The Information and Communications Technology Agenda for 2017 and Beyond

To: Whom It May Concern in Government in 2017

From: Reed Hundt

Re: The Information and Communications Technology Agenda for 2017 and Beyond

Date: August 25, 2016

The Executive, Legislative, and Judicial branches compete for control of, or at least influence over, regulation of information and communications technology. The ICT platform is the technological and organization method of creating and sharing digital information. This platform accounts for between 10% and 20% of all economic activity. It is an input to almost all goods and services. (The last time I bought a hot dog the vendor used a Stripe reader to record the credit card. And I don’t want to know how ICT sliced the pig at the beginning of the supply chain.)

As such, it can enable other goods and services to be made more productively. Its own goods and services, like Facebook or Xeon chips, also can be made faster, better and cheaper. Most important, and hardest to quantify, is the obvious catalytic effect of the ICT platform on all other industries. Think of multi-dimensional Amazon and you have the big idea.

In order to push the economy out of secular stagnation and to increase average family income for all income quintiles, the next government — both the Executive and Legislative Branches — needs a plan for the ICT platform. Before the technologists and economists set their teeth against this assertion, I hastily add that the plan might be consolidation of the wireless industry or abandonment of net neutrality. Or it could be the promotion of multiple licensees for 5G (next generation wireless) services in a single geography. In other words, the plan could be to allow incumbents to gain advantages or it might be to support new entrants. It could favor redundant networks, or shared facilities. In any case, as Treasury Secretary Tim Geithner famously said in Oval Office debates about rebuilding the balance sheets of the big banks, “Plan beats no plan.”

I can’t think of any way to describe Donald Trump’s ICT plan. However, Republican and Democratic leaders have limned some important parts of an ICT plan in various stalled bills over the last couple of years. And Hillary Clinton’s ICT goals are reasonably detailed, although perhaps purposely not presented as a plan per se. One legacy of the Cold War is the popular insistence on the market-trusting cluelessness of government, even while everyone expects extremely careful government thinking about monetary policy, medical research, national defense, tax and antitrust regimes, securities and drug regulation, and so forth. Whatever. My point is that the pieces of a plan are already out there. So here’s my crack at putting them together, adding in some suggestions of my own.

There needs to be a three-part plan. Part one is about the economy; two, culture; three, government as an operations problem.

ICT as a platform for economy

First, government should try to cause ICT to improve the standard of living for all Americans in three ways: (i) maintaining full employment (so as to drive wage increases), (ii) increasing the provision of public benefits to all Americans, and (iii) relying more on progressive taxation to pay for public services.

Translating this agenda leads to the following prescriptions:

A. Increase public and private sector investment in new networks. Current annual investment in broadband in the United States is $70 to $90 billion, depending on definition. The goal should be to increase that number to a range of $100 to $150 billion for each of the next five years, provided that all investment is intended to have a positive return to capital. The investment surge can have very high multiplier effects, establish American firms as leaders in ICT and produce significant consumer benefits. The beckoning target markets are upgrades to gigabit broadband to all buildings and widespread deployment of next generation wireless. The former is the internet access that most people buy from the local cable company. The latter is the bag of six to eight new technologies (such as phased array antennas, signal processing breakthroughs, virtualized networks, and millimeter wave forms) that permit a 10x increase in the volume and value of wireless communications. Together, these two markets, which may converge, compose much of the infrastructure of ICT.

a) Public funding should build the new ICT infrastructure in the 300 to 400 most chronically underserved county and urban areas in the country. Instead of allowing market forces to cause modern networks to reach these poverty-heavy communities last, the plan specifically should cause construction to occur early in these areas.

b) The networks can be redundant and competitive, or based on shared facilities, or in some areas regulated monopolies. The planning should experiment with all models and make decisions about what structure is appropriate in specific demographic and geographic markets. The plan can embrace innovation, test models, and the possibility of failure.

c) The combination of deregulation and regulation in the 1990s involved three different goals: sharing essential facilities (unbundling), promoting multiple facility-based competition (wireless licensing), and precluding adjacent market extension of market power (eliminating the advantages the fixed line telephone companies had in the emerging dial-up Internet access market). The next iteration of government needs to be proactive in all three directions: the job of assuring competition is never done. The FCC, FTC and DOJ need to identify essential facilities (is search an example?), continue to maintain and indeed encourage facilities-based competition (when will cable enter wireless?), and bar adjacent market expansion of market power (set top boxes!). At the same time, an earned monopoly deserves a period of reward — it should be celebrated, not attacked, as long as it is not enabled to leverage that monopoly into adjacent markets.

