The State’s role in integrating artificial intelligence into America’s economy

Artificial intelligence has the capability of creating another resource that can be optimized or consumed by a nation-state.  Increases in computing power and better designed algorithms along with access to increasing amounts of data translates into an increased amount of information that can be extracted via machine learning.

Venture capitalist Nick Hanauer postulates that a nation’s prosperity is a function of the rate at which we solve problems.  If he is correct, then problem solving requires that we maximize the amount of available information to find the best answer.

If information is the jet fuel for a Fourth Industrial Revolution economy, data is the oil that has to be extracted and refined. Companies such as Amazon, Facebook, and Google are using machine learning to provide better customer and subscriber experiences with their product.  They are among the largest of the data miners.  Their efforts, along with those of other technology companies is expected to contribute to economic growth beyond a baseline (no-artificial intelligence) scenario.

For example, Accenture reports that labor will see an increase in productivity of 35% by the year 2035 due to the application of artificial intelligence.  Annual growth rates in value added to gross domestic product are approximated at 4.6% by 2035. With capital and labor (due to a cap on the capacity of cognitive ability) reaching their limits as contributors to increased economic growth, artificial intelligence, taking its place along capital, labor, and entrepreneurship as a factor of production, is expected to help the economy exceed its current limits in three ways:

  1. Automating physical tasks as a result of artificial intelligence’s ability to self-learn;
  2. Augmenting labor by giving labor the opportunity to focus on creativity, imagination, and innovation; and
  3. Diffusing innovation through the economy.

With these promises of growth comes the fear on the part of labor that artificial intelligence will eliminate the need for a substantial portion of current jobs.  Even while experts and academics tout artificial intelligence as a complement to labor; as an augmenter of labor’s cognitive skills, there is still the fear that this emerging technology will create a valueless human workforce.  This perception creates a dilemma for a government that sees democracy under the attack globally.  Is artificial intelligence going to exclude millions in the name of efficiency? If so, what use is there from participating equally in an electoral process of the economy leaves you out?

Government will have to prepare a messaging campaign if it is to maintain its legitimacy as a distributor of economic equity in the face of an increasingly digitized economy and society. The potential destructive nature of artificial intelligence is scarier than what has been presented in movies like “2001: A Space Odyssey” or “Terminator.” Immediate benefits of artificial intelligence may flow first to those who already have high tech skills or hold or have access to great amounts of capital. In other words, AI is the ultimate nail in the coffin for the capital gap. Those with access to or control of capital will only see their control over the data and information that feeds it get larger. If you can’t process data or package useful information, you are nonexistent. Just useless furniture. It won’t be some AI robot that kills you off. It will be a human with money and enhanced cognitive skills that decide we are valueless.

As Erik Brynjolfsson, Xiang Hui, and Meng Liu pointed out last month in an article for The Washington Post last month, “No economic law guarantees that productivity growth benefits everyone equally.  Unless we  thoughtfully manage the transition, some people, even a majority, are vulnerable to being left behind even as others reap billions.”

As Professor Yuri Harari notes, technology is not deterministic, however.  It is people who make decisions as to how their political economy will shift and change.  Brynjolfsson, Hui, and Liu note that voters need to urge policymakers to “invest in research that will design approaches to human learning for an era of machine learning.”

The evidence does not show that policymakers are being prodded to move on the issue of artificial intelligence. Not surprising since voters are not knowledgeable about the issue either.  Artificial intelligence is not on the top of any poll responses from voters.  As regards to Congress, the only major action has been companion bills S.2217 and HR4625 where Congress wants the Secretary of Commerce to establish a federal advisory committee on the development and implementation of artificial intelligence.  While the bills provide good working definitions of artificial intelligence and machine learning and has among its concerns economic productivity, job growth, and labor displacement, allowing a bill to sit in committee for ten months is not the kind of speedy intelligence that artificial intelligence needs to be complemented by.

