Issues

Day of Action Should Not Just Be One Day

By Mike Montgomery

As many know, today is a day of action on net neutrality. For everyone who believes in the principle of net neutrality, however, we shouldn’t reserve just one day. That’s because for nearly a decade a cloud of uncertainty has hung over the future of net neutrality. It is time for that uncertainty to end but it will take a sustained effort, not just one day of protest to fix this. For too long the fate of net neutrality has been subject to whomever sits in the White House and nominates the FCC chairperson.

As we have been saying since 2014, we need to translate today’s day of action into a sustained effort to get Congress to write into law the principles of net neutrality, which are foundational in the digital age. That will protect entrepreneurs and provide a level playing field. This isn’t a new approach for CALinnovates as it is for many engaged in the debate. We have said for 3 years that legislation is not only important, but that it is vital. As one of the first voices to argue for legislation to codify these important principles in stone, we didn’t push the easy button and accept temporary regulations.

We know there are some who don’t see it that way. They would rather rail at the FCC for once again reversing its position. But what good does that do? If a Republican is in charge, the FCC sees net neutrality implementation one way; if a Democrat is in charge, the FCC sees implementation another way. Either way the other party raises campaign funds arguing that when they are in charge next they will switch things up. Meanwhile, consumers and entrepreneurs lack certainty that legislation would provide about fair, clear rules of the internet road.

This back and forth is the worst of all worlds because it creates uncertainty: for consumers, for entrepreneurs and for the infrastructure providers. Here’s what we know: the current FCC is going to go in a different direction when it comes to net neutrality. Whether you agree with that — and there are a lot of technologists and policymakers on both sides of the issue — that’s the political reality. So where do we go from here?

CALinnovates has long sought a third-way on net neutrality — one that ensures it is a guiding principle but doesn’t lock into place provisions that freeze future innovation. A lot of the focus has been on the FCC’s use of

Title II of the Communications Act of 1934. And it’s not just CALinnovates that is concerned with Title II — a large group of Internet pioneers have raised serious concerns (the list of these tech leaders is below).

Here’s what one leader, John Perry Barlow — the co-founder of the Electronic Freedom Foundation — wrote: “Telecom regulations give a lot of leverage to organizations whether governmental or corporate to close down the right to know. My long experience says as soon as you give government the authority to impose regulations on the Internet you are doing something to frustrate the right to know. People tend to presume on theoretical grounds a little right minded regulation will help people build beneficial architectures and organizations. I do not think there is anything to support that theory. Every time I have seen any sort of regulation of the Internet the results have been mayhem. Declaring the Internet and the telephone network to be the same thing is like declaring a Buick and a symphony to be the same thing because they both make noise.”

The problem with Title II is that although it does, in theory, ensure that all data is treated equally and that companies can’t carve out fast lanes, it also opens the door to the internet being frozen into a time capsule that discourages network modernization, which supports the next wave of innovation and increased competition among providers. The digital world moves at the speed of light. To slow growth to the speed of bureaucracy would have serious negative effects on the tech industry that is continually transforming.

When others were calling for regulations, we argued for legislation. We were ahead of the curve while others engaged in the food fight that defines the net neutrality debate. Now, though, we are glad others are finally echoing what we’ve been saying since 2014. Bipartisan legislation would end for once and for all the endless cycle of FCC rule-making, litigation by those who oppose it, more FCC rule-making, repeal of FCC rule-making, protests, more protests and counter-protests. Our position hasn’t made us popular with those who profit from protest, but it has been the right thing to do the whole time. Today, we reiterate our call for Congress to enact commonsense legislation that put flexible but important principles into law that protect consumers and give some direction to entrepreneurs.

If net neutrality is as important as we all say it is, it should be the law of the land, not a political hot potato resting on the third rail of American tech policy for another decade.

