Investing in the Internet economy of tomorrow

This piece originally appeared in The Hill

The incredible growth in mobile internet use over the past few years is nothing short of staggering. There are now around 6.4 billion internet connected devices worldwide, and that number is increasing by 5.5 million every single day. Some predictions suggest that we could reach over 20 billion connected devices by 2020, prompting a boom in the startups that will build the gadgets and services powering the coming Internet of Things (IoT). But such optimistic estimates assume that we’ll have the infrastructure to support billions of these connected devices, and unless we start taking steps now to ensure that there’s enough of the bandwidth necessary to power IoT, the pace of innovation may grind to a halt. Simply put, if IoT is going to deliver on its incredible promise, we’re going to need mobile networks that are 10 to 100 times faster than what we have today with significantly more wireless bandwidth.

Thankfully, some policymakers are paying close attention to the infrastructure needs of this connected future. On June 20, in a speech at the National Press Club, Federal Communications Commission (FCC) Chairman Tom Wheeler detailed his plan for the future of 5G—the next generation mobile network standard. For the investors and entrepreneurs we work with here at Engine, this investment in the internet economy is incredible news. His remarks reminded us that to build the infrastructure necessary to power the “always on, always connected” future, we need forward looking policies that keep pace with innovation. As Chairman Wheeler aptly said, “the interconnected world we live in today is the result of decisions we made a decade ago. The interconnected world of the future will be the result of decisions we must make today.”

The FCC is currently in the process of taking several major steps to enable this 5G future. While most people are focused on the historic, high-profile spectrum auction currently underway and the Chairman’s proposal to open up vast amounts of new high-band spectrum for 5G applications, there is a less publicized proceeding that will also have major implications on the future of 5G: the FCC’s business data services (BDS) reform proposal.

The FCC is in the final stages of a proceeding that will introduce competition to the BDS marketplace, a market currently overwhelmingly dominated by a few broadband gatekeepers. BDS are the high-capacity connections that connect antennas and wireless towers to their associated wired networks. Referred to as “backhaul,” these connections are paramount to delivering the bandwidth necessary for 5G, as they carry the mobile data sent from the world’s 6 billion connected devices to the broader internet. But currently the BDS market is hindered by the anti-competitive practices of a few large incumbent providers. Data released by the FCC during its ongoing proceeding demonstrates that 97% of BDS lines are controlled and operated by monopolies or duopolies.

During the same June 20 speech, Chairman Wheeler committed to reforming the BDS marketplace “before the end of this year.” We applaud the commitment and the current technology neutral approach being sought by the FCC to “encourage innovation and investment in [BDS] while ensuring that lack of competition in some places cannot be used to hold 5G hostage.”

The exponential growth in demand for bandwidth shows no signs of slowing down, and it is critical that networks can provide the bandwidth and speeds necessary to connect all 20 billion connected devices in 2020. But it is even more vital that we have policies in place that support this explosion of IoT devices when that number doubles and triples. That will happen faster than anyone can imagine, and the need for competitively-priced BDS is a key piece of powering this rapid technological revolution. Advancements in the wireless ecosystem have fueled innovations in everything from text messaging to the gig economy. No one can predict what the businesses of the future will look like, but with forward looking policies, we can ensure the startups of tomorrow will have the tools to grow, thrive, and create incredible new technologies.

Photo credit: Rick Prokosch