issue: Telecom

The App Economy in Thailand

Posted on by The Progressive Policy Institute

When Apple introduced the iPhone in 2007, that initiated a profound and transformative new economic innovation. While central bankers and national leaders struggled with a deep financial crisis and stagnation, the fervent demand for iPhones, and the wave of smartphones that followed, was a rare force for growth.

Today, there are 5 billion mobile broadband subscriptions, an unprecedented rate of adoption for a new technology. Use of mobile data is rising at 65 percent per year, a stunning number that shows its revolutionary impact. More than just hardware, the smartphone also inaugurated a new era for software developers around the world. Apple’s opening up of the App Store in 2008, followed by Android Market (now Google Play) and other app stores, created a way for iOS and Android developers to write mobile applications that could run on smartphones anywhere.

The App Economy in Vietnam, 2017

Posted on by The Progressive Policy Institute

When Apple introduced the iPhone in 2007, that initiated a profound and transformative new economic innovation. While central bankers and national leaders struggled with a deep financial crisis and stagnation, the fervent demand for iPhones, and the wave of smartphones that followed, was a rare force for growth.

Today, there are 5 billion mobile broadband subscriptions, an unprecedented rate of adoption for a new technology. Use of mobile data is rising at 65 percent per year, a stunning number that shows its revolutionary impact.

More than just hardware, the smartphone also inaugurated a new era for software developers around the world. Apple’s opening up of the App Store in 2008, followed by Android Market (now Google Play) and other app stores, created a way for iOS and Android developers to write mobile applications that could run on smartphones anywhere.

Regulation and the Productivity Revolution in Japan’s Handset Market

Posted on by The Progressive Policy Institute

The Progressive Policy Institute has long been focused on the interaction between regulation and innovation across the United States, Europe, and Asia. We are particularly concerned with the broad class of pricing of innovative products and services.

From this perspective, we note that the Japanese government, acting through the Ministry of Internal Affairs and Communications (MIC) and the Japan Fair Trade Commission (JFTC), has required or encouraged mobile providers to reduce or eliminate their subsidies for consumer purchases of smartphone handsets. The government’s explicit goal is to persuade the providers to use the money saved from reduced subsidies to lower rates for long-term consumers.