Tech leaders concerned about Title II regulation of the Internet :

1. John Perry Barlow, lyricist, activitist, and co-founder EFF

2. Gordon Bell, researcher emeritus, Microsoft

3. Mark Cuban, founder, AXS TV & Owner, Dallas Mavericks

4. Tim Draper, co-founder, Draper Fisher Jurvetson

5. Tom Evslin, founder & former, CEO ITXC

6. Dave Farber, Professor Emeritus, CMU & Board Member ISOC and EFF

7. Toby Farrand, VP Engineering, Ooma

8. David Frankel, founder ZipDX, Jetstream, & HD voice pioneer

9. Martin Geddes, former BT Strategy Director

10. Charlie Giancarlo, Sr Advisor, Silver Lake & former Chief Development Officer, Cisco

11. George Gilder, futurist and author

12. John Gilmore, activist and co-founder EFF

13. Bryan Martin, Chairman and CTO, 8×8

14. Doug Humphrey, co-founder Digex, Cidera & first east coast ISP

15. Joe McMillen, founder Complex Drive & lead developer first carrier grade VoIP gateway

16. Scott McNealy, co-founder SUN Microsystems

17. Bob Metcalfe, Professor, University of Texas & co-founder 3Com, inventor of Ethernet

18. Andrew Odlyzko, Professor, University of Minnesota

19. Ray Ozzie, creator of Lotus Notes & former CTO Microsoft

20. Jeff Pulver, cofounder, Vonage & Zula

21. Sandra Rivera, VP Data Center Group and GM Network Platforms (leads SDN/5G initiatives)

22. Michael Robertson, CEO, MP3.com

23. Les Vadasz, former EVP, Intel

Mike Montgomery is Executive Director at CALinnovates.

Why Elon Musk Chose South Australia For His New Battery Project

By Mike Montgomery

When Elon Musk announced that he plans to build the world’s biggest ion battery to power to South Australia, it was a sign that the state truly has made a stunning turnaround.

Things looked grim for South Australia back in 2013, when GM announced it would stop manufacturing cars in Australia as of fall 2017.

Adelaide, the biggest city in South Australia, had prospered after World War II as a manufacturing hub for automobiles, appliances and textiles. Local industry was protected by high tariff walls — as high as 54 percent for automobiles in the 1980s. In Adelaide, the largest employers were tied to the auto industry.

That shattering 2013 announcement was a wake-up call, according to Jay Weatherill, South Australia’s premier. “It was a signal moment for us,” he says. “It’s been the impetus for massive change.”

Weatherill decided to pin the state’s future on tech and innovation rather than go looking for a volume-based manufacturing industry to replace GM. In fact, he started looking to make South Australia the next Silicon Valley.

As more cities look to reinvent themselves in the wake of factories closing, Adelaide is an appealing model. The first step was a review of commercialization and venture capital investments in South Australia. The news wasn’t good. The state received less than 0.2% of the venture capital investment in Australia. The review also found that a lack of coordination between government departments and agencies hindered private investment opportunities.

The solution was to spend money to make money. Weatherill used state funds last year to establish a $38 million venture capital fund to promote innovation, attract new VC and encourage tech companies to move to South Australia. The state also committed money to support new businesses from conception to product development and early commercialization, and gave more money to the local university’s innovation incubator to underwrite initiatives in the advanced manufacturing and engineering spaces.

South Australia also has invested in promoting its agribusiness sector and developing private export markets in high-quality foods, particularly to serve the exploding middle class in Asia. “Our wine and food are attracting huge investment from overseas,” says Andrew Cullen, managing partner of Deloitte in South Australia.

Weatherill also hired American transplant Tom Hajdu as his “Chief Advisor on Innovation.” Hajdu — founder of both music production company tomandandy and Disrupter, a Los Angeles-based startup incubator — says the state needed to upgrade its infrastructure to attract new tech businesses and the jobs that come with them. He led the effort to make Adelaide the first international city to join the Smart Gigabit Communities Program, which in part requires members to install sensors throughout the city and develop applications to connect those sensors and the data they collect to the cloud. So-called “gig cities” also have high-speed internet that is up to 100 times faster than the national average. The SA government paid $3.5 million for the upgrades.

But the biggest sign that the economy has turned the corner came in May, when all of South Australia’s efforts to modernize paid off. The Australian government picked the state as the primary location for its new defense shipbuilding program. Australia committed $66 billion to build submarines, frigates and offshore patrol vessels for the Australian navy, and to upgrade and modernize Adelaide’s existing naval shipyard. The government also will open a school in Adelaide to train shipbuilding workers.

Building and maintaining the next-generation naval fleet is expected to bring in 5,000 high-skilled, high-tech jobs, as well as thousands of other jobs in associated industries. South Australia won the bid in part by focusing on how it has morphed from rust belt to 21st century city.

