Startup News Digest 8/26/2016

Our Weekly Take on Some of the Biggest Stories in Startup and Tech Policy.

New Program for Immigrant Entrepreneurs a Win for Innovation. For years, the startup community has been calling for reforms to our immigration system that would allow immigrant entrepreneurs to build their companies in the U.S. It’s a no brainer, especially in light of the fact that more than half of the current group of U.S.-based “unicorns” (startups valued at more than $1 billion) have a foreign-born founder. While reforms in Congress have stalled, the Administration is proposing a new International Entrepreneur Rule that will allow foreign entrepreneurs to live in the U.S. for up to five years to help scale their business. To be eligible, the entrepreneur must have a 15 percent or greater ownership stake in the company and play an active and central role in its operations. Additionally, the startup must have received at least $100,000 in government grants, $345,000 from qualified U.S. investors, or meet alternative criteria. The public will have 45 days to review and comment on the proposed rule, and it’s expected that the Administration will finalize the rules before the conclusion of Obama’s term.

New Plan From T-Mobile Raises Net Neutrality Concerns. In its quest to catch up with AT&T and Verizon, T-Mobile has tried out a variety of new offerings over the past year that involve exempting certain traffic from customer data caps. Programs that exempted data from all participating music and video services—Music Freedom and BingeOn, respectively—raised ire from net neutrality advocates who argued that by exempting an entire class of applications from data charges, T-Mobile was altering the competitive landscape in favor of participating companies. The Federal Communication Commission’s (FCC) net neutrality rules give the Commission the discretion to block such so-called “zero-rating” plans, but so far, regulators have let these plans slide. However, new programs from T-Mobile and Sprint may prompt a closer look from the FCC. T-Mobile recently announced “unlimited data” plans for new customers, foregoing the data caps at the heart of the zero-rating debate. The catch is that the carriers will throttle all video traffic and limit a user’s ability to tether devices unless the customer pays an additional fee. But, since the FCC’s net neutrality rules prevent carriers from ‘degrad[ing] lawful internet traffic,” many net neutrality advocates argue that by throttling all video traffic unless the user pays a fee, the plan directly violates the rules. How the FCC reacts to this new proposal will go a long way in signaling how aggressive the Commission will be in protecting the open internet.

Leaked EU Copyright Proposal Suggests Problematic Rules. As a part of its Digital Single Market initiative to harmonize rules regarding digital trade across the European Union, the European Commission (EC) issued several inquiries seeking public comment on different aspects of the new regime, from how to regulate online platforms to how copyright rules should apply in the digital realm. This week, a draft of an EC white paper regarding copyright rules leaked, and the path the EC appears to have chosen is deeply problematic for the internet sector in Europe. Among its more troubling proposals, the paper suggests requiring online portals to implement filtering technologies and requiring user generated content sites to enter into licensing agreements with rights holders to compensate rights holders if the portal’s users upload copyrighted material. Considering filtering technologies like YouTube’s Content ID system cost tens of millions of dollars to implement and produce enough false positives to prompt YouTube to create a dedicated team to address improper deletions, the EC’s proposed rules would have a devastating impact on online portal startups that will be unable to afford compliance with the new regime. Should the EC follow through with these proposals, it’s almost certain that Europe would see less investment in online portals, less startup activity, and ultimately, fewer avenues for new content creators to reach an audience.

Future of Work an Opportunity for Entrepreneurs. The “future of work” is about more than just gig economy workers and portable benefits, argues Engine board member Josh Mendelsohn in a Medium post this week. Focusing on broader issues of worker displacement and un- and underemployment, Mendelsohn charges the tech community to get to work addressing the challenges posed by the changing nature of work. While it won’t be easy (“If it were an easy challenge...we would be well on our way to healthy employment and significant quality of life gains,” he writes), entrepreneurs already have the underlying technologies they need to affect change and empower underutilized labor. They simply need to harness that power. Mendelsohn outlines nine specific opportunities for innovation, but urges the tech community to think broadly and engage outside of its own bubble to identify additional solutions.

An Upward Trend in Entrepreneurship. The Kauffman Foundation released its 2016 Startup Activity Index for cities and states this week and the news is good: startup activity gained momentum in most states and metro areas. Specifically, entrepreneurship grew in 30 states and 23 out of the 40 largest metro-areas. Another key takeaway? Startup growth isn’t just happening in traditional tech hubs like Silicon Valley and NYC. In fact, the top three cities for startup activity were Austin (with 600 new entrepreneurs for every 100,000 adults!), Miami (a city whose startup ecosystem we’ve looked at in depth), and Los Angeles. New business formation hit its lowest level in 20 years just two years ago, so this bounce-back in activity is promising. You can view the full report here.