This post is one in a series of reports on significant issues for startups in 2016. In the past year, the startup community's voice helped drive notable debates in tech and entrepreneurship policy, but many of the startup world's policy goals in 2016, such as immigration and patent reform, remain unfulfilled. Check back here for more year-end updates and continue to watch this space in 2017 as we follow policy issues affecting the startup community.
The net neutrality debate that dominated tech headlines in 2014 and 2015 was once again the top telecom issue in 2016, peaking in June with the U.S. Court of Appeals decision to uphold the Federal Communications Commission’s (FCC) 2015 Open Internet Order. The telecom excitement didn’t end there, as policymakers dealt with a huge number of issues related to promoting telecom competition; preparing for a wireless, connected future; and building out broadband access in underserved parts of the country. In short, the momentum in 2015 carried over into 2016 in a big way. Looking ahead, 2017 is poised to be yet another busy year in telecom policy, though the impact of an incoming Trump Administration still remains uncertain.
Startups Score Another Victory on Net Neutrality
If 2015 was the year the startup community won net neutrality, then 2016 was the year the startup community won net neutrality again. After months of deliberation, the U.S. Court of Appeals voted 2-1 in June to uphold the FCC's 2015 Open Internet Order. Engine and net neutrality advocates across the country celebrated the decision as a victory for thousands of startups that rely on the internet as a level playing field. While the first half of the year saw a number of legislative proposals meant to undermine the FCC’s authority to enforce the Order, the Court’s decision, combined with the threat of a veto from President Obama, effectively put an end to those efforts for the latter half of the year.
However, looking to 2017, it is almost guaranteed that net neutrality will come under fire. President-elect Trump hasn’t been shy in his opposition to net neutrality (in 2014, he called the rules an "attack on the internet"), and if his picks for the FCC landing team are any indication, the incoming Administration is going to do whatever it can to roll back the 2015 Order. Whether the new FCC pursues a formal rulemaking to reverse the rules or takes a more laissez-faire approach and simply declines to enforce them is yet to be seen. It is also likely that the Republican-dominated Congress, no longer threatened by an Obama veto, will take a crack at gutting the rules.
Frustrations at the FCC
A number of other initiatives pursued by the FCC in 2016 will likely die under new agency leadership in 2017. Among the items facing extinction is the proposed overhaul of the business data services (BDS) market, a priority of Chairman Wheeler’s that Engine has also supported. The FCC proposed a sweeping reform of the BDS market back in April, but scaled it back in October and eventually removed it from the agency’s agenda following the election and calls from Congress to halt action on any issues that didn’t necessitate immediate attention. The agency also dropped its ambitious plans to introduce increased competition into the set-top box market in September after facing significant opposition from the cable industry and a number of members of Congress. It is looking less and less likely that either of these items will make it back onto the FCC’s agenda next year.
Spectrum Remains at the Forefront
Recognizing the growing demand for wireless connectivity, freeing up more spectrum for commercial use has been a top agenda item for members of both parties and is one area that may see bipartisan cooperation and movement in 2017. In January, Senators John Thune (R-SD) and Ranking Member Bill Nelson (D-FL) introduced the MOBILE NOW Act, which would free up spectrum for both licensed and unlicensed commercial use and streamline broadband infrastructure deployment. The bill was welcomed by the startup community, and was approved by the Senate Commerce Committee in March. Unfortunately, the bill died on the Senate floor in December amid the controversy over Commissioner Jessica Rosenworcel’s reconfirmation. However, we expect to see it resurface next year, and its supporters are optimistic that the legislation will move through Congress in 2017.
With the incentive auction taking place quietly in the background, the FCC also pursued new efforts to improve the spectrum landscape, voting unanimously in July to open up huge swaths of new high-band spectrum for 5G applications. The move was a win for innovators and represented an important investment in the internet economy. And because it was approved with full support at the agency, it is unlikely that the new FCC will roll it back.
The Administration also examined issues around unlicensed spectrum this year, specifically debating whether or not the 5.9 GHz band should be opened up for unlicensed use. We submitted comments and joined a letter urging the Administration to prioritize the band for unlicensed spectrum sharing. The agency has not yet come to a decision, but the issue got more complicated in December when the Department of Transportation proposed a rule that would mandate the inclusion of vehicle-to-vehicle communication capabilities in all new cars. This communication would rely on the 5.9 GHz band, which was allocated to the automobile industry in 1999 to support these types of vehicle-to-vehicle technologies. In light of this development, the issue may become even more contentious as it continues to play out in 2017.
In January, the FCC reported that there are still 34 million Americans (or about 10 percent of the country) who lack access to broadband at sufficient speeds. While this represents an improvement over 2015 numbers, it is nonetheless indicative of the enormous amount of work that still needs to be done to bring better broadband access and competition to underserved communities. Unfortunately, the ability of the federal government to promote meaningful broadband competition was rolled back in July when a court ruled that the FCC lacked the legal authority to preempt state anti-municipal broadband rules. In another set-back, Google Fiber announced in October that it would be pausing expansion efforts in eleven of its cities, arguably due (at least in part) to intense resistance from larger ISPs in a number of its potential Fiber cities. This makes the efforts by policymakers, including the recently launched Senate Broadband Caucus, to improve connectivity all the more important going into 2017.