“South Australia is a next generation state,” says Hajdu. “It’s the center of the new digital economy.”  If Elon Musk agrees, you know it must be true.

Mike Montgomery is the Executive Director at CALinnovates.

This piece was originally published on Forbes.

 

WannaCry or WannaFixIt? Time for Action on Data Security

By Tim Sparapani

As we’ve seen from the latest round of WannaCry ransomware attacks, no one is safe from these viruses that have locked up the data of more than 200,000 users in at least 150 countries. When desperate consumers and businesses are hit, they often end up paying to get access to their data, which puts a tangible price on their hassle and inconvenience and makes it clear that safeguards that block attacks are essential.

But we should never waste a good crisis. This attack presents a chance to redouble efforts to stomp out botnets, which take over people’s computers and spread viruses.

There is no legislative silver bullet for cybersecurity. The U.S. Senate can take concrete action by swiftly passing the Modernizing Government Technology Act, which the House passed in May. Federal agencies can begin implementing the president’s executive order on cybersecurity. And, we should codify the Vulnerabilities Equities Process. Yet if government officials pour time and money into “solutions” targeting outdated issues, the public may remain as ill-prepared for the next botnet or malware attack as the last. Clearer thinking by policymakers about cybercrime is critical for improving how consumers and businesses prepare for the next hit.

First, it’s necessary to broaden the scope of concern about the damage these attacks cause. For the last 20 years, online security discussions have focused solely on data breaches and identity theft. But, any introductory textbook on information security will tell you that it’s essential to focus on integrity and availability of the data as well. Before WannaCry, the Mirai botnet attack unleashed billions of phony requests to a few websites, shutting them, and the services that rely on them, down. These attacks show that hackers can use brute force to shut down government services, cripple businesses and hurt consumers. But making users’ data unavailable can do almost as much damage as stealing it. Future attacks that merely alter data — thus undermining faith in the accuracy of things like bank or personal health records — can have similarly devastating effects and cost billions in losses.

It’s a mistake to believe that we can protect the public if the culprits are tracked down and arrested. Cybercrime is lucrative, and the tools of the trade are increasingly sophisticated and readily available. Fewer than 1 percent of all cybercriminals are arrested because it is so hard for law enforcement agencies to find them. Most cybercriminals attack from countries that lack the laws and tools needed to convict them. New technological interventions will be necessary.

Now consider how cybercrime can change and evolve. Spam, for example, is a much smaller problem now than it was 10 years ago. That’s partially because a few of the worst spammers were arrested. It’s also because tech companies competed to come up with technologies to keep their customers’ inboxes free from offers from Nigerian princes or bogus online pharmacies. When companies compete over security, the public wins and crime decreases. Government policies that encourage this kind of innovation and competition would benefit consumers.

WannaCry also showed that more user education does not dramatically reduce the incidence of ransomware, data theft and other cyberattacks. Most people know that patching is important. But it’s still not being implemented at scale, partially because everyone has their own devices, and those devices are increasingly connected to the internet. Instead of relying on users to upgrade their security, the tech industry should automate patching to keep our computers, phones and Internet of Things devices protected.

Fixating on establishing industry standards for proper consumer and corporate “cyberhygiene” is a distraction that may slow down cybersecurity innovation. Standards — when agreement can be reached, which is rare — typically take many years to develop, and this results in internet users relying on outdated software and hardware. Flexible approaches like the National Institute of Standards and Technology cybersecurity framework that raise questions but don’t dictate specific solutions are better.

Fortunately, there are more and more powerful technologies that can help defeat problems like ransomware and botnet attacks — but we’ll have to adopt new thinking on cyberattacks if we are to put them to use. The most important technology is cloud-based services, which can be used for storing and encrypting data, for blocking cyberattacks and for providing applications ranging from social media to specialized business services. Too many people are still reluctant to move their data off their premises, and in some cases they are even prohibited by law from doing so. But, a two-person dental office cannot do a better job of protecting its data and networks than a cloud company with leading-edge technology and best-in-class engineers dedicated to ensuring their systems are secure.

