Uber, Facebook, the iPhone – these are just three of many examples of innovative products and services that add billions of dollars to the U.S. economy and make our everyday lives easier. Despite the once-unimaginable benefits of our tech economy, the future of innovation in America is being threatened by the federal government’s desire for ever-expanding control and regulation. Outrageously, recent decisions, especially at the FCC, are threatening the “permissionless innovation” culture that fostered a digital revolution and created hundreds of thousands new high paying American jobs.
Given the unparalleled record of U.S. success in developing and bringing new, innovative technology products to market with a relatively hands-off regulatory approach, you would think there would be extreme hesitancy to alter that formula. The environment that brought us services like Amazon and Netflix is no accident, but instead can be attributed to a conscious decision to let the tech sector develop with minimal government intervention. The founders of GroupMe didn’t have to stop to ask for governmental permission when building the prototype, pitching the idea to investors, or taking the app to market. This fluidity has allowed our nation’s tech companies to grow and thrive at a dizzying pace, producing historic improvements in our quality of life.
The Internet contributed almost $1 trillion to our GDP last year
Consider the overall economic impact of these developments. The Internet contributed almost $1 trillion to the U.S. GDP last year, surpassing major industries like construction and food services. The app economy alone has created almost 500,000 American jobs. And studies estimate that future Internet of Things technologies could generate tens of trillions of dollars by 2025.
The need to maintain the permissionless innovation default setting in order to keep this positive trend going has been a matter of bipartisan consensus until quite recently. Instead of micromanaging the Internet economy, Congress has focused on laws designed to prevent it from being savaged by outdated and illogical government burdens. For example, consider the harm if Congress did not bar state and local governments from setting their sights on this alluringly taxable target. Thankfully, there has been wide agreement across the political spectrum that the Internet Tax Freedom Act is sound policy.
FCC is leading us down an uncharted path
So we were disturbed to see the concept of permissionless innovation abused and distorted as a rationale for sweeping and vague net neutrality rules that, as a practical matter, now require any cutting-edge, new offering by a broadband provider to get at least the tacit approval of the FCC. The Commission’s recent requests for meetings with T-Mobile, AT&T and Comcast to explore details of their latest service plans in the context of the new rules is a perfect example of the “Mother, May I?” dynamic that has been established. Wireless and wireline broadband providers now have a new and complex regulatory variable to solve before they can feel comfortable taking a chance on any new service concept going forward.
Numerous other examples, from the Commission’s sudden interest in regulating privacy practices and streaming video services to its premature involvement in new technologies such as LTE-U, show a clear trend toward ever-increasing command and control, and away from the permissionless innovation principle that has gotten us to this point. It seems that we are headed down an uncharted path of overregulating this dynamic industry, which will kill job creation and hinder future technology advancements.
The European example of what not to do
The negative impacts of applying heavy-handed regulations to rapidly evolving industries are readily apparent. For example, in the last couple of decades, many European nations have adopted a highly prescriptive regulatory approach that treats broadband as a utility, not a risky and capital-intensive business serving consumers and trying to turn a profit. As a result, European broadband companies collectively lag behind their U.S. counterparts in nearly every measurement of infrastructure deployment, job growth, and investment, and their networks have stagnated for decades. Additionally, entrepreneurs and businesses are forced to spend more resources than ever on regulatory compliance rather than creating new products, services and jobs.
As we move into an era of immersive technology that can actually better anticipate our needs and further improve our health and quality of life, it is more important than ever to remember the decisions that made the digital revolution possible. Washington must refrain from imposing undue burdens on the tech economy and allow the private sector to keep on blazing new trails. The Internet is a great laboratory for innovation. If we want to see what the next Uber, Facebook or iPhone looks like, Congress and the FCC must return to the hands-off approach that has succeeded for decades and let the innovators do what they do best: innovate.