt spent the day on September 17 meeting with key lawmakers and officials, explaining to policymakers why an open Internet is so important to their businesses and why the FCC needs to protect the innovative landscape of the Internet by enacting real net neutrality rules.

The startups began the day with a meeting at the White House, discussing their concerns about the Chairman’s proposed rules with key members of the President’s Office of Science and Technology Policy, including an appearance from newly-named CTO Megan Smith and Deputy CTO Alex Macgillivray.

While the President has already publicly expressed support for net neutrality rules that prevent ISPs from creating fast and slow lanes, the startups made clear to the White House that such rules are only possible through Title II reclassification. Having the President publicly support strong net neutrality rules earlier this summer was an encouraging development, and we are hopeful that the President will continue to pressure the FCC to make the correct decision on Title II reclassification.

The startups next made their way to the Capitol, where they participated in a press conference with Sen. Ed Markey—one of the most prominent and longstanding supporters of Title II reclassification—to further educate the public on the importance of the FCC’s decision. Sen. Markey was joined by Kickstarter’s Michal Rosenn, Dwolla’s Jordan Lampe, and Vimeo’s Michael Chea, each of whom eloquently made the case for Title II reclassification as the only way to preserve an open Internet for future innovators. The afternoon was spent in meetings with key members of Congress and staff, including representatives from both parties’ telecom subcommittees, net neutrality supporters like Sen. Markey and Minority Leader Nancy Pelosi, along with members like Reps. Hakeem Jeffries and Joe Crowley.

The eventful day was capped with a meeting with Leader Pelosi, who—in between coordinating her delegation’s voting on significant foreign policy issues—sat down with us to discuss her strong support of net neutrality. Her recent letter in support of Title II reclassification showed her willingness to stand up to the powerful cable company lobby and do the right thing to keep the Internet open and competitive for startups in her district and throughout the country.

We are incredibly grateful to the participating startups for taking the time out of running their businesses to let Washington know that, despite not having an army of lobbyists constantly campaigning on their behalf like the ISPs, startups throughout the country are committed to doing what it takes to ensure the FCC enacts meaningful net neutrality rules.  

Dream Deferred: President Obama Delays Further Action on Immigration

As the 114th Congress hurtles toward the finish line of the November elections, we have watched--with great disappointment--the failure to fix the immigration issues plaguing our economy. Despite Congressional intransigence on the issue, it appeared earlier this summer that President Obama was planning to step into the void and take sweeping executive actions to address the growing crisis of our nation’s broken immigration system. Alas, we can now chalk up further inaction as, best case, another election year casualty; worst case, failure at all levels of government to fix a broken immigration system.

Earlier this week, the Obama Administration quietly deferred further action until after the November elections, apparently in an attempt to shore up politically vulnerable members of their party in hotly-contested seats. In so doing, they have left the millions of families already ravaged by government inaction in further limbo. Once again, they lessened our ability to remain competitive in a global marketplace by still failing to keep the gifted immigrant thinkers and doers--trained in our schools--here building companies.

It would be easy to write this off cynically given the electoral climate for the President and his party, but we must make this an opportunity to ask the Administration to do more, to live up to its commitments and to not sit idly by while families struggle with their status and businesses flounder without talent to drive their goals. Simply put, we can’t wait and wonder when inaction will turn to action, and we must resolve to send a message in this election season that delay won’t cut it.

As candidates return home this month and engage in their reelection campaigns in earnest, find them at the town hall, in the supermarket, when they visit your startup, wherever it may be, and ask them: how much longer we have to wait for them and the Administration to lead? Because we have waited too long already, and it is time for this President and this Congress to put people and opportunity ahead of politics and party and pass common sense immigration reform now.

What We Can Learn from Rockport: On Fiber Networks and Our Economic Future

If you’re anything like me, you don’t exactly have an abundance of choice in broadband providers. In virtually every market in America, your options are limited to the local cable monopoly or the local telephone monopoly (and if we’re being realistic on what speeds are sufficiently fast to be considered “broadband,” you’re really stuck with cable). Economically, this dearth of choice comes as no surprise. High upfront investment costs make it incredibly difficult for competitors to unseat the incumbent provider, leaving that provider with the market power to charge high rates for relatively slow speeds.