Happy Holidays from PPI

Posted on by The Progressive Policy Institute
It’s been a surreal political year, but PPI has much to celebrate this holiday season. Throughout 2017, we expanded our productive capacity and the scope of our political and media outreach significantly. For example, PPI organized 150 meetings with prominent elected officials; visited 10 state capitals and 10 foreign capitals, published an influential book and more than 40 original research papers, and hosted nearly 30 private salon dinners on a variety of topical issues.
Best of all, we saw PPI’s research, analysis, and innovative ideas breaking through the political static and changing the way people think about some critical issues, including how to revive U.S. economic dynamism, spread innovation and jobs to people and places left behind by economic growth, and modernize the ways we prepare young people for work and citizenship.
Let me give you some highlights:
  • This fall, David Osborne’s new book, Reinventing America’s Schools, was published on the 25th anniversary of the nation’s first charter school in Minnesota. David, who heads PPI’s Reinventing America’s Schools project, documents the emergence of a new “21st Century” model for organizing and modernizing our public school system around the principles of school autonomy, accountability, choice, and diversity. David is just winding up a remarkable 20-city book tour that drew wide attention from education, political, and civic leaders, as well as the media. Because David is a great storyteller, as well as analyst, it’s a highly readable book that offers a cogent picture of a K-12 school system geared to the demands of the knowledge economy. It makes a great holiday gift!
  • Dr. Michael Mandel’s pioneering research on e-commerce and job creation also upended conventional wisdom and caught the attention of top economic commentators. Dr. Mandel, PPI’s chief economic strategist, found that online commerce has actually created more jobs in retail than it destroys, and that these new jobs (many in fulfillment centers in outlying areas) pay considerably better than traditional ones. His research buttresses the main premise of PPI’s progressive pro-growth agenda: that spreading digital innovation to the physical economy will create new jobs and businesses, raise labor productivity, and reduce inequality.
  • PPI challenged the dubious panacea of “free college” and proposed a progressive alternative – a robust system of post-secondary learning and credentials for the roughly 70 percent of young Americans who don’t get college degrees. PPI Senior Fellow Harry Holzer developed a creative menu of ways to create more “hybrid learning” opportunities combining work-based and classroom instruction. And PPI Senior Fellow Anne Kim highlighted the inequity of current government policies that subsidize college-bound youth (e.g., Pell Grants), but provide no help for people earning credentials certifying skills that employers value.
  • Building on last year’s opening of a PPI office in Brussels, we expanded our overseas work considerably in 2017. In January, I endeavored to explain the outcome of the U.S. election to shell-shocked audiences in London, Brussels, and Berlin. In April, we led our annual Congressional senior staff delegation to Paris, Brussels, and Berlin to engage European policymakers on the French presidential election and other U.S-E.U. issues, including international taxation, competition policy, and trade. PPI also took its message of data-driven innovation and growth to Australia, Brazil, Japan and a number of other countries.
Other 2017 highlights included a strategy retreat in February with two dozen top elected leaders to explore ideas for a new, radically pragmatic agenda for progressives; a Washington conference with our longtime friend Janet Napolitano (now President of the University of California system) on how to update and preserve NAFTA; public forums in Washington on pricing carbon, infrastructure, tax reform, and other pressing issues; creative policy reports on varied subjects; and a robust output of articles, op-eds, blogs, and social media activity.
I’m also happy to report many terrific additions to PPI in 2017. Rob Keast joined to manage our external relations and new policy development; Paul Bledsoe assumed a new role as Strategic Adviser as well as guiding our work on energy and climate policy; and Emily Langhorne joined as Education Policy Analyst. We will also be adding a fiscal project next year.
All this leaves us poised for a high-impact year in 2018. In this midterm-election year, our top priority will be crafting and building support for a new progressive platform — a radically pragmatic alternative to the political tribalism throttling America’s progress. That starts with new and better ideas for solving peoples’ problems that look forward, not backward, and that speak to their hopes and aspirations, not their anger and mistrust.
It’s a tall order, and we cannot succeed without your help and support. Thanks for all you have done over past years, and we look forward to working with you in 2018.
Happy holidays and New Year!

Mandel featured on TechFreedom Tech Policy Podcast, “#178: Is it time to break up Big Tech?”

Posted on by The Progressive Policy Institute

In a New York Times op-ed, Jonathan Taplin argues that Google, Facebook, and Amazon have become monopolies. With such large market shares in search advertising, social media, and e-commerce respectively, Taplin says it’s time to break up these companies — or regulate them as public utilities. Is this a fair assessment? Is Big Tech really stifling innovation? What lessons can we learn from the growth of other industries like automobiles and fossil fuels? Tech is often seen as a bright spot in our otherwise sluggish economy. Should policymakers focus their efforts elsewhere? TechFreedom discusses with Mike Mandel, Chief Economic Strategist at the Progressive Policy Institute and co-author of a report, “The Coming Productivity Boom.”

Listen here.

 

Lewis for Austin American-Statesman, “How better politics make a stronger and more open Internet”

Posted on by The Progressive Policy Institute

Americans don’t agree on much these days — but everyone knows our politics isn’t working.

Even the simplest of issues are no match for the spinmeisters, and policy argument has been replaced by viral meme. It’s a plague that undermines the very idea of meeting in the middle that has been fundamental to our progress.

And the open internet appears to be its next target.

Internet openness – or neutrality – is a foundation of the economic, social and cultural success of the online ecosystem. It ensures broadband providers don’t block access to lawful websites, throttle traffic, or harmfully discriminate against apps or services online.

Two years ago, the FCC enshrined these basic principles into law. And while there was a healthy debate over the need for regulation – since the internet was already open and working well – the basic principles of openness and neutrality were not controversial.

Continue Reading at Austin American-Statesman. 

Mandel for WSJ, “Robots Will Save the Economy”

Posted on by The Progressive Policy Institute

The problem today is too little technology. Physical industries haven’t kept up.

Some anxious forecasters project that robotics, automation and artificial intelligence will soon devastate the job market. Yet others predict a productivity fizzle. The Congressional Budget Office, for instance, expects labor productivity to grow at the snail’s pace of 1.3% a year over the next decade, well below the historical average.