Finally, tech companies can become a first line of defense, particularly if the U.S. government shares any software vulnerabilities it discovers. The president and Congress should work together to codify the Vulnerabilities Equities Process so that national security and law enforcement agencies can provide tech companies with the sort of insights that can help them close gaps before malicious actors exploit them. Our national economic security depends on this. We should enact legislation that favors disclosure of vulnerabilities to U.S. tech companies, and the recently introduced Protecting our Ability to Counter Hacking Act has helped start that conversation.

Artificial intelligence, machine learning and big data are other effective tools for preventing or responding to attacks. But these new solutions will not be adopted if governments and businesses don’t understand that much of the old thinking about cyberthreats and cybercrime has to be reconsidered in light of emerging threats.

Tim Sparapani is a data privacy law and policy expert serving as senior policy fellow with CALinnovates and principal at SPQR Strategies.

This piece was originally published on Morning Consult.

Mike Montgomery: Title II And Common Carriers: How The FCC Can Save Net Neutrality And Still Ruin the Internet

By Mike Montgomery

Prolonged discussions of Federal Communications Commission regulations are typically about as stimulating as a fistful of Ambien — except when it comes to net neutrality.

With the FCC poised to issue new rules governing how Internet service providers manage and price the traffic that flows through their networks, Americans woke up and spoke up so loudly that they crashed the agency’s website last month. The million-plus comments from concerned citizens were the most the FCC has ever received during a proposed rule’s public comment period — and just a few hundred thousand shy of the number of complaints that poured in after Janet Jackson’s infamous “wardrobe malfunction.” When we’re comparing tech regulations to Super Bowl nipple slips, you know we’re in a different kind of debate.

You probably haven’t had a chance to read all 1,067,779 comments. Neither have I. But most support an outcome preserving the wide-open Internet that birthed our current era of innovation, transformation and disruption. The question now is how to achieve this.

The debate so far has been oversimplified: Are you for net neutrality or against it? That reductive framing may lead us to embrace a solution that doesn’t solve the problem.

From where I sit at CALinnovates, representing tech companies dependent on the open Internet to survive, this debate is incredibly important. Disruptors like ride-share platform Sidecar and conference-call service Speek shouldn’t be forced to bid against deep-pocketed giants — or anyone, for that matter — for their share of bandwidth. Nor should they be forced to adapt to regulations that would suppress new ideas or hamstring the entrepreneurs who hatch them.

They, along with countless other startups and aspiring innovators, agree: We need an outcome that preserves the openness of the Internet.

Unfortunately, it’s not so simple. Let me explain. The leading proposal in Washington to achieve that goal is to reclassify broadband providers as “telecommunications services.” This would allow the FCC to regulate providers using authority granted it under Title II of the Communications Act of 1934.

As you have undoubtedly noticed, the Communications Act of 1934 was passed in 1934. That means the FCC is gathering input as it considers adopting the same legislative framework for the Internet that existed back when “wireless” meant the hand crank on your grandparents’ AM radio.

Title II turned our nation’s telephone system — a single network operated by a single company, Ma Bell — into a highly regulated utility, just like water and electric companies. While they helped protect consumers from the excesses of a corporate monopoly, Title II’s restraints hardly made that phone network an innovative one.

Ask your parents: Under Title II, innovation in telecom meant being able to buy a different color of the same phone chosen by the monopoly at a price set by the government. This same law can’t accommodate today’s sprawling, bustling, magically fragmented Internet, a miracle of technology unimaginable in 1934 — or even in 1996, when the act was updated for the “modern” era.

By turning the Internet into a utility, we’ll bleed tech innovation with a thousand paper cuts. Would we even know what an iPhone is if Steve Jobs had to run his pricing models past the FCC? Would Twitter be fomenting revolution if Jack Dorsey needed to check with regulators about what kind of data can be shared online and by whom?

It sounds far-fetched, but that’s how it would work. Under Section 214 of Title II, common carriers have to ask for approval before discontinuing nonperforming platforms or launching new ones.

Shoehorning Internet companies into Title II and treating them as common carriers won’t just slow Silicon Valley down to Beltway-at-rush-hour speed; it will also render impossible a great many things that have become part of our daily routines, like using on-demand services from location-based smartphone apps.