Broadband markets simply aren’t competitive, and this lack of competition has caused the US to fall behind other industrialized nations in access to ultra-fast technologies like fiber, which provides symmetrical upload and download speeds many times beyond what cable can offer. Because it’s expensive to build fiber networks, and because your local broadband provider is likely the only game in town, ISPs have been reluctant to invest in fiber networks. Fiber options remain distressingly rare in America, accounting for only 8.16% of broadband connections, well behind other industrialized nations with robust tech sectors. Worse, we don’t seem to be in any hurry to catch up, as fiber connections grew only 12% in the US from 2012-2013, again lagging behind other industrialized nations.

Here’s the good news: in the absence of ISP fiber offerings, some municipalities are taking action to bring fiber to their citizens themselves. Today, Rockport, Maine, with the support of Sen. Angus King, a vocal champion of Internet access policies, launched a municipal fiber network with gigabit per second connections. That means Rockport citizens—in a town a of 3,300—can get download speeds almost 35 times faster than what I have access to in San Francisco, the supposed heart of the tech world. In doing so, Rockport joins cities like Chattanooga, Tennessee, which has positioned itself as an emerging tech hub by installing a gigabit fiber network in 2010. Chattanooga’s fiber network has already proven attractive to businesses, with 5,000 business subscribers and an emerging startup community. Companies like Claris Networks are moving operations to Chattanooga to take advantage of the municipal network, which provides equally fast upload speeds crucial to business success.

Municipal broadband networks provide consumers with alternatives in markets desperately in need of competition. Not surprisingly, monopoly incumbent ISPs have fought hard to block municipal broadband networks, helping pass laws in 20 states preventing communities from building their own broadband networks. The telecom lobby has also worked to prevent municipalities from operating or leasing fiber networks that have already been built but lay dormant. These laws have prevented Chattanooga from expanding its fiber network, and the city filed a petition with the FCC, asking the agency to step in and preempt these anti-competitive restrictions.

Access to ultra-high-speed Internet is quickly becoming necessary for business success, and as the US continues to lag behind peer countries in fiber access, startups will soon face significant competitive disadvantages without greater access. Since telecom incumbents have been unable or unwilling to provide fiber access, towns like Rockport have stepped in to create needed competition and provide fiber to its citizens.

If we hope to stay competitive in the world economy, we need to make sure that citizens and businesses have adequate broadband access, whether through private or municipal networks. To achieve that, we need to ensure that Rockport, Chattanooga, and other forward-thinking municipalities investing in connectivity become the trend, not the exceptions, in the marketplace.

Copyright Damages: A Capricious System That Stifles Innovation

The last time Congress enacted significant new copyright legislation, only about one quarter of U.S. households had Internet access. It’s not surprising, then, that the current copyright regime isn’t exactly suited to our digital age. Copyright law is meant to provide incentives for creators and innovators. This principle is in the Constitution, which gives Congress the power “to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” In other words, we give creators limited monopolies over their works—patents and copyrights—in order to encourage them to create.  

Lately, however, this concept has started to backfire. Laws meant to foster innovation have in fact discouraged technological innovation by imposing the threat of ruinous financial penalties on entrepreneurs for engaging in perfectly legal activities that lawmakers couldn’t have envisioned when drafting the Copyright Act.

Copyright law can be confusing, particularly because many of the ways we create and share content today didn’t exist in the 1960s and ’70s, when Congress wrote most of the current Copyright Act. But, one aspect of the law is clear: a court may levy damages of up to $150,000 for each instance of infringement. This means that you could be on the hook for $150,000 for illegally downloading a single song, or for reusing or repurposing content in a manner that you believed was totally legal—until you found out it wasn’t.

The uncertainty resulting from this huge potential liability touches innovators of all kinds, not just traditional content creators. If you’re a startup and host any third-party content, you could find yourself unwittingly facing the threat of outrageous damages. Even if what you’re doing is legal, just starting your business may not be worth the risk.