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Net neutrality challenges the affordability of information

Last weekend, the State of California upped the ante in the net neutrality debate when Governor Jerry Brown signed into law SB 822, a bill that put into California law net neutrality requirements that were contained in the Federal Communications Commission’s 2015 Open Internet Order, a set of rules that were later repealed by the FCC in its 2017 Restore Internet Freedom Order.  Section 3101(a) and Section 3101(b) of SB 822 provide the core element of the legislation and reads as follows:

“3101. (a) It shall be unlawful for a fixed Internet service provider, insofar as the provider is engaged in providing fixed broadband Internet access service, to engage in any of the following activities:
(1) Blocking lawful content, applications, services, or nonharmful devices, subject to reasonable network management.
(2) Impairing or degrading lawful Internet traffic on the basis of Internet content, application, or service, or use of a nonharmful device, subject to reasonable network management.
(3) Requiring consideration, monetary or otherwise, from an edge provider, including, but not limited to, in exchange for any of the following:
(A) Delivering Internet traffic to, and carrying Internet traffic from, the Internet service provider’s end users.
(B) Avoiding having the edge provider’s content, application, service, or nonharmful device blocked from reaching the Internet service provider’s end users.
(C) Avoiding having the edge provider’s content, application, service, or nonharmful device impaired or degraded.
(4) Engaging in paid prioritization.
(5) Engaging in zero-rating in exchange for consideration, monetary or otherwise, from a third party.
(6) Zero-rating some Internet content, applications, services, or devices in a category of Internet content, applications, services, or devices, but not the entire category.
(7) (A) Unreasonably interfering with, or unreasonably disadvantaging, either an end user’s ability to select, access, and use broadband Internet access service or the lawful Internet content, applications, services, or devices of the end user’s choice, or an edge provider’s ability to make lawful content, applications, services, or devices available to end users. Reasonable network management shall not be a violation of this paragraph.
(B) Zero-rating Internet traffic in application-agnostic ways shall not be a violation of subparagraph (A) provided that no consideration, monetary or otherwise, is provided by any third party in exchange for the Internet service provider’s decision whether to zero-rate traffic.
(8) Failing to publicly disclose accurate information regarding the network management practices, performance, and commercial terms of its broadband Internet access services sufficient for consumers to make informed choices regarding use of those services and for content, application, service, and device providers to develop, market, and maintain Internet offerings.
(9) Engaging in practices, including, but not limited to, agreements, with respect to, related to, or in connection with, ISP traffic exchange that have the purpose or effect of evading the prohibitions contained in this section and Section 3102. Nothing in this paragraph shall be construed to prohibit Internet service providers from entering into ISP traffic exchange agreements that do not evade the prohibitions contained in this section and Section 3102.
(b) It shall be unlawful for a mobile Internet service provider, insofar as the provider is engaged in providing mobile broadband Internet access service, to engage in any of the activities described in paragraphs (1), (2), (3), (4), (5), (6), (7), (8), and (9) of subdivision (a).”

Political actors that favor the FCC’s implementation of net neutrality rules have managed in the past to endear their position to the public by describing efforts opposing the rules as a barrier to freedom of expression.  Net neutrality rules proponents argue that internet service providers have a financial incentive to use their positions as gateways to internet access to favor their content over that of edge providers.  Favoring ISP content may take the form of throttling data coming from a favored website or blocking a consumer’s access to their favorite website.

Net neutrality rules proponents would also argue that even if their access to a website was not blocked or data from their favorite website not slowed down, the receipt by an ISP of compensation in exchange for giving an edge provider higher priority of their traffic may mean that smaller content providers are put at a disadvantage compared to larger content providers with deeper pockets.

Opponents of putting net neutrality into an agency rule would agree that the principles of net neutrality should be adhered to.  However, as network operators, ISPs argue that they cannot afford to devalue their networks by frustrating consumer access to internet content.  The internet has grown in use and popularity as a result of the “network effect” where as more consumers use the internet, the demand for and supply of content and other services increases thus increasing the value of an operator’s network.  In the end, blocking, throttling, or prioritizing content would only work against the network operator.

Often overlooked in the net neutrality debate is the global nature of the internet.  Facebook users, for example, take for granted that most of the social network’s subscribers are not located in the United States and that we all access a network of interconnected computers located in multiple countries. The traffic you receive can come from a number of jurisdictions before landing on your computer.

Ironically, California leads the way in North America when it comes to internet traffic density.  According to data from Akami, California accounts for 5.1% of traffic flows in North America.  Statista.com reports that internet traffic in North America amounts to  1,411,021 terabytes a month. This means that California’s approximate share is 71,962 terabytes a month.