d) The FCC can require that wireless licensees build facilities. This well-established authority can be extended to bring into the present construction that might otherwise be delayed for up to a decade. The FCC also could rebate portions of auction revenue in exchange for accelerated construction.

e) The FCC currently is blocked by the Sixth Circuit Court of Appeals from pre-empting state and local bans on municipal broadband but either the Supreme Court or Congress can overturn that ruling. Municipalities can receive federal funding or themselves can grant easy access to facilities in return for immediate construction of super-fast broadband networks.

f) The networks known as 5G will have very different architectures than previous cellular networks. The government can collect the best plans from industry and decide what piece parts — such as fiber connections and sensors on public property — can be shared by every private party. In addition it can commission the construction of 5G networks to collect and share data on public functions, such as traffic management, water usage, public events, sewer and road repair.

g) The tools of pro-competition include the many powers vested firmly in the FCC in the wake of its victory in the net neutrality case in the D.C. Circuit. The FTC and DOJ have extensive powers as well. Among them are the authority to regulate interconnection, roaming, spectrum licensing, spectrum build-outs, and auction methodology. A new statement of competition policy is always the first order of business for a newly constituted FCC. The White House should join in; Congress too ought to express a coherent competition policy. Competition is a significant impetus to investment.

B. Every analog product and service — health care, teaching, public safety, transportation, retail, manufacturing — should be transmuted into a digital form. In every such market there is some public benefit that government should want to provide. It may be Medicare-covered, used in charter schools, employed by local police, related to solving traffic congestion, part of food stamp subsidies, or of use to small machine tools shops. Regardless of the sector, there is some boost government can provide and if so it should be provided on the ICT platform for maximum value and minimum cost. (The ACA exchanges, famously, are the biggest public on-line markets ever created, and they now work very efficiently.)

a) The government should demand interagency collaboration and public-private funding to accelerate the creation and distribution of digitized public benefits. The 18th century structure of government and 20th century array of departments and agencies are sadly inappropriate for the 21st century economy. To make the form of government fit the necessary functions, the White House and Congress should insist on interagency processes that are effective, transparent, and ineluctably dedicated to outcomes. (It is indescribable how off-putting any user of government finds today’s common practice of buck-passing among agencies. The bureaucracy resembles a restaurant where no waiter serves your table.)

b) The government should move beyond connecting classrooms and libraries to providing ubiquitous access to data center-formed solutions. The promise of data center analytics has to be delivered, at least with respect to public benefits, to everyone at the same time, and that time should be soon.

c) One in five Americans have some form of disability. The government’s plan should aim at providing at least some form of useful ICT good or service for all forms of disability and all who have it. Examples of communications and computing services for the hearing and visually impaired abound, and show what is possible if focus and technology aim at this goal.

d) Cybersecurity, and indeed privacy, is a public good and should be developed and distributed to everyone. It should be an offer, not a mandate, but neither should be only available to the cognoscenti or the wealthy. Examples of violations of reasonably expected privacy include robo-calls and spam. The government should not allow technology and profit-making in these areas to victimize consumers.

e) Adoption is an essential component of delivering public benefits. Everyone should have internet access via broadband at home. Instead large fractions of households in the bottom 60% of income do not find broadband to be affordable. Government should no more tolerate that than it would allow children in such households to go without education or health care or food. Government should give the FCC the mission and the tools to fulfill this goal.

C. More progressive taxation means collecting funds for public benefits, usually called “universal service” (although the services are localized in delivery and heterogeneous in nature), from a broad base of payers, with higher income earners paying a higher percentage than lower income earners. It is time to move beyond seeking proxies for this structure, such as charging heavy users on the supposition that they are higher income earners. By contrast, means testing the distribution of benefits is typically a waste of time, and produces aberrant, unpredictable outcomes given the ever-changing fortunes and composition of families.

