The Big Story: Congress considers next steps for broadband programs
As members of Congress kick off an effort to evaluate and improve federal broadband programs to close the digital divide, it’s critical they consider the impact the digital divide has on the startup ecosystem. Many parts of the country—especially rural communities, low-income areas, and communities of color—still lack affordable, reliable Internet access. These gaps in broadband accessibility exclude would-be founders, startup employees, and users who use startup products and services, from participating in the innovation ecosystem. In comments filed with lawmakers this week, Engine urged them to factor in the needs of all beneficiaries of federal broadband programs, including startups.
Lawmakers recently relaunched the bipartisan, bicameral Universal Service Fund (USF) Working Group. The USF is a Federal Communications Commission (FCC) initiative to promote universal Internet access. It is funded by telecommunications providers through fees collected from consumers’ monthly phone bills and is distributed to four USF programs that target specific communities and institutions, including low-income communities, rural areas, and schools and libraries. As we explained in our comments to lawmakers and in a new op-ed this week, the USF’s existing programs have been especially important in expanding access to affordable, reliable high-speed Internet in rural and low-income communities. The USF funding base—which is based on phone service—has been shrinking for years, and some proposals to address this would create new fees specifically for digital services. Startups both rely on and offer free and low-cost services that would be impacted by those proposals, and they’re typically not in a position to pass down the direct and indirect cost of new fees to their users. It’s critical that policymakers find ways to make USF effective and sustainable without making it harder for startups to compete.
The USF working group is only one of several major shifts happening to broadband programs. FCC Chairman Brendan Carr has recently outlined plans to reverse the agency’s 2023 decision allowing schools to use E-Rate funds to provide buses with Wi-Fi and its 2024 decision enabling libraries to loan Wi-Fi hotspots for off-premises use. Other developments include the recent expiration of the Affordable Connectivity Program funding and delays to the long-awaited Broadband Equity, Access, and Deployment Program. Policymakers should prioritize strengthening and expanding initiatives like USF to close the digital divide so people have the affordable, reliable Internet access they need to participate in the innovation ecosystem.
Policy Roundup:
House hearings underscore risk to innovation of state AI patchwork. Multiple House committees this week held hearings exploring the future of AI policy. Witnesses at both hearings underscored the challenges posed by an incongruous patchwork of state laws and the importance of one consistent federal standard to promote innovation, including by citing Engine research about the cost of varying state data privacy frameworks. Engine sent a letter earlier this week underlining these costs and burdens that startups experience as the result of having to navigate multiple sets of rules on the same issue.
Senate confirms USPTO director. The Senate confirmed John Squires on Thursday to lead the U.S. Patent and Trademark Office. His confirmation comes at a critical time as the agency—under former Acting Director Coke Stewart—has been implementing new Patent Trial and Appeal Board (PTAB) policies that restrict access to inter partes review. In a joint letter this week, Engine emphasized that these reforms risk undermining patent quality and disproportionately harming startups by limiting their ability to use affordable, effective tools—like the PTAB—to challenge weak, overly broad patents that are often weaponized against them.
Hearing explores lending programs for small businesses. The House Small Business Committee held a hearing this week exploring access to capital and the use of Small Business Administration (SBA) lending programs. The witnesses and members discussed the importance of empowering community bank lending, continued funding for SBA disaster loans, and improving timely capital access to rural entrepreneurs. Members raised concerns regarding the recent SBA personnel cuts and whether this would affect the agencies’ delivery on key capital access initiatives. As policymakers explore new ways to improve access to capital for small businesses, including startups, it’s critical that they pursue a multi-pronged approach at creating opportunities for investment.
New York releases proposed rulemaking on age verification. This week, the New York Attorney General’s office put forward their proposed rules for how Internet platforms operating in the state should comply with the SAFE for Kids Act passed in 2024, which prohibits offering certain features to users under 18. The proposed rule says platforms can use several methods, and must offer one option that does not require a government ID. In pre-rulemaking comments to the Attorney General last fall, Engine underscored the costs and risks to startups associated with requirements to verify the ages of all their users.
Startup Roundup:
#StartupsEverywhere: Indianapolis, Indiana. After a career in financial services, Jack Boudreau knew he wanted to improve access to financial advice. He founded Habits, a marketplace that helps individuals and families find their perfect financial advisor. We sat down with Jack to discuss AI, regulation, and more.