There’s reason to reject both of these dystopian scenarios. Innovation isn’t a zero-sum game. The problem for most workers isn’t too much technology but too little. What America needs is more computers, mobile broadband, cloud services, software tools, sensor networks, 3-D printing, augmented reality, artificial intelligence and, yes, robots.

For the sake of explanation, let’s separate the economy into two categories. In digital industries—technology, communications, media, software, finance and professional services—productivity grew 2.7% annually over the past 15 years, according to the findings of our report, “The Coming Productivity Boom,” released in March. The slowdown is concentrated in physical industries—health care, transportation, education, manufacturing, retail—where productivity grew a mere 0.7% annually over the same period.

Digital industries have also experienced stronger job growth. Since the peak of the last business cycle in December 2007, hours worked in the digital category rose 9.6%, compared with 5.6% on the physical side. If health care is excluded, hours worked in physical jobs rose only 3%.

What is holding the physical industries back? It is no coincidence that they are heavily regulated, making them expensive to operate in and resistant to experimentation. The digital economy, on the other hand, has enjoyed a relatively free hand to invest and innovate, delivering spectacular and inexpensive products and services all over the world.

Continue reading at The Wall Street Journal.

L.A. Times: Don’t stress over robots; a bright new economy is being born

Posted on by The Progressive Policy Institute

Good news: The robots may not destroy us after all.

A few weeks ago, I wrote a column that outlined the worries of big thinkers such as Stephen Hawking and Andrew Yang who are predicting a wave of job destruction caused by automation, robots and artificial intelligence.

Michael Mandel begs to differ. Mandel is chief economic strategist at the Progressive Policy Institute. He and Bret Swanson, president of Entropy Economics LLC, just completed a study for the Tech CEO Council that foresees a rather bright economic future brought about by technological innovation.

I recently interviewed Mandel and he made a compelling argument that the application of technology to the physical economy will, in time, produce more jobs, higher wages, greater productivity and all kinds of as-yet-unimagined business activity. The two doomsday narratives that are currently circulating — that robots will steal jobs and that productivity will lag more or less permanently — are as wrong as the 19th century fears that electrification would put people out of work, Mandel said.

Continue reading at L.A. Times. 

Mandel for Forbes: How E-Commerce Is Raising Pay And Creating Jobs Around The Country

Posted on by The Progressive Policy Institute

Think back to the first half of the 20th century, when superstar companies of the likes of Ford, General Motors, General Electric, DuPont and Bethlehem Steel literally grew from nothing to employ hundreds of thousands of workers. These innovative market leaders, notably feted by business historians such as Alfred Chandler, pioneered new products and production techniques, achieving and sustaining ever-higher levels of manufacturing productivity. They offered higher wages to workers, lower prices to customers, and a sense of vitality and dynamism to the whole economy. In a very real sense, these superstar companies helped create a new middle class of factory workers.

Skeptics deny that that this virtuous circle is operating today. They fear that today’s tech superstars are not generating enough jobs to make up for the slow growth of jobs in the rest of the economy.

However, these fears of a digital job drought are misplaced. According to analysis of data from the Bureau of Labor Statistics, high-productivity digital companies are expanding—not just on the coasts, but across much of the country. And the gains are going not just to well-educated software developers, but to mid-skilled sales people and office staff.

Continue reading in Forbes.

Flashback Friday: PPI in Hindsight

Posted on by The Progressive Policy Institute

Just over a year ago, PPI unveiled a big ideas blueprint with a prescient subtitle: Unleashing Innovation and Growth: A Progressive Alternative to Populism. We knew that progressives in the United States and Europe needed better answers to the economic and cultural grievances that have fueled the rise of a retrograde populism and nationalism around the world. We did not foresee that Democrats would fail to offer a forward-looking plan for jobs and shared growth, opening the door to Donald Trump’s improbable victory.

Which makes the themes and ideas in PPI’s sweeping policy blueprint more important than ever. Populism today thrives in the political vacuum left by center-left parties that offer no clear vision for reviving economic dynamism and hope. “Winning the economic argument will be essential to victory in the 2016 elections and it starts by getting the diagnosis right,” the blueprint noted. Instead, Democrats ran a campaign that leaned heavily on identity politics, wealth redistribution and centralized, small-bore solutions.

