Technological Innovation And Deployment: Priorities for 2021 And Beyond

With the pandemic forcing Americans online, the role that technological innovation and deployment play in promoting prosperity has never been more clear. As the new administration begins to prioritize different policy initiatives, technology policy must remain at the forefront. And while legislators may feel the impulse for broad regulatory reforms, targeted actions can better help industry bring services to consumers without some of the significant unintended consequences which may come with overbearing regulations.

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Q3 2020 hedge fund letters, conferences and more

Broadband Investment

Promoting the deployment of broadband remains one of the most significant priorities for any regulator. American broadband providers have invested billions of dollars into the deployment of their networks and the necessary infrastructure behind them. However, as private companies work to raise additional capital for investment, uncertainty from federal regulators threatens this progress. Most notably, calls to reclassify broadband as a Title II service open up internet service providers (ISPs) to a variety of unnecessary regulations designed for utility telephony. Instead, a light touch approach better incentivizes investment without causing the harms that many predicted (and which never came to pass).

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Potentially even more threatening, there have been talks of developing a nationalized 5G network, which would severely threaten private business models. As R Street explained in both comments to the Department of Defense and here, America’s market-based approach led the world to 4G, and derailing this proven model would only delay our 5G future.

However, even with these changes, some communities will remain unserved. There are many reasons for this, and as scholars have explained, regulators cannot look at cost alone. Communities need different things, and lawmakers must carefully consider these differing needs as they attempt to connect these traditionally unserved areas.

Big Tech

Regulators on both sides of the aisle have been critical of America’s technology firms over the last few years, but calls for regulation often miss the point or would lead to significant unintended consequences.

With regards to competition policy, some regulators have begun to target the apparent “bigness” of these companies without considering the significant pro-consumer benefits they provide. The consumer welfare standard that currently guides competition enforcement best ensures that competition remains protected while allowing firms to innovate and generate efficiencies for consumers. And perhaps most importantly, some competitors for these technology firms face outdated regulations which put them at a disadvantage. Broadcasters, for example, still face arbitrary restrictions at the FCC due to an outdated view of the media marketplace. Relieving this regulatory burden would better allow broadcasters to compete in the ever-evolving media ecosystem.

On content moderation, many members have called for reforms, or worse outright revocation, of Section 230. This would ultimately stifle speech online while simply entrenching current dominant firms into their existing market positions. A more targeted approach, such as a code of ethics for content moderation, would better address the legitimate concerns about content moderation practices without derailing the legal system that made America’s technology sector the envy of the world.

Intellectual Property

While our intellectual property (IP) regime was designed to promote technological innovation, it can often serve to stifle it instead, particularly when overly broad or poor quality patents that should never have been granted make their way into the system. Additionally, patent thickets are often strategically deployed to raise costs and limit entry, which reduces competition and impedes technological innovation rather than promoting progress. At the same time, non-practicing entities often acquire patents not for technological innovation, but for extracting royalties and licensing fees from those who are trying to innovate. Congress passed the America Invents Act (AIA) and created the Patent Trial and Appeal Board and inter partes review (IPR) process to address these problems, creating a cost-effective means of challenging and removing bad patents. Some in Congress are seeking to overturn the AIA and restrict the use of the IPR process. Yet, the use of IPR should be strengthened—not weakened—to ensure that IP laws promote technological innovation rather than simply protecting economic rents. Congress should make every effort to create a balanced intellectual property regime that rewards true innovation while eliminating patent abuses that simply extract monopoly rents.


Article by Jeffrey Westling and Wayne Brough

About R Street

R Street is a non-profit public policy research organization that supports free markets; limited, effective government; and responsible environmental stewardship. It has headquarters in Washington, D.C. and five regional offices across the country. Learn more at www.rstreet.org.