On October 9, 1910, the headline "Auto vs. Horse: Six-Day Test Shows Motor Car Cheaper and More Efficient Animal" blazoned across The New York Times. You may find humor in this revelation 102 years later--hindsight is 20/20--but policy makers should take pause. The wowing technology of today will soon be replaced with the unimagined innovations of tomorrow.
Investment is critical to innovation. The broadband sector invested nearly $1.2 trillion from 1996 to 2011. This industry has been a shining star in a dark economic period, and more private sector dollars are necessary to maintain our nation's position as a global leader. What's the surefire way to keep the dollars flowing and ensure a prosperous future? A regulatory environment that encourages investment.
As Bret Swanson, president of Entropy Economics, emphasized recently at an Internet Innovation Alliance Academy on Capitol Hill, broadband usage is exploding. More and more people are depending on high-speed Internet connections to access health care, education, jobs, civic engagement and communications of all kinds. With the number of users and the amount of bandwidth consumed climbing at an astonishing rate, unprecedented challenges lie ahead.
We are "now trying to put two pounds of meat in a one pound bag" when it comes to mobile connectivity, as illustrated by Morgan Reed, executive director of the Association for Competitive Technology, at IIA's event. The build-out of wireline and wireless infrastructure, along with more government-allocated spectrum, is essential to fielding this exponentially increasing demand from consumers. And yet another challenge: we need more storage capacity, as identified by Swanson. In the last decade of the 20th Century, data could easily be stored locally--DVDs, computer hard drives; today, cloud based storage connected to the user by broadband is ever more essential. The only constant is change.
The technology landscape is constantly changing, and the free market is the only thing fast enough to keep up with its pace. In the blink of an eye, a company that is trailing in the race can overtake the leader.
In the 1990's, Microsoft (Nasdaq: MSFT) was challenging Netscape with its new Internet Explorer browser at the time while being sued by the Department of Justice (DOJ) for alleged monopolist practices. Apple (Nasdaq: AAPL) was adrift and nearly bankrupt. Who knew, as Swanson points out, that Apple's iPhone business would soon be bigger than all of Microsoft? Policy makers shouldn't give certain companies a head start today and others an undeserved penalty, because they can't predict who will be on the leaderboard just a few years down the road.
Two decades ago in 1992 the first commercial traffic crossed the Internet. The U.S. Postal Service was going strong; there were 623 websites a year later, according to MIT researcher Matthew Gray; and the DVD had yet to be invented. Today, the Internet crosses nearly every corner of the globe. More than 107 trillion emails will be sent this year; there are more than 555 million websites; and one hour of video is uploaded to YouTube every second.
Driven by the hunger of consumers and the ambition of entrepreneurs, the technology industry is rapidly evolving, far faster than the speed of government. For the government to craft regulations that handicap some technologies and advantage others – or to pick corporate winners and losers – will stifle the private investment needed for the innovation that leads to the next big thing, making stars of also-rans like Apple and preventing the spark for companies that don't exist today but could be household names in a handful of years. Until policy makers unearth a crystal ball, they should act with humility, taking care to foster an investment-friendly environment that will lead to a future brighter than we can imagine.
Jamal Simmons, a public relations advisor to corporate, non-profit and political clients and former Clinton Administration appointee, is co-chairman of the Internet Innovation Alliance.