And the amount of internet traffic flowing is expected to continue increasing.  According to findings by Cisco, internet traffic is expected to increase by 278 exabytes a month by 2021.  As gateways for internet traffic, ISPs concerned about managing congested networks may want to employ a time honored method of congestion management: price, and this method of determining where resources flow is what is really being kept in check by SB 822.

SB 822 prohibits ISPs from charging content providers for the handing off of edge provider traffic.  It is ironic that proponents of these rules on the one hand support the notion of regulating broadband providers like telephone companies, but prohibit the very practice telephone companies have used to recover a portion of their network costs. As internet traffic increases along with the costs for delivering traffic, would proponents prefer ISPs increase the prices the end use consumer pays while providing edge providers with free content? If this is the case, then net neutrality proponents in California, many of whom are unwittingly support keeping edge provider costs low, may find accessing information on the internet less affordable.

 

State resources either Abrams or Kemp can use to drive rural broadband in Georgia.

At first blush, the stances of the two candidates for Georgia on the issue of broadband deployment are pretty much standard fare.  Citing her responses to a questionnaire by the Georgia Chamber of Commerce Democratic Party candidate Stacey Abrams describes broadband an essential business service.  To boost the economy of rural Georgia, Ms. Abrams mentions her support for the Georgia Department of Transportation’s efforts to expand broadband along the state’s rights-of-way.

Ms. Abrams is referring to the Georgia Department of Transportation’s Georgia Interstate and Wireless Broadband Deployment P3 Project.  The primary goal of GDOT’s broadband project is statewide expansion of GDOT’s NaviGAtor traffic management system.  GDOT considers NaviGAtor as a first step toward bringing broadband to more of the state’s citizens.  GDOT states that by recycling its assets i.e. state rights-of-way, GDOT can accomplish the mission without any additional tax revenues. Once private partners are on board, the project is slated to take 25 years to design construct, and deploy the fiber optic cable and small cell network along 1,300 miles of state rights-of-way.

Republican Party candidate Brian Kemp echoes Ms. Abrams sentiments about broadband being a game changer for rural Georgia.  While not citing GDOT’s NaviGAtor, Mr. Kemp cites similar benefits offered by the state’s program including eliminating fees for use of state rights-of-way; exploring tax incentives for tech companies and entrepreneurs  committed to expanding high-speed internet access in rural Georgia, and incentivizing public/private partnerships with the use of low interest loans.

Rural broadband deployment has moved further to the front of the national policy agenda line.  Federal Communications Commission chairman Ajit Pai, himself a native of rural Kansas, has been touting closing the rural digital divide since joining the FCC.

Georgia, according to the website BroadbandNow, is America’s 20th most connected state, but has some work to do when it comes to increasing the availability of alternatives for 1.4 million residents who have access to only one wired provider. Approximately 870,000 Georgia residents do not have access to a wired connection with at least 25 megabits per second download speeds.

Georgia has already taken steps to help bring more broadband networks to its citizens. In addition to GDOT’s NaviGAtor traffic management system, the state’s Department of Community Affairs is required to develop the Georgia Broadband Deployment Initiative,  a program that provides for funding for the purpose of delivering broadband to unserved areas.  Money is to be spent on capital expenses and expenses directly related to the purchase or lease of property or to communications services or facilities. Through the funding of qualified political subdivisions i.e. cities, counties, etc., Georgia hopes to promote trade, commerce, investment, and employment opportunities.

An additional state resource that Georgia can use to close its rural broadband divide is the OneGeorgia Authority.  OneGeorgia, with the use of two funds, provides financing for rural areas committed to developing their economies.  By law, Georgia’s governor serves as OneGeorgia’s chairman, putting either Ms. Abrams or Mr. Kemp in a power position to drive rural Georgia’s broadband deployment in particular and the state’s economic growth overall.

 

 

The likelihood of net neutrality being codified in statute looks dim…

Republicans in the U.S. House and U.S. Senate have been pushing for legislation that codifies net neutrality principles, making them a part of federal law.  Even with control of both chambers of the U.S. Congress, Republicans have not been able to convince enough Democratic members of Congress to get on board with passing a law that would avoid the back and forth pendulum between promulgating and repealing net neutrality rules on the agency level at the Federal Communications Commission.