Recognizing the need to reform copyright law to better protect the new types of creativity that technological changes have allowed, Congress held several hearings in recent weeks evaluating different aspects of the copyright regime, from term lengths to music licensing to the first sale doctrine. Most recently, and perhaps most importantly, the Judiciary Committee held a hearing to discuss possible changes to the nature and scope of the remedies available in copyright infringement actions.

Under virtually all U.S. laws, plaintiffs can only collect money from defendants to the extent that they were actually injured by the illegal activities. Copyright law, however, is different: plaintiffs don’t have to show any economic injury from infringement whatsoever in order to collect money from defendants. Instead, a copyright plaintiff can ask the court to award a fixed amount of money—between $200 to $150,000 per work infringed—whether or not the plaintiff was actually harmed. Juries have significant discretion to award damages within this range, and, as juries are wont to do, they often issue awards that are wildly unpredictable and many times larger than the plaintiff’s actual injury.

While it’s certainly important to deter blatantly infringing conduct, the chilling effects of these large statutory damages have unintended consequences. Copyright law doesn’t have a lot of bright lines separating conduct that is infringing from conduct that isn’t; this flexibility is necessary to ensure that new, beneficial modes of creative expression aren’t outlawed under statutes that couldn’t predict future innovations. This, of course, means that it’s often difficult for innovators to know with certainty whether their conduct is infringing or not, and the threat of hundreds of thousands of dollars in damages for failing to accurately predict what a judge or jury will say will necessarily deter a lot of non-infringing conduct.

For example, the rules surrounding liability for companies that provide content distribution services (e.g. BitTorrent, YouTube, etc.) are decidedly unclear. The law does provide “safe harbors” for content intermediaries, but those harbors are hardly safe if, like YouTube, you have to spend seven years and untold millions in court to determine whether you’ve qualified. The risk of a high statutory damages award, even if it is unlikely that any infringement has occurred, can be enough to discourage entrepreneurs and investors from entering the market.

The disincentivizing effect of massive statutory damages awards isn’t limited to startups hosting third-party content. The rules regulating software copyrights are incredibly confusing, even for copyright experts. Considering so much software development revolves around building off preexisting code, uncertain copyright liability is a risk for virtually any entrepreneur who wants to innovate by transforming existing code. In the wake of the Oracle v. Google ruling, using simple APIs to ensure interoperability raises the risk of huge statutory damages liability, even if the use of such APIs causes no damage at all.

The existing statutory damages framework seems to have lost sight of the ultimate purpose of all copyright laws: “To promote the Progress of Science and useful Arts”—essentially, to promote innovation. When considering changes to the Copyright Act, Congress must reconsider the statutory damages framework to make sure that discouraging infringement doesn’t also discourage innovation by subjecting entrepreneurs to undue risk from the threat of irrational statutory damages awards.

Thanks, President Obama: President Speaks Out Against Slow Lanes

The latest politician to add his voice to the growing coalition supporting Title II reclassification and strong net neutrality rules is none other than U.S. President Barack Obama. The President, in remarks given at this week’s U.S.-Africa Summit in Washington, made a strong statement in favor of real net neutrality, saying, “I personally, the position of my administration, as well as a lot of the companies here, is that you don’t want to start getting a differentiation in how accessible the Internet is to different users. You want to leave it open so the next Google and the next Facebook can succeed.”

Here’s the thing: the only way to ensure there is no “differentiation in how accessible the Internet is to different users” is to reclassify the Internet as a “common carrier” under Title II. The crux of the current debate surrounds under what legal authority the FCC can protect an open Internet, one without paid prioritization and fast lanes. The FCC Chairman, in public statements, has signaled his intent to work under the current legal structure--called Section 706--but, simply, the law will not allow that.

The D.C. Appellate Court has made it abundantly clear that the FCC must reclassify broadband as a “telecommunications service” under Title II if it wants to ban the type of behavior President Obama spoke out against.  According to that Court, the FCC’s prior rules preventing ISPs from discriminating against or blocking access to disfavored companies were “per se common carrier obligations,” and only services subject to Title II can be treated as common carriers. Quite simple, in fact.

