Startup News Digest 9/2/2016

Our Weekly Take on Some of the Biggest Stories in Startup and Tech Policy. To receive this weekly digest in your inbox, sign up at

Tell Congress: Startups Need Better Broadband Competition. Engine is looking for startups, entrepreneurs, and the organizations that support them to sign our letter telling Congress that startups care about broadband competition. Startups, businesses, and other institutions often need significantly more internet bandwidth than consumers use at home, so they rely on what are known as “business data services” (BDS) to deliver high-speed, high-capacity connectivity. Unfortunately, the BDS market is dominated by a few broadband gatekeepers that distort the market and jack up prices for startups and other customers. But that could change soon: the Federal Communications Commission (FCC) is in the process of a rulemaking that will introduce competition and lower prices in the BDS market. Read more about the issue here and add your startup’s name to the letter to let Congress know you support the FCC’s efforts.

New Drone Rules Take Effect. The FAA expects 600,000 commercial drones to take to the skies within the next 12 months. The driving (or should we say, flying) factor? A new rule that went live on Monday that makes it much easier to become a commercial drone operator. Under the new regime, commercial fliers no longer need a pilot's license or a special permit to operate drones, so long as they abide by specific guidelines issued by the FAA (like not flying at night, beyond the line of sight, or over people). The rules have been welcomed as an important milestone in expanding commercial opportunities for drone technologies, and they have generated quite a bit of interest: over 3,000 people pre-registered to take the certification test on the first day the rules took effect. Expect to see even more action from the FAA in the coming months. The agency has indicated it is working on new rules that will eventually close some of the gaps in the regulatory framework, like allowing drones to fly beyond line-of-sight and over people.

EU Regulators Release Favorable Net Neutrality Rules. This week, the Body of European Regulators of Electronic Communication (BEREC) released final guidelines for net neutrality in Europe. Advocates on both sides of the Atlantic were concerned that ambiguities and loopholes in the EU’s legal regime would give carriers too much leeway to circumvent the intent of the rules. Fortunately, BEREC’s final rules address a number of the law’s outstanding ambiguities and expressly bar some problematic ISP activities that might have been permissible under the law as written. As with the U.S.’s net neutrality rules, zero-rating programs are not uniformly banned, but whereas the FCC’s order establishes case-by-case adjudication of all zero-rating programs, BEREC’s rules strictly prohibit certain types of zero-rating, such as programs through which users are only able to access a subset of the internet. BEREC also helped clarify what sorts of offerings qualify for the “special services” exemption that allows ISPs to manage traffic differently for services like linear IPTV that rely on networks that are not connected to the broader internet. With the anti-net neutrality lawsuit in the U.S. failing at the District Court level and this decision from European regulators, the future looks bright for the open internet.

Female VCs Outperform Industry Average. The lack of diversity in the venture capital industry is well documented. According to Fortune, fewer than 6 percent of all decision-makers at U.S. venture capital firms are women. TechCrunch puts the number at 7 percent. And a new study from Women.VC published this week found that the total number of female VCs nationwide is now 15 percent below the the five-year high of 296 in 2014. Still, there was some good news in the Women.VC survey: female VC partners have a pretty great track record. Specifically, the survey found the overall performance of women VCs is 3.78x a net return multiple, greater than the industry average. And while this doesn’t necessarily mean that female investors are always the best in the industry, it certainly puts to rest any argument that hiring a female partner would mean “lowering standards.

Comey Talks Encryption. Expect the debate around encryption to heat back up in the coming months. At a security symposium in Washington, D.C. this week, FBI Director James Comey expressed his desire to have an “adult conversation” about the topic, stating that “the conversation we’ve been trying to have about this has dipped below public consciousness now, and that’s fine. Because what we want to do is collect information this year so that next year we can have an adult conversation in this country.” This type of conversation, removed from a politically charged environment, is something the startup community has been calling for for months. Still, it’s worth remembering that encryption is binary—it's either safe or not safe—and the assertion that the best minds in cryptography (and even the NSA) aren’t being “adult” in making this point doesn’t give us too much hope for how further conversations will go.