Under Section 222 of Title II, companies have a duty to protect the confidentiality of customers’ proprietary network information. Sounds benign, right? Well, it means wireless location data could no longer be shared with Internet companies for mapping or advertising. Location-based companies would be limited by, in the regulators’ lyrical stylings, the “use or disclosure” of “call location information concerning the user of a commercial mobile service.” In plain English, that means companies like dating service Tinder, car navigation service Waze and ride-sharer Uber could soon become relics of the past. At the least, they would have far higher hurdles and costs in launching and attracting investment capital.

The big losers in all this would very likely be startups and the consumers they seek to serve. For large, established digital companies, these new regulations would probably just be an inconvenience. For startups that don’t have the resources to fight Title II classification, or the in-house legal teams to interpret the new requirements, the rule changes would be a death knell.

Before we trade the devil we know for the devil our grandparents knew, we should pause to ask ourselves whether legally defining the Internet as a utility will keep it both open and innovative — or act as a drag on creativity and growth.

I’m pro-net neutrality, but anti-1934-style strangulation. Where does that leave me? According to the approaches under consideration, I may soon be a man without a country. Good thing the Internet, at least for now, doesn’t require a passport.

Mike Montgomery is the Executive Director of CALinnovates,

This piece was originally published in The Huffington Post.

Mike Montgomery: New Report by Faulhaber, Singer, And Urschel Shows That In Tech-Driven Economy, FCC Needs To Step Up

By Mike Montgomery

It’s clear that technology is a key driver of prosperity in today’s modernizing economy. Trillions of dollars in economic activity flow through the networks which make up the internet, making America’s digital economy the envy of the world. Networks are redefining the services people consume and the income people derive. For example, according to a Pew survey, 72 percent of Americans have used a sharing or on-demand service.

That’s why the Federal Communications Commission has never been more important. From last year’s Net Neutrality rules to current proceedings about set-top boxes, internet privacy and business services, FCC rules are shaping the future of the internet – and the broader economy that it fuels. Whether you agree or disagree with these regulations, everyone agrees they will have a profound impact.

That is why it’s so disconcerting to see the FCC disconnected from the economic impact of its decisions. In a report he published in July, the FCC’s very own former chief economist, Gerald Faulhaber, Ph.D., along with economists Dr. Hal Singer and Augustus Urschel, raised alarms about the agency’s dangerous turn away from economic analysis in its decision making.

In the report, Dr. Faulhaber, Dr. Singer, and Urschel ask: Why do the U.S. Department of Labor, the U.S. Environmental Protection Agency and the Consumer Financial Protection Bureau all conduct stringent cost-benefit analyses on their decisions while the FCC does not?

The FCC has simply become too important to the economy for it to fail to explore the economic impact of its decisions. For example, numerous economists warned the FCC that its decision to impose so-called Title II regulations on internet service providers, which treats today’s advanced broadband access in the same way as telephone services from generations ago, will have a negative impact on investment and innovation while not solving the issue we all want addressed: how to ensure that internet traffic is treated fairly across networks, regardless of where it comes from. Yet, when issuing its Open Internet Order, the FCC conducted no economic analysis of the impact its proposed rules would have on consumers, innovation or investment.

How is that possible?

The problems continue. The FCC is currently facing a major backlash from Congress, Hollywood and many innovators for its proposed new technology standards for set-top boxes.

Economists and legal analysts, including Harvard’s Laurence Tribe, are protesting a new FCC proposal to apply stifling “opt in” rules for internet privacy – distorting the market by creating arbitrary and inconsistent requirements for the same data when it is used by different companies and precluding companies from even the most mundane communications with their customers.

The agency is even considering abandoning years of economic precedent on whether and how markets should be regulated to impose rate regulations in business services where competition is thriving.

How the country utilizes spectrum is another issue where the FCC seems intent on picking winners and losers instead of maximizing the economic value of this public resource. In other words, once again, economics is taking a back seat to some other agenda.

If the FCC had undertaken rigorous economic analysis and evaluated the costs and benefits of these proposals it could have avoided these controversies and worked toward genuine consensus on pro-consumer, pro-innovation policies. That is what we should expect from a government agency that is supposed to be a subject-matter expert.

Traditionally, responsibility for managing the economy fell to the White House, the Treasury Department and the Federal Reserve — all economically expert operations. But the FCC is now elbowing its way into this mix by flexing jurisdiction over the internet and much more. But as the saying goes, with great power comes great responsibility.

So what can be done? If the White House isn’t prepared to insist the FCC factor economic impact into its decisions, it will be up to Congress.