Last spring, 52 U.S. Senators, including three Republicans, voted to reinstate net neutrality rules that were repealed in December 2017 by FCC chairman Ajit Pai’s Restoring Internet Freedom Order.  Mr. Pai’s treatment of net neutrality keeps the emphasis on one of the open internet’s four principles, transparency but leaves the other three principles; throttling, paid prioritization, and blocking, up to the “network effect”, where broadband access providers argue that discouraging use of the internet by blocking, throttling, or discriminating between carriers would lead to a devaluation of their networks, thus an illogical approach to take.

GOP control of the House is under threat this November.  If election sentiment carries over into the midterms, it is likely that the Democratic Party will capture the House.  Rasmussen Reports found that 47% of likely voters in the United States’ midterm elections are likely to vote for the Democratic Party while 42% of likely voters may cast their ballots for the Republican Party.

In the U.S. Senate, Republicans hold 51 seats while the Democrats hold 47 seats. Two independents, Angus King of Maine and Bernie Sanders of Vermont, caucus with the Democrats.  The Democrats need at least four seats to regain control of the Senate.

In the U.S. House, Republicans hold 236 seats to the Democrats 193.  Democrats need to pick up at least 25 seats to garner a House majority.

Will Democrats run on net neutrality as an issue? Based in polling from Pew Research, net neutrality is likely not an issue to grab the eardrums of voters.  For all voters, economic issues overall took first place, according Pew’s poll.  When broken down, the top six issues were:

  1. Immigration
  2. Health care
  3. Education
  4. Politicians/Government systems
  5. Guns/gun control/gun laws
  6. Economy/economic issues

For Democrats, while the top three overall issues for all voters were also a part of the Democrats of top three issues, gun control, politicians and government systems, and jobs rounded out the bottom three of their top six concerns.

House Democrats are aligning with their base’s apparent lack of priority for net neutrality.  Looking at a sample of 102 House Democrat websites, only four (3.9%) of those sites mentioned net neutrality, the open internet, or internet freedom as a key issue.

The low priority given to net neutrality this campaign season by voters and House Democrats tells me that Democrats will be in no hurry to join Republicans in drafting a bipartisan net neutrality bill.

 

NAFTA negotiations provides Trump an opportunity to force Congress’ hand on net neutrality and privacy legislation

The North American Free Trade Agreement went into effect 1 January 1994, a full two years before President Bill Clinton would sign the Telecommunications Act of 1996 and almost a decade before law school professor Tim Wu would pen the essay that set the concept of net neutrality into motion. It doesn’t come to me as a surprise that issues such as equal treatment of data over networks or the privacy of subscriber data were not huge ones back then.

From the early 1980s through the mid-1990s, the policy priorities included universal service and promoting competition in local markets while increasing telephone subscribership among low income, black, and Hispanic communities. Talking about the internet in the mid-1990s was synonymous to Natasha Romanova whispering to Steve Rogers about the existence of The Winter Soldier, something that may be real, but we just don’t know.

But by 1995, the whispers were becoming clearer to industry and Congress that the internet and high-speed broadband access to an increasingly global inter-network of computers provided investment opportunities for capital while increasing the speed and efficiency in moving the most important resource: information.

Over the last fifteen years, American telecommunications markets have had to contend with the back and forth threats of an additional regulatory overlay in the form of net neutrality rules. Attempts to codify net neutrality, the principle that broadband access providers should be transparent about their management practices while not discriminating against non-affiliated traffic, and allowing subscribers to access content of their choice, has become very politicized over the past three years. In 2015, a Democrat-led Federal Communications Commission passed net neutrality rules that were repealed two years later by the current Republican-led Commission.

And while Democrats in the U.S. Senate were able to persuade enough Republicans to pass a resolution to repeal the Commission’s transparency rules and replace them with the 2015 rules, the likelihood of passage of the resolution by the U.S. House is impossible because it is currently controlled by the GOP.

The political reality is that subscriber concerns about accessing content of their choice as well as maintaining the privacy of the data that they buy and sell is important to maintaining the internet and broadband as attractive communications tools. The Trump administration has an opportunity to head off an international net neutrality debate by including language that encapsulates net neutrality principles while reiterating the importance of protecting privacy on both sides of the border with Canada and Mexico.

An additional benefit of putting privacy and net neutrality language in Chapter 13 is that it will force Congress’ hand during the ratification process. It would be inconsistent for the United States to approve language in a treaty that incorporates privacy protections and net neutrality principles for international data trade while not recognizing those principles in its national laws. This level of certainty in American and international law will provide a great benefit for investors.