Which is why the President’s statements are so important. It’s now clear that the President must support reclassification. And those comments came at a particularly important time. As you likely know, the FCC, and its Chairman, Tom Wheeler, are currently evaluating a number of proposals dedicated to protecting the Internet, and keeping it free for innovation.

In making his comments, President Obama joins with hundreds of our country’s leading startup companies, Fortune 500 corporations, technologists, advocacy organizations, Internet users and supporters across the world in calling for the Internet to be reclassified under Title II. We look forward to continuing our work with the Administration to protect and “leave open” the Internet to ensure that all startups, especially the “next Google and the next Facebook can succeed.”

The Drumbeat Continues: More Startups Call for Title II Reclassification

Today, 10 more startup companies across the United States called on the FCC to reclassify the Internet and keep it free and open for innovation. While Congress has gone home for the August Recess, the process on Internet rulemaking continues at the FCC, where startup companies continue to make their voices heard. The companies, which represent a broad swath of growing businesses all across the country, once again focused on the only real choice available for Chairman Wheeler to preserve the ability for these companies to hatch, grow, and scale in the marketplace, and that is reclassification under Title II.

Take, for example, the story of San Francisco-based microfinance startup LendUp. Their story, according to co-founder Sasha Orloff in the filing, is only possible because the rules governing the Internet allowed for free and fair competition. As Orloff writes, “Competition within this industry is fierce and, if we were founded under the rules laid down in the Chairman’s proposal, our initial cost projections could have proven prohibitive. We would have needed to pay a substantial premium in order to ensure customers could find and access us within a crowded marketplace.” Instead, LendUp is now able to provide financial assistance to people in need, while also educating their customers about the positive benefits of responsible financial behavior, all because of technology they could build on an open Internet.

We get a bit of a global influence in this batch of comments as well, because despite Europe’s having recently fought -- and won -- its’ own battle for Net Neutrality, the FCC’s proposal could have deleterious effects on global companies doing business in the United States. Publitas, an Amsterdam-based company working to optimize and present digital content in the retail space, writes that not only would the company never have been gotten off the ground in the world envisioned by the current proposal, their future is under threat as well. U.S. influence on the Internet has global reach, and because of that, Publitas Founder and CEO Guillermo Sanchez warns that “[i]f the FCC had enacted policies which infringed upon net neutrality, the Netherlands might have enacted similar ones” which would have put the original idea under threat. But also, with a “data intensive” business like Publitas, “our business would be seriously hobbled if we were in a slow lane.”

The current proposal could also have negative influences on new marketplaces, writes Shapeways, a New York-based leading marketplace for 3D Printing images and blueprints. They are responsible for 18,000 Shapeways shops already, and with 3D Printing continuing its massive growth curve, the market they empower is continuing to foment further entrepreneurial gains in the economy on the whole. But that future is uncertain because of the proposal which Shapeways says, undermines “the great equalizer.” Everyone has the same access, anyone can float their own “crazy idea.” By creating two-tier access, you sacrifice this core tenet, throttle the spirit of freedom, and ultimately kill the power of wild innovation this nation is founded upon.” They lay out their proposed solution plainly, asking the FCC to reclassify the Internet as a utility, “which it is.”

These comments and more are available on our site, and we have again extracted multiple key quotes below. For more like this, sign up at startupsfornetneutrality.org and our work to reclassify the Internet continues over the course of the summer, we’ll keep you updated with all the news and views you need to help support a better proposal and a solution that keeps the Internet free and open for innovation.

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Distinc.tt

We currently spend considerable resources ensuring that our users can quickly access the content that they need. They view high-resolution photos of restaurants, events, and people; as well as geolocation data to help with coordination. They find out what places around them are most popular and who is currently there. These tools help LGBT people stay connected and maintain a sense of community in this rapidly changing environment. As you can imagine, the amount of bandwidth that this takes up is exponentially related to our growth and success. Having to negotiate with ISPs for the same access that our competitors would enjoy is simply not an option at our stage as a startup, we neither have the time nor the money.

Badger Maps, Inc.