Lawmakers have many tools at their disposal. Oversight hearings can shine a light on how the FCC makes its decisions. Congress can ask the Government Accountability Office to investigate how the FCC factors economics into its decisions – or fails to. And, of course, if Congress thinks the FCC has made decisions based on faulty or no economic reasoning, it can pass legislation to overturn faulty rules.

Hopefully the FCC will take stock of the criticism from people – like Faulhaber– who know it best, and make changes that will help the agency take the economic impact of its decisions into account.

After all, if the FCC wants to sit at the “adult table” when it comes to deciding our economic future, the very least we can expect them to do is their homework. According to Dr. Faulhaber and others, the agency hasn’t earned that seat just yet.

Mike Montgomery is executive director of CALinnovates, a San Francisco-based technology advocacy coalition.

This piece was originally published in Morning Consult.

Retail Isn’t Dying, It’s Being Revolutionized

By Kish Rajan

There’s almost nothing more depressing than the sight of a dying mall. If you’ve ever walked through one of these places, you know the sadness of the empty store fronts, the echoing atriums and the going out of business sales at the few remaining shops.

It’s enough to make anyone think that we’re witnessing the end of in-person shopping as we transition to online purchasing. But don’t let those sad malls fool you. Retail is far from dead — but it is evolving in ways that could benefit both shoppers and workers.

First, it’s worth noting that the death of brick and mortar shopping has been greatly exaggerated. E-commerce only accounts for 10% of retail overall. According to NPD, 95% of Americans shop at Wal-Mart while only 42% shop at Amazon. And those dying malls? They’re more a sign of overdevelopment than a harbinger of the obsolescence of retail. The number of malls in the U.S. grew more than twice as fast as the population between 1970 and 2015 according to research from Cowen & Co. What we’re seeing now is more of a rightsizing than a decline.

And many malls are reinventing themselves. Take the Westfield Mall outside of Los Angeles. Located in the heavily Asian San Gabriel Valley, it’s often almost impossible to find parking there on the weekends. Once a sleepy shopping center stocked with the usual suspects, the mall is now home to outposts of hot Asian retailers like SST&C out of Taiwan and Muji, a Japanese lifestyle store.

You see this kind of rethinking of retail everywhere you go. Online stores like Warby Parker and Modcloth are popping up in real life around the country. At the same time classic brick and mortar shops, like Nordstromand Best Buy, are using their physical stores to help drives sales online and vice versa.

This kind of creativity is exciting but it is just part of the overall evolution in retail. As more shopping moves online, it’s inevitable that we’ll see a change in the overall demand for different kinds of workers. Just look at Amazon Go, the online retailer’s latest foray into the real world. The Settle-based supermarket will work completely by automation. You just take what you need and leave and Amazon charges your account without requiring any human interaction at all. It’s a delight for shoppers but could dramatically reshape the number and types of jobs in future grocery stores.

As low-paid jobs fade, they’ll be replaced by higher-paying jobs in both physical and online retail. A recent study by the Progressive Policy Instituteshows that while retail saw a gain of 27,000 jobs last year, ecommerce jobs climbed by 97,000. Those ecommerce jobs pay an average $21.13 compared to an average $16.65 per hour in general retail.

But the trick will be moving displaced workers into better jobs that will pay more. It’s naïve to think that a laid-off cashier in a small town in Alabama can just pick up and move to a higher paying ecommerce job that might be located in Washington state.

In order for the new economy to benefit everyone, we have to make sure these new jobs are available to everyone. We can do that by ensuring technology jobs are spread throughout the country, not just concentrated in places like Silicon Valley and Boston. Smaller towns can become tech hubs. Just look at what’s happening in Augusta, Ga., where a group of entrepreneurs are building incubators and helping to create a tech-friendly environment.

We also need to laser focus on retraining workers. That means tech companies and government working together to come up with smart new ways to train people. One good example of this is TechHire Eastern Kentucky. Launched by Ankur Gopal, the CEO of Interapt out of Louisville, Ky., with support from the local government, the program trains people through class study and apprenticeships to move into tech jobs.

If we are to successfully move to the next phase of retail, which will be a mix of brick-and-mortar and ecommerce, we need to make sure there are new and better opportunities for workers. Those opportunities will come from creative new shops as well as good-paying tech and warehouse jobs. It’s a mix that will be good for customers, and good for employees.

