Reallocating Mid-Band Spectrum Will Create Significant Economic Benefits

On February 5, 2019, the Analysis Group published a study in conjunction with CTIA titled "The Economic Impacts of Reallocating Mid-Band Spectrum to 5G in the United States." The use of mid-band spectrum is a necessity for developing 5G networks capable of maintaining high speeds and low latency. The study examines the economic impact of reallocating 400 MHz of licensed mid-band spectrum between 3.45 GHz and 4.2 GHz. Over a seven-year buildout period, wireless providers will invest $154 billion in 5G infrastructure, resulting in $274 billion in additional economic activity and 1.3 million new jobs.

Copyright Industries Contributed Significantly to the U.S. Economy in 2017

U.S. Copyright Industries
Infogram

United States Remains Global Leader in IP But Still Can Improve

On February 8, 2018, the U.S. Chamber of Commerce’s Global Innovation Policy Center (GIPC) released the sixth edition of the International IP Index entitled “Create.” The Index scored the intellectual property (IP) systems of 50 countries, representing over 90% of the world’s gross domestic product. Scores were derived from several specific factors pertinent to IP rights protection, allowing policymakers to better understand where their countries stand in relation to others.

The International IP Index should prompt U.S. policymakers to strengthen our IP rights system. Although the U.S. ranked at the top of the Index, by a smidgen, the Index nonetheless identified IP rights enforcement as one of the areas in which improvements need to be made. Lackluster Index scores for IP rights systems in certain foreign countries should also spur U.S. trade negotiators to seek stronger protections for Americans’ IP rights overseas. By bolstering IP protections, the U.S. will further benefit from the strong relationship between strong IP rights and economic activity. 

Scores in the 2018 International IP Index are based on eight key categories, including: patent rights, copyrights, trademarks, trade secrets, commercialization of IP assets, enforcement, systemic efficiency, and membership in and ratification of international treaties. Those categories encompass 40 separate indicators of a strong IP system.

Because scoring for this year’s Index is based on 40 indicators, instead of 35, a weighted-score was calculated to determine whether countries’ protections of IP rights were stronger or weaker than what was calculated in last year’s Index. Of the 45 countries included in the 2017 Index, 28 improved their weighted-scores in this year’s Index.

For the sixth consecutive year, the United States had the highest score. The U.S. IP system rated 37.98 (out of 40). The United Kingdom and Sweden followed with scores of 37.97 and 37.03, respectively. The countries with the lowest scores were Egypt, Algeria, and Venezuela at 10.10, 9.53, and 6.85, respectively.

Despite the United States’ leadership with regard to strong IP rights protections, there are some areas of weakness discussed in the Index. For example, the United States has a perfect score with regard to encouraging creativity by virtue of strong copyright protections, but it lacks an effective enforcement regime to disable access to websites which facilitate pirated content and counterfeit goods. A 2017 report by the IP Commission found that the annual cost of counterfeit goods, pirated software, and theft of trade secrets to the U.S. economy is between $225 billion and $600 billion.

To combat online piracy, Congress can help step up enforcement by reforming and updating the Digital Millennium Copyright Act’s notice and takedown system under Section 512. Also, modernizing the U.S. Copyright Office by updating the administrative technologies in order to maintain a readily searchable database of copyright registrations would be helpful. So too would be giving the Copyright Office the authority to address Section 512 matters. A process for adjudicating small claims for infringement would bolster IP protections and enhance the economic value of copyrighted works. The Register of Copyright Selection and Accountability Act of 2017, which would address some of these issues, passed the House of Representatives in April 2017, but it has not made much progress in the Senate. (See FSF Senior Fellow Seth Cooper’s February 2017 blog discussing the need to modernize the Copyright Office.)

Moreover, the relative lack of IP rights protections in several other countries, as reflected in the Index, reinforces the need for U.S. pursuit of agreements to better secure protections for IP rights holders internationally. The 2018 Index notes that the United States’ withdrawal from the Trans-Pacific Partnership (TPP) negatively affected the scores of member countries. (See our blogs about the importance of multilateral trade agreements and TPP here, here, and here.)

The U.S. should continue to seek new bilateral or multilateral agreements, including ones more narrowly focused on strengthening protections for all IP rights holders in the U.S. and foreign countries. As more countries adopt strong protections of IP rights through trade agreements, the entire global economy also will grow substantially, because legal institutions, including regimes that safeguard IP rights, constitute a positive externality for the global economy. The mutual gains from global trade are much higher when more nations adopt and enforce laws that protect IP rights.