There are a lot of costs to starting a business, and investors and venture capitalists are only interested in funding certain types of businesses. An entrepreneur needs to pay peoples' salaries, pay for servers, buy software, pay for space to house workers, buy Ramen and peanut butter, etc. So by adding another cost — paying off Internet service providers, to keep them from putting a gun to companies’ heads — you will get less innovation in the American economy.

LendUp

Beyond competition, core aspects of our business depend on Internet speed and efficiency. From underwriting to transaction processing, we rely on large amounts of data flowing quickly to meet customer needs and ensure accuracy and security. Speed also enables our value proposition as no customer is going to sit through a credit education video that takes too long to load. Again, with competition so intense and the alternative lenders so lacking our benefits, the consequences of a borrower abandoning us for a less compliant lender that could pay more for bandwidth are high. Furthermore, as investors evaluated the potential of our business, if these would-be risks had been a reality, I am confident conversations would have been different.

Linear Air

I am a serial networking entrepreneur and inventor.  I have four Internet patents, and prior to Linear Air, I spent a decade as the CTO of a networking company (Ipanema Technologies) whose product was designed to guarantee good performance across the Internet. That makes me, as it happens, one of the world’s foremost technical experts on Internet performance, the matter at the heart of this proposal, and I can state definitively that the only way to create a “fast lane” on the Internet is to slow everything else down. Anyone who claims differently is either mistaken, or lying.

MobileWorks

We need strong network neutrality rules that keep the Internet as a level playing field. FCC Chairman Tom Wheeler should not preside over the transformation of the Internet from a level playing field that has been the greatest engine of innovation and growth the world has ever seen to being a discriminatory, heavily tolled platform controlled by an largely uncompetitive ISP industry. The Chairman’s proposal would allow ISPs to create new barriers to innovation that would harm startups like ours—and all those who may benefit for our services. It harms consumer choice, entrepreneurship, and will kill jobs.

Publitas

We need the protection of bright-line rules. We cannot make do with the FCC’s vague commercial reasonableness standard. We have no telecommunications lawyers on staff; big ISPs have hundreds at their disposal. We simply don’t have the resources to fight a legal battle on the basis of presumptions. We urge the FCC to enact bright-line rules which prohibit blocking, technical discrimination, paid prioritization, and access fees, applicable to both fixed and mobile connections, and to reclassify broadband providers under Title II of the Communications Act.

RebelMouse

The FCC’s proposal will parch the Internet ecosystem, constricting our revenues. It will also force us to pay whatever we must to put ourselves in the fast lane, and to negotiate individual deals with multiple ISPs. That is time and money that we could have spent on hiring, innovation, and growth. We also face the threat of exclusive deals, hammered out between our competitors and ISPs, giving them and them alone the right to a fast lane. We could not afford to purchase such a right, which undoubtedly would be very expensive. If any of our competitors bought the exclusive right to a fast lane, we might have to go out of business.

Shapeways

Over the past twenty years, American innovators have created countless Internet-based applications, content offerings, and services that are used around the world. These innovations have created enormous value for Internet users, fueled economic growth, and made our Internet companies global leaders. This innovation happened in a world without discrimination. An open Internet has also been a platform for free speech and opportunity for billions of users. Shapeways would not have come to life without the Internet, and the FCC’s proposal threatens our future to provide an open platform for independent businesses to flourish, even those with an inventory of one product. The proposal will further harm competition by quelling innovation among small businesses in all sectors by creating financial barriers to entry.

Fred Trotter

The Digital Divide is getting narrower but steeper, there are fewer on the ‘wrong’ side but life is getting worse and worse for those few. Our country is betting on digital health interventions working to rescue our economy but this model relies on consistent connectivity between consumer grade doctor ISP connections and consumer grade patient ISP connections. If we allow for the creation of Internet “fast lanes” we will force at least some patients and doctors into the slow lane. This will deepen the Digital Divide and significantly damage the healthcare reform efforts that are designed to rescue our country’s economy.

Poll Everywhere

Many of the concerns we would have had at our founding remain problematic today. We still run on a tight budget, and we’re not sure whether we could afford to put ourselves in a fast lane. Even if we could, that would only mean diverting money away from hiring and growth.