Kish Rajan is Chief Evangelist at CALinnovates.

CALinnovates Statement on the Appointment of Commissioner Jessica Rosenworcel to the FCC

According to multiple reports, the White House has decided to nominate former FCC Commissioner Jessica Rosenworcel to return to the agency. We join a bipartisan chorus in declaring that it’s about time.

Should Rosenworcel’s appointment be confirmed by Congress, her return to the FCC will inject an even greater amount of wisdom and forward-thinking to this currently condensed policy-making body. As we noted when she was initially appointed to the FCC in 2012, and as Senate Minority Leader Chuck Schumer has correctly pointed out, Rosenworcel understands the rapidly changing nature of technology and the important role the tech sector plays in the innovation economy. Among the many issues Rosenworcel has championed that will return to the regulatory discussion include a vital continuation of the education and advocacy she continues to lead around the closing of the homework gap. The FCC and the nation will be well-served by her experience, expertise and intellect.

“Americans from Silicon Valley to the Hudson Valley will benefit greatly from Jessica Rosenworcel’s reappointment to the FCC. Welcome back, Commissioner Rosenworcel. You’ve been missed,” said Mike Montgomery, CALinnovates executive director.

Solving Infrastructure Problems From the Bottom Up

By Kish Rajan

Walking down the streets of San Diego, it’s not immediately apparent that the city is at the center of a technological revolution in infrastructure. That’s because the technology, 3,200 sensors, is hidden inside the city’s new street lights. The sensors collect data that will help the city save $2.5 million on electricity each year, track air quality, and improve traffic flow and parking. They can even be of use to public-safety first responders.

San Diego’s smart lights are just part of the city’s push to rebuild its infrastructure. Last June, voters approved the Rebuild San Diego ballot initiative, which will provide up to $4 billion for infrastructure projects over the next 25 years.

Expect to see more local and state governments taking infrastructure problems into their own hands. Given the realities of politics in Washington, they know the folly of waiting for the federal government to step in and save the day. And it’s highly unlikely that any new infrastructure plan that did emerge from Washington would cover more than a fraction of the $4.6 trillion that the American Society of Civil Engineers (ASCE) estimates it would cost to fix everything — more than the federal government spends in a year.

ASCE’s latest report card gives America’s infrastructure an overall grade of D-plus. And no one knows better than those at the local level how our deteriorating infrastructure makes us less competitive globally, not to mention the safety concerns it raises for the people who use crumbling bridges, overpasses and tunnels every day or who drink water that might be contaminated by sewage overflows, just to name a few issues. They need to take a page from San Diego’s playbook and find creative ways to start solving infrastructure problems from the bottom up.

It’s already beginning to happen. South Bend, Ind., for example, is a sewer overflow city. Hundreds of billions of gallons of raw sewage overflow into local rivers and lakes every year. Aiming to improve the situation, the city, under Mayor Pete Buttigieg, has begun using a system called CSOnet, developed by a local company, that collects data from sensors inside the sewers so the city can redirect water to empty pipes and reduce the overflows.

In Multnomah County, Ore., more than a third of the commercial buildings use more energy than they should. But the Building Ready Multnomah initiative, started by former County Commissioner Jules Bailey, helps finance capital improvements that reduce energy consumption or generate energy. The organization leverages public and private resources for the loans and encourages participants to use the savings generated from becoming more energy efficient toward seismic upgrades to prepare for natural disasters.

And as some Western states struggle to build up their renewable-energy infrastructure, other states, including California, have excess renewable energy capacity. California state Sen. Bob Hertzberg has proposed the creation of a regional grid operator and energy exchange to make it easier for states to buy and sell energy to each other, which could reducing overall carbon dioxide emissions.

These efforts might seem small, but they can add up to a serious impact. With the continuing dysfunction in Washington, it may be years before we see a comprehensive federal infrastructure effort. But as these local leaders have shown, that doesn’t mean we can’t begin to improve our grade.

Big Data Will Help Revolutionize The Pot Industry

By Mike Montgomery

Getting a Rocky Mountain high may soon be legal in all 50 states, which means pot is fast on its way to becoming just another industry, albeit an exploding one. And as the marijuana industry comes aboveground, it’s opening a huge space for the usual disruptors — tech startups and data analytics firms.