Importantly, the supplemental statistical analysis of the Index emphasizes that “the stronger the IP environment is, the stronger an economy performs.” It also states that “even economies that implement moderate improvements to their IP environment experience positive economic and societal outcomes ranging from access to financing and foreign direct investment to higher levels of economic value generation.”

Across all countries, the Index found several noteworthy correlations between strong IP protections and economic innovation and creativity. On average, countries that scored above the median of the Index:

• Are 20% more productive and 60% more likely to have robust entrepreneurial activity,

• Produce up to 80% more knowledge and technology outputs,

• Have twice the percentage of high-value workforce and over six times more highly skilled researchers in its labor force,

• Are 62% more likely to have larger and more dynamic content and media sectors,

• Provide up to three times wider access to new music through legitimate and secure platforms,

• And generate twice as many video-on-demand and streaming services.

Strong protections of IP rights incentivize investment in research and development, innovation, and creative content because they ensure entrepreneurs have an opportunity to earn a return on their labors. And as economies with strong IP rights regimes grow and prosper, consumers are the ultimate beneficiaries as new goods and services, in whatever form they take, are brought to market.

The International IP Index provides U.S. and foreign policymakers a useful tool for assessing how to improve IP systems and enhance innovation and creativity in the 21st Century economy. 

Maryland Could Be Future Hub of Data Economy

The Center for Data Innovation recently published a report entitled “The Best States for Data Innovation,” ranking the U.S. states on their ability to foster data innovation. The report also discusses how technological advancements, like faster computing, better algorithms, and more robust communication networks, have made it easier to collect, store, analyze, use, and disseminate data. These advancements have led to the emergence of the data economy: an economy in which success depends on how effectively firms can leverage data to generate insights and unlock value.

Maryland ranks third overall among the fifty states and leads in several categories. Given Maryland’s high ranking, if Governor Larry Hogan – with the General Assembly’s help –continues his efforts to improve Maryland’s business climate and fiscal situation, Maryland could become the national hub of the data economy.

Here are some notable categories where Maryland ranks in the top 10:

• Enabling technology platforms: Maryland ranks 1^st.

• Broadband access: Maryland ranks 3^rd.

• The availability of machine-readable data on public-transit systems: Maryland ranks 3^rd.

• Using data to develop human and business capital: Maryland ranks 6^th.

• Maryland has one of the highest percentages of science, technology, engineering, and math (STEM) degrees, ranking 7^th overall.

• Maryland has the highest number of jobs in the country related to statistics and the second highest number of jobs related to data-science.

• Maryland also was one of the first states to enact an open-data policy, allowing residents and businesses to have access to government datasets.

The report says: “The widespread adoption of data analytics and artificial intelligence is expected to contribute hundreds of billions of dollars to U.S. GDP in the coming years in sectors such as finance, transportation, and manufacturing, while unlocking new opportunities to improve outcomes in fields such as education and health care.” For Maryland, fostering data innovation will continue to attract more economic activity and job creation into the state, establishing Maryland as a hub of the data economy and providing innovations in medicine, education, and transportation for its residents.

As I stated in a July 2017 blog, Maryland has struggled with achieving fiscal responsibility in the past. But new leadership under Governor Hogan has started to reform Maryland’s business climate. If successful, efforts to eliminate unnecessary regulations and lower burdensome taxes and fees will attract jobs and economic activity into the state, increase Maryland’s tax base, and reduce its long-term debt. Alleviating the burden of long-term debt for residents and businesses will spur additional economic activity within Maryland and attract more data-intensive businesses that value Maryland’s emerging data economy.

As the report states:

While data-driven innovation is a global phenomenon, some regions are better poised to enjoy the resulting benefits because they have invested in and supported the conditions necessary to succeed in the data economy. This is also true within the United States, where some states are actively building the necessary foundation for a thriving data economy and others are lagging. Decisions made today that affect the extent to which a state participates in the data economy will have long-term implications for its future growth, as data plays an increasingly larger role in many different sectors across the economy. Early adopters will benefit more quickly from using data to address a multitude of challenges, and by positioning themselves at the forefront of data-driven innovation; they also will be able to grow and attract data-driven companies in a wide range of sectors that will make them the future hubs of the data economy.

The Center for Data Innovation’s report says that some of Maryland’s high-level statisticians and data-scientists may reside in the state for federal government employment. Nevertheless, with this valuable resident workforce, Maryland’s data economy already has an advantage over other states. Governor Hogan and the Maryland General Assembly should continue to reduce regulatory and tax barriers that could inhibit data-intensive businesses from locating in the state.

Governor Hogan and other state leaders should be commended for their efforts to foster data innovation within the state. State leaders should be proud, but not content, with Maryland’s 3^rd overall ranking. There is no reason why Maryland cannot become the United States’ future hub of the data economy.