Unleashing argued that America (and Europe) are stuck in a slow-growth trap that holds down wages and living standards. And it offered bold prescriptions for building on America’s competitive advantage in technology and entrepreneurship to spread innovation – now concentrated in a vibrant digital sector — to the nation’s physical economy, which continues to suffer from low productivity. In addition, the document proposed creative ways to modernize the nation’s economic infrastructure, improve the regulatory environment for innovation, build middle class wealth and empower poor Americans to work, save and chart their own course to social mobility and inclusion.

Crucially, the blueprint also urged progressives to reject anger and victimhood and offer voters a confident account for how America can build a new, inclusive prosperity:

What America needs is a forward-looking plan to unleash innovation, stimulate productive investment, groom the world’s most talented workers, and put our economy back on a high-growth path, It’s time to banish fear and pessimism and trust instead in the liberal and individualist values and enterprising culture that have always made America great.

That was the road not taken in 2016. Now it’s the road to political relevance and success for progressives here and elsewhere.

 

Embrace of IT in Physical Industries Has U.S. on the Cusp of a Productivity Boom

Posted on by The Progressive Policy Institute

WASHINGTON—The Technology CEO Council (TCC) today released a new economic analysis, co-researched and written by PPI Chief Economic Strategist Michael Mandel that shows a coming U.S. productivity boom enabled by the diffusion of information technology (IT) into the physical industries, including manufacturing, agriculture, healthcare, transportation, and energy. Far from a jobless future, Mandel’s co-analysis predicts that increased use of information technology will make the physical economy more productive and American workers more valuable.

“Job and productivity growth has stalled in many industrialized countries, including the U.S.,” says Mandel. “While some economists will put the blame squarely on IT for disrupting industries and destroying jobs, the surprising fact is that 70 percent of companies in the U.S. economy are not taking full advantage of the power of information technology. And that’s the problem.”

By comparison, digital industries have fully embraced information technology, building new products and platforms—the PC, the Web, the smartphone, cloud computing, electronic financial markets—all of which empowered further explosions of entrepreneurial activity and along with it, jobs.

According to the report, this IT-enabled transformation could add $2.7 trillion to U.S. annual economic output by 2031 (in 2016 dollars), and grow federal revenues by a cumulative $3.9 trillion over the next 15 years.

In particular, The Coming Productivity Boom details a manufacturing sector in the midst of major transformation—not just by robotics and 3D printing, but by the emergence of smart manufacturing, a fundamental rethinking of the production and design process that will substantially boost productivity and demand. In turn, smart manufacturing will lead to the creation of a new set of manufacturing-related jobs and allow American factories to compete more effectively against low-wage overseas competition.

Catalyzing this growth requires better tax policy, the free flow of goods, services and data around the world, investments in communications networks and in education and training, as well as an embrace of innovation among regulators.

The complete report is available for download at www.techceocouncil.org/productivityboom.

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Net Neutrality: The Debate That Would Not Die

Posted on by The Progressive Policy Institute

One of the biggest puzzles in democratic societies across the world these days is what to do about regulation. On the one hand, regulation is important for a well-functioning society. On the other hand, too much regulation can hamper innovation and growth.

Moreover, there’s a feeling that democratic governance has broken down. We don’t seem to have a good process for coming to collective decisions.

Case in point: The “open internet” debate. When the FCC issued its Open Internet Order in March 2015,  we said it was “time for Congress to act.”  We believed and still believe that in the importance of an open internet, but the FCC was unilaterally picking the wrong approach. The imposition of Title II rules was unnecessary to keep the Internet open.

Now that the FCC may be backing from the 2015 Open Internet Order under new FCC Chairman Ajit Pai, we say the same thing: It’s time for Congress to act. These big swings back and forth in policy don’t do anyone any good.

Consumers, tech firms, ecommerce and content companies, and telecom providers all need certainty about the rules of the road, and that means legislation that enacts the open internet into law without an excessive and unnecessary regulatory structure. It may not be quick and pretty, but it’s the right way to go.