Regulated firms in ICT should be encouraged by government to adopt progressive approaches to the public benefits they confer. A good example is the way the cable industry provides low cost internet access to low income homes. These voluntary programs should be more transparent and more speedily implemented but they are part of an overall strategy of improving the standard of living for all Americans.

ICT as a platform for society

Second, in terms of culture, what the anthropologist Clifford Geertz called the “web of beliefs and values,” the legislative and executive branches have always wanted to exercise some influence over these social parameters. Hillary Clinton herself of course is a Baby Boomer, perhaps the last of her generation to be President. The core values of this generation are belief in unlimited possibilities, opinionated about right versus wrong, insistent on at least the principle of equality of opportunity but not outcomes, inclined to elevate personal choice over collective action, and distrusting of authority. The Millennial generation (born in the 80s and 90s) members are pragmatic rather than ideological, willing to accept differences in advantages, supportive of a minimum and rising standard of living for all, and inclined toward community-wide behavior. Think of the difference being between people who grew up making long one on one phone calls as opposed to those who are always in touch, but in brief bursts. Or the difference between those who like email and those who message. Or sitting down to communicate versus being ambulatory.

Millennials are now numerically larger than the Boomer generation and inevitably the gap in size will grow, accompanied by a shift of power to the X generation (born between 1965 and 1980) first and then the Y or Millennial generation (born between 1981 and 1996). Alignment with the changes in the American culture should lead government in these directions:

• To engage in more experiments — testing, measuring, reporting — rather than designing systems by large stand-alone legislative or rulemaking interventions. Laws and rules might be structured to start with experiments, then move to expansion to scale, while reporting constantly on outcomes. Requests for experiments would be granted in days. Data collection and dissemination would gain more priority than adjudication of disputes. Speed of action would gain new emphasis.

• To eschew “vanilla” distribution of public benefits in favor of delivering different versions to communities and individuals that seek variation for local needs. A common baseline should suffice, but after that differences should exceed similarities. Indeed, local preferences for benefits could be built into programs — a school in one area may want to maximize public benefits differently from a school in another area. Public safety needs logically would vary from place to place. Government should not assume one size fits all, but at the same time it should not delegate its authority to local entities, or dumb itself down by simply making block grants of authority or money. America increasingly benefits from closer relationships among identity groups, work forces, and regions; the federal government can and should play a major role in tying our disparate country together. So far the United States is the most successful diverse nation in human history. Government should hold dear the mission of continuing that run.

• To favor collective applications. A community that seeks en masse funds for gigabit connectivity should be able to obtain a federal grant that delivers to that whole community, in combination with private sector funding, the solution that the group has asked for. Auctions and social networks together can readily support such collective behavior.

ICT and the functioning of government

Third, in respect of the operations of government, government should regard as critical the job of turning around the distrust and disgust that most Americans feel when they look at government. Although a country is a not a company, no business would survive long with the approval ratings that government carries. For far too long far too many Americans have felt the country, by which they mean their own narratives and their government, is on the wrong track. Part of that sentiment surely stems from disappointment in the ability of government to address, much less solve, problems of almost any kind.

The keys to re-establishing the trust of the people in government are similar to what any turn-around CEO would do in a company. Trust, transparency, and toil are the three requirements. The leaders of government have to trust each other and explain why they deserve the trust of the people. Decisions, even when made among diverse power centers, should be clearly explained, as Oliver Cromwell said to his portrait painter, “warts and all.” And everyone in government should act as if their job were in peril. It isn’t for most members of Congress and the permanent bureaucracy. But they should act as if it were.

Just as the Internet disrupts every analog experience, so it also disrupts every government function. The ACA and Social Security are good examples of government providing service chiefly in digital form. But with respect to many services the digital version doesn’t exist or is still clunky. Messaging, bots, e-commerce, payments, and social networking ought to be mandated for every government department and agency.

Speed is a sadly overlooked aspect of service for many agencies. Government bureaucracies, Congressional committees, and agency rule makers should all operate under published timelines pursuant to which advocates and observers can justifiably insist on decisions. Government action should be just and everyone knows that justice delayed is justice denied.

The 18th century structure of government and 20th century organization of departments and agencies are both exquisitely ill-suited to modern life. Rewriting the constitution or re-organizing government may be necessary sometime but both are a waste of time or impossible in the short term. What is possible is coordinated action.