Startups like Eaze in California began with medical marijuana, using technology to provide on-demand marijuana deliveries via an app. Eaze also provides data to help retailers predict supply and demand. MJ Freeway offers an agricultural tracking product that helps marijuana license holders manage their businesses and comply with regulations in Colorado. Both companies can be scaled up easily as more states come online with recreational use.

Dozens of other startups are devoted to finding ways to use technology to improve mundane tasks, including human resources, transportation, regulatory compliance, insurance and mobile payments.

On the analytics side, Cannabase is a Colorado-based wholesale market that treats marijuana just like any other commodity. It provides real-time market insights to wholesale growers and retailers, helping them anticipate market trends, price changes and volume fluctuations in both the medical and recreational markets. Cannabase also provides analytics to advertisers looking to market to growers and dispensaries. “Data-driven operations are the ones most likely to survive,” says Jennifer Beck, Cannabase co-founder.

Beck is talking about when marijuana is legalized across the U.S. Right now, it is still a Schedule 1 drug, regulated in the same manner as cocaine and heroin. But a trio of new bills proposed by members of the Congressional Cannabis Caucus in the House of Representatives brings federal legalization one step closer. The Regulate Marijuana Like Alcohol Act is self-explanatory, while the other bills pertain to pot-industry taxes and reforms to banking and research regulations.

Although it’s legal for recreational use in just a handful of states, marijuana already is the fastest-growing industry on the planet, according to Arcview Market Research’s 2017 report on the marijuana market. Sales hit $6.7 billion in 2016 — a 34 percent jump from the previous year. Arcview expects the legal marijuana market in North America to be nearly $23 billion by 2021 — all without federal legalization.

Those are the kinds of numbers that draw venture capital. The total amount of capital raised by cannabis companies in 2015-2016 was more than $2 billion, up 45 percent from the previous year, according to Arcview, which itself has invested $118 million in more than 145 companies.

Another cannabis VC company is Poseidon Asset Management, which has more than $15 million invested in technology firms like Headset and Wurk. Poseidon invests mostly in ancillaries — genetic research, biotech, agtech and, of course, data analytics. “The industry is evolving and that’s where technology companies come into play,” says Emily Paxhia, managing director of Poseidon Asset Management. “It’s being powered by people who are entrepreneurial in spirit and willing to participate when it’s still a little more high-risk.”

When legalization happens — and it will — companies with access to big data will have a big advantage in the multibillion-dollar market. As legalization spreads, prices will decline and the number of products will explode, making branding and marketing vital. Big data in particular is necessary to gain insight into the potential of the pot industry. “Data allows people to make informed decisions, track trends, merchandise products and advertise effectively,” Paxhia says. “From a regulatory standpoint, this is critical to demonstrate the evolution of the industry.”

Right now, the entire legal-marijuana industry is a somewhat unknown space, but soon it will be filled with unlimited data on sales, markets and consumer behavior. “The rest of the business and innovation world is infatuated with data, and there is no reason for cannabis to be the exception,” Paxhia says.

Could One Of Italy’s Most Beautiful Regions Emulate Next Silicon Valley?

Tourists flock to the region of Liguria in Italy for the area’s natural beauty. Nestled against the Mediterranean at the northern tip of the Italian boot, Liguria boasts the Cinque Terre, a string of five picturesque fishing towns connected by idyllic hiking trails.

But according to Marco Bucci, Liguria is rich in another resource: tech talent. Bucci, who is running for mayor of Liguria’s biggest city, Genova, joined Mike Montgomery and Jeff Capaccio, of counsel at Silicon Valley law firm Carr & Ferrell, a member of CALinnovates’* Advisory Board and the founder of the Silicon Valley Italian Executive Council to talk about the potential for the region.

Bucci believes that by reducing taxes, better marketing Liguria and utilizing best practices from Silicon Valley, he can help turn Genova into an Italian tech hub.

The region has home-grown potential with academic institutions as home to the Italian Institute of Technology and the University of Genova which has an excellent engineering program. The trick will be getting students from those schools to stay in the area and avoid the brain drain that has affected the area for far too long, according to Bucci. Bucci says that will be one of his top priorities if elected.

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*CALinnovates does not endorse candidates.

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