Press Release: New PPI Historical Study Shows Tech Company Jobs Growing As Fast or Faster Than U.S. Employment Leaders of the Past

Posted on by The Progressive Policy Institute
WASHINGTON— The Progressive Policy Institute (PPI) today released a new study, “A Historical Perspective on Tech Jobs,” authored by PPI Chief Economic Strategist Michael Mandel comparing job creation performance among tech companies in the United States to employment leaders of the past. The study finds that today’s big tech companies are following a similar or better employment trajectory than big job creators of the past, while average hourly wages for many tech and telecom industry jobs fall solidly into the rank of “middle-class” jobs, though the concept of  “middle-class” requires greater analysis and examination. 
 “When we compare today’s tech leaders with the employment leaders of the past at a similar stage of development, it turns out that the job creation performance of the tech sector looks quite good,” writes Mandel. “We remember the giant corporate employers of the post World War II period, but we fail to remember how they had generally been in existence for many decades before they reached that mammoth size. And just like it takes many years for an oak tree to grow from an acorn, it turns out that employment growth simply takes time.” 

PPI’s study finds that in 2016, Amazon became the fastest American company to reach 300,000 workers, hitting that mark in its twentieth year as a public company. This figure, which does not include contractors or temporary workers, represents an average employment growth rate of roughly 30 percent annually. 

By contrast, General Motors reached 300,000 employees in 1941, 32 years after its 1909 founding. American Telephone & Telegraph hit the same milestone in 1926, 27 years after its 1899 absorption of the local Bell systems. And Walmart went over 300,000 associates in its 1991 fiscal year, its twenty-first year as a public company. 

According to the study, Amazon is not alone; In fact, tech giants such as Google, Apple, Facebook, and Microsoft are adding jobs as fast or faster than the great job-producing companies of the past, like General Motors, AT&T, Walmart, IBM, General Electric, U.S. Steel, and Bethlehem Steel. 

The study includes charts and tables highlighting the historical comparisons, as well as a comparison of average hourly wages for selected tech and telecom industries. This comparison previews an upcoming paper on the quality and wages of tech and telecom jobs, including upstream and downstream jobs.

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Reforma Tributaria y la Econom’a App: El Ejemplo de Colombia

Posted on by The Progressive Policy Institute

En los Estados Unidos hemos estado, con mucha razón, obsesionados con el resultado de las elecciones presidenciales. Pero el mundo sigue girando. Por ejemplo, la semana pasada Colombia ratificó un tratado de paz histórico entre el gobierno y el movimiento rebelde. PPI tuvo el privilegio de estar en Bogotá este octubre, donde realizamos un evento sobre la Economía App, el cual fue muy difundido, y describió cómo la Economía App de Colombia ha generado más de 80.000 puestos de trabajo.

Hay que felicitar al presidente de Colombia, Juan Manuel Santos por su éxito. Al mismo tiempo, él ha presentado una importante reforma tributaria que simplifica el sistema de impuestos corporativos mientras que recauda nuevos fondos. No es sorpresa que la medida de reforma tributaria sea controversial. Por ejemplo, las franquicias de la cadena de sandwiches Subway reclaman que el incremento en los impuestos puede terminar con el negocio.

De mayor impacto, la reforma tributaria de Santos afecta directamente al sector digital de Colombia y en particular a la Economía App. Incrementaría el IVA en dispositivos (teléfonos, tablets y computadoras) del 16 al 19% – solo las tablets y las computadoras menos costosas estarían exentas del IVA. La reforma ialzaría el IVA sobre los servicios móviles de datos del 16 al 19% y agregaría un 4% adicional de impuestos al consumo (un total de 23%). Finalmente, la reforma tributaria impondría un IVA sobre todo el contenido y servicios digitales que sean provistos por proveedores de origen extranjero.

Estas medidas tributarias podrían potencialmente restringir la continuación del crecimiento de la Economía App de Colombia, la cual depende de dispositivos asequibles y el banda ancha móvil, y del acceso a apps provenientes de cualquier parte del mundo. Más aún, esto podría afectar negativamente la competitividad en el resto de la economía, ya que la Economía App es mucho más que solo entretenimiento y aplicaciones de juegos. De hecho, se desarrollan y usan aplicaciones por grandes multinacionales, bancos, compañías de medios audiovisuales, tiendas minoristas, y gobiernos.