The FCC is a good example of an agency that should champion inter-agency action. Many rules ought to be written in open, clear, and speedy fashion either simultaneously in multiple agencies or at the FCC but jointly with other agencies participating. Joint document collection and rulemakings should be normal, not unusual. The Wheeler FCC has achieved remarkable coordination with the Department of Justice. That example ought to extend to all agencies involved in transportation, public safety, privacy, health, education, and financial services.

It is not a stretch to imagine FCC rulemakings that encourage developments in shared driving. Automobiles are currently used collectively only 4% of the minutes in a day. This astonishing waste of resources is demonstrably not necessary. But rather than relying solely on Uber or Lyft to address this issue, government should be funding shared transportation for poor and rural communities. A joint FCC-DOT program could be devised to produce this benefit. Similarly the EPA wants to reduce carbon emissions from transportation, and to do so automobiles ought to be part of information grids that optimize routes, provide information about charging stations for electric cars, and deliver subsidies according to miles driven. A joint EPA-DOT-FCC proceeding should be easy to imagine and critical to create.

The FCC and FAA should work together, publicly and productively, to address the paradigm for the use of drones by ICT without line of sight control by individuals. Commercial “dronage” is a big business that government should encourage, especially in order to enhance American competitiveness. Firms in other countries, especially in China, already are expanding into these critical new markets (especially for non-consumer applications).

The list of problems that agency government is solving poorly due to fractionation of authority and failure to consolidate expertise is a long one. The White House would argue with some validity that it has organized cross-agency and cross-department activity in various areas. However, its efforts are still nascent and unfortunately obscure. The White House alone is not built for the rulemaking and contracting that are the two ways government typically touches the economy and society. The Executive Branch should aspire to central authority over the anachronistic structure of government but it should recognize also that implementation is a core function that itself requires its own management skills.

Currently most agency processes and almost all interagency processes are obscure, unpredictable and maddening. Unless Congress restructures its committees and also the government that mirrors those committees, the Executive Branch will have to find a way to make agencies and departments follow Executive Branch guidance. This is only sometimes done today. The career bureaucracy is more at odds with political appointees than the public could believe. Congress too is right if it feels its wishes are not the parent of what happens. To paraphrase the late Harvard professor Thomas McCraw, government more often should be able to demonstrate that when it pushes button A, bell A is rung. Today it is bell B, or no bell at all that follows often enough.

A glaring example of the need for more effective interagency decision-making is spectrum allocation. Vast swathes of spectrum are allocated for federal use. Most of it can and must be shared with commercial entities. Filters, band managers, exclusion zones, and other techniques make sharing quite feasible. But agencies other than the FCC have not demonstrated a vivid awareness that sharing benefits the American people. The FCC should throw money at this problem: in other words, the FCC should champion transition plans and licensing conditions that enable commercial entities to provide benefits to other agencies and to the users of the services of those other agencies that make the agencies eager to share their spectrum, instead of loath even to take meetings on the sharing topic. The White House and Congress too need to be much more pro-active in insisting on sharing. There is only so much spectrum and far too much is allocated exclusively to federal uses that can be perpetuated and expanded through various alternatives other than denying commercial sharing.

Conclusion

In 2017 and beyond, government should be the apostle of the politics of abundance. No big nation in history has ever had an opportunity to create so much wealth and to distribute it as wisely to all its people as the United States has. Technological breakthroughs actually exist in all fields of human knowledge. The potential for further discovery and invention is boundless. Death itself is under siege; poverty has no reason to exist; the worst of maladies are subject to remediation and even cure.

It is not in the will of the American people, or their faculty of ingenuity, or their diversity and energy, where we find the greatest obstacles to staggering improvement in the standard of living for this country, and the world that would happily imitate success here. The problem is government, as Ronald Reagan said, meaning something quite different. I’m saying not that government should go away but rather that it must define its strategy with greater acuity and execute on that strategy with much greater skill. This is meant to be a challenge to all three branches that are in the Constitution and the fourth branch that exists sine loco in that venerable document. For Boomers, given the calendar, there’s not a moment to lose in creating the legacy of a government that serves the purpose of the country, and for the younger, more numerous generations now is the time to be the change you wish to see.