Meanwhile, we are terrified by the threat of an exclusive deal, forged between ISPs and a giant producer of clickers. We certainly could not afford such a deal, which would come at a great cost. If that deal forced us to the slow lane, it would be hard for us to draw in new users. We might even lose our current ones, frustrated as they would be with our slow and patchy service.

RFP-IT: Making It Easier for Government to Support Startups

Our Federal Government spends a lot of money. I mean, a lot of money. And with that money, they purchase many goods and services. Increasingly, many of those purchases have intersected with technology: technology that makes existing products more efficient, solutions for new and existing problems, new infrastructure to help the government manage its processes, and so on. In fact, the government buys so much stuff, whole industries (yes, plural) have been built with the singular goal of selling to the government. While these processes and industries are largely pretty boring, every once in a while something happens, the system stops functioning properly, and it becomes news.

That is exactly what happened with the mangled rollout of the much-maligned healthcare.gov website late last year.

Among the many problems uncovered by the process, we realized that those systems in place to spend the aforementioned sums of money are not always best at finding the most efficient projects, programs, and services to buy. In fact, healthcare.gov was just latest high-profile example of the problem. Many, if not most, of the issues faced in federal government procurement are situated squarely in the fact that these laws and regulations represent a different time, and have been made archaic by advances in technology.

Stepping into that breach with an innovative solution of her own is Silicon Valley’s own representative, Anna G. Eshoo. The Democratic Congresswoman, a longtime supporter of the technologies that lead the world from her home district, today introduced the Reforming Federal Procurement of Information Technology (or, RFP-IT) Act which seeks to make these processes more open, easier to navigate, and more accessible to startup companies looking to sell to the Federal Government.

The bill, co-sponsored by a bipartisan coalition of Rep. Eshoo’s House colleagues, has three specific goals. First, it will enhance competition in the marketplace by enabling more small businesses to bid on federal IT contracts without having to spend thousands on compliance costs by lifting the threshold for a streamlined contracting process from $150,000 to $500,000. According to Eshoo’s summary of the bill, “expanding the use of simplified acquisition procedures will shorten procurement lead times and help level the playing field for start-ups and small businesses – a critical factor in an IT marketplace that is characterized by the constant influx of new entrants and rapidly evolving IT products and services.”

Second, the bill takes a number of steps to promote innovation, including codifying the popular Presidential Innovation Fellows program, and asking the General Services Administration to recommend how to slim-down certain procedures.

Finally, the bill moves to ensure more accountability by establishing a Digital Government Office within the Office of Management and Budget, strengthening the existing CIO office in the White House and improving transparency and oversight.

You can read the full text of the (very short!) bill here. We thank Rep. Eshoo and her colleagues for highlighting one of the ways our government functions, and working to bring more efficiency and innovation into the process.

ECPA Pushes Past 235 Co-Sponsors

For the last few months, we’ve closely watched the progress of a bill in Congress seeking to reform and update the Electronic Communications Privacy Act. We’ve discussed the current law’s outdated regulations of our communications infrastructure, but a piece of that could be updated very quickly through Kansas Congressman Kevin Yoder and Colorado Congressman Jared Polis’ Email Privacy Act. Essentially, as we’ve noted before, law enforcement currently doesn’t currently need a warrant to read your email--leaving many startups in the unenviable position of not being able to protect their customers. We think this is wrong, and it turns out a bunch of our elected representatives agree.

Less than a month ago, we noted that the bill had reached 218 co-sponsors, fully half of the House of Representatives, and which, let’s face it, is a monumental achievement with such a divided Congress, and a testament to ECPA reform’s popularity. With this week’s announcement that six more Republican co-sponsors are signing on, that number has now ballooned to 235 and is threatening to climb even higher.

Even as we creep closer and closer to mid-term elections, there are certain things Congress can still do while it’s in session. The Email Privacy Act, which would drastically enhance both privacy and security for Internet users and bring our laws into the 21st Century, is a great example of the “art of the possible” and we encourage the House to listen to itself and pass this much-needed reform swiftly.