La importancia a futuro de la Economía App va incluso más lejos. Citamos de nuestra publicación de octubre 2016, «Siguiendo la Economía App de Colombia»:

Uno de los cambios más grandes que se aproximan es el Internet de las Cosas, el cual es el uso de Internet para ayudar a controlar objetos físicos y nuestro entorno físico. Los agricultores usarán cada vez más aplicaciones que ayuden a su producción agricultural, los enfermeros y doctores usarán aplicaciones para administrar el cuidado de los pacientes, y los productores usarán aplicaciones para controlar sus fábricas.

A nivel global, los países exitosos digitalmente como Vietnam y China aplican tasas de IVA relativamente bajas a los datos y servicios móviles para estimular el uso (Vea este informe reciente sobre la inclusión digital y los impuestos sobre el sector móvil).

Finalmente, como hemos mencionado en nuestra publicación de octubre de 2016:

Si los legisladores son serios con respecto a fomentar un ecosistema dinámico para nuevas empresas y la Economía App, entonces continuar con las políticas que apoyen la Economía App será lo que ayudará a Colombia a participar en la revolución móvil global como productor más que como consumidor. Aplicar demasiadas restricciones costosas sobre la Economía App de Colombia podría desviar el crecimiento hacia otro lugares. (énfasis añadido)

Tracking Colombia’s App Economy

Posted on by The Progressive Policy Institute

All around the world we are seeing the rise of the App Economy— jobs, companies, and economic growth created by the production and distribution of mobile applications (“apps”) that run on smartphones. Since the introduction of the iPhone in 2007, the App Economy has grown from nothing to a powerful economic force that rivals existing industries.1

In this paper we examine the production and distribution of mobile apps as a source of growth and job creation for Colombia. We find that Colombia had over 83,100 App Economy jobs as of September 2016, including a conservative estimate of spillover jobs. What’s more, Colombia’s connectivity with the global economy, particularly the United States, gives the country the potential to add many more App Economy jobs in the near future.

Going forward, Colombia has several important advantages in positioning itself as a hub for domestic and export app development. Colombia benefits from a growing economy in a time of economic volatility in the region. For 2015, Colombia showed annual growth of 3.1 percent, while the overall Latin American economy contracted. This is a slowdown compared to the growth Colombia experienced in years 2010-2014, due in large part to external factors: the decrease in global demand, particularly from China; and falling oil prices, with petroleum accounting to nearly half of the country’s total exports.3 Growth is expected to slow further in 2016, with economic and political uncertainty, including the ongoing peace process and tax reform.

Does the FCC Have the Authority to Rewrite Copyright Law and License Apps?

Posted on by The Progressive Policy Institute

Does the Federal Communications Commission (FCC) have the authority to rewrite copyright law and license apps? This Thursday the Senate Commerce Committee will hold an oversight hearing for the FCC, giving the committee members the opportunity to ask FCC Chairman Tom Wheeler this very relevant question.

Wheeler has proposed a plan by which payTV operators will be required to offer their shows through an app, which can be used on any device. The goal of this plan is to wean consumers off set-top boxes and home television sets, and encourage them to watch their favorite shows on their phones or tablets.

In the process, however, Wheeler is also mandating that the copyright holders for movies and television shows can no longer control where their material appears. That dramatically changes established copyright law, which gives copyright holders effectively unlimited discretion over how and where to sell and distribute their content.

Moreover, the FCC would set up a licensing board to certify the apps, setting an unfortunate precedent where any app that provided video content could presumably come under government control about how and where it could provide that content (or else it would be easy to circumvent the FCC’s rules). In effect, the FCC is setting itself up as the gatekeeper of the App Economy, which has been a tremendous job producer so far for the United States.

As we discussed in our 2015 paper, “Copyright in the Digital Age: Key Economic Issues,” significant changes in copyright law should be evaluated by three metrics:

  • Do they promote the creation of new artistic works?
  • Do they allow creators and authors to benefit from their artistic endeavors?
  • Do they stimulate jobs and economic growth?

There is no evidence that the FCC did any economic analysis of these copyright metrics to justify its proposal. Moreover, app licensing by the government could dramatically slow down the rate of innovation in apps

PPI is in favor of competition in the set-top box market, including the delivery of content through apps. But the FCC’s attempt to squeeze out set-top boxes by rewriting copyright rules and licensing apps has the potential to have wide-reaching negative economic consequences.