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Senator Wyden Speech at 2013 CES

Senator Wyden spoke about the importance of breaking down barriers to innovation and competition at the 2013 Consumer Electronics Show. Below are his remarks as prepared for delivery.

“The Freedom to Compete”

January 9, 2013

 

Good morning.  It’s great to be back here at CES.  I’m a little surprised to see so many of you this morning.  A 9:15 am policy discussion in Las Vegas is usually a pretty risky venture, but I’m glad to be joined by all you.  As some of you continue to sip your Red Bull, I’d like you to throw the slogan that says, “What happens in Vegas, stays in Vegas” out the window.  Instead, let’s establish that “What innovation is demonstrated in Vegas, needs to be disseminated around the world.”

 

The International Consumer Electronics Show is a hands-on demonstration of how important the Internet and digital technology is to the domestic and international economy.  Technology is central to our economy and to our lives.  CES is also the opportunity to identify potential threats to this digital economy and determine what action must be taken to address them.   The threats to the Internet are real and they are growing

 

What a difference a year can make.  Last year at this time legislation was before Congress that would have censored and broken the Internet.  Legislation – infamously known as PIPA and SOPA – that would have stifled the growth of the Internet economy and the jobs it creates.

 

Although Gary Shapiro and the Consumer Electronics Association invited me and Representative Darrell Issa to come out last year to talk about why those proposals were so harmful, the common thinking was that, while we were well intentioned, Darrell and I were probably in the end nothing but a sizzling meal for the legacy content industry.

 

The rest is history.  In an unprecedented move, Reddit, Wikipedia and other digital innovators orchestrated 2012’s Internet blackout and then the phones and the servers melted under the crush of 15 million incoming calls and e-mails to Congress.  Two days after the Internet went dark, a light bulb went on in Congress and PIPA and SOPA were shelved.  A journalist for the New Republic said it best:  The Internet faced its biggest threat, and won.

 

But that fight was just one small piece of an ongoing, timeless battle.  In 1969, the same year the Internet routed its first packets, the noted thinker Jane Jacobs observed the on-going cycle of economic growth where innovators undermine established economic interests and are in turn undermined by the next generation of innovators. 

 

She pointed out that the only alternative to this process is economic stagnation.  That stagnation is the natural outcome of the ability of the incumbent interests to rig the system in their favor with superior political and economic power.

 

She understood that the only chance we have to preserve economic innovation is for a “third force” to emerge to protect the weak and emergent interest of innovation.  Back in Jacob’s time the hope was that this third force would be government, but the last 40 years show how limited government can be in that role.  In reality, that third force is you, the people in this room, all of you viewing or reading this speech online, and every one of the 15 million people whose voices were heard last January.

 

 

Legislators will do their part.  While government cannot be fully counted on to stand up to incumbent interests, there are champions of innovation in Congress, both Republican and Democrat, who will stand against those seeking rig the system to deny innovation a fair shot in the marketplace.

 

The incumbents often seek special help from the government, claiming they want a marketplace from government intervention; but they don’t get it.  The role of the government is to address market failures, and to block cartels, monopolies, and anti-competitive forces that interfere with the effective operation of free enterprise.  A legitimate function of the government is to defend the market against the forces interfering with its efficient function. 

 

That is where you come in.    If we play offense around an agenda for Internet innovation we can, to use the language of the Oregon Ducks, Win the Day.

 

With that in mind, here are some ideas to tackle the big challenges that I see down the field.  The centerpiece of our agenda should be guaranteeing innovators the Freedom to Compete.

Here is what the freedom to compete in the marketplace means.  First, it begins with access to the Internet.   Internet Service Providers – wired or wireless – must be barred from practices that discriminate against specific content.  The Open Internet order established by the FCC is a good start but it doesn’t go far enough because, in reality, it is not comprehensive.  Most of Las Vegas this week, for example, will access the Internet through their wireless connection, which is not fully subject to the FCC order.

 

It is clear that consumers across this country will benefit if there is more competition among Internet Service Providers.  This is not the case today.  The FCC estimates that 96 percent of the population has only one or two wireline ISPs to choose from. 

 

If a provider wishes to slow consumers’ Internet connections in order to discriminate against a provider of content, my view is that they should face the anti-trust laws.  Senator Franken and I are working on legislation to do just that -- to strengthen the anti-trust laws in order to ensure that the major ISPs cannot use their market dominance to pick online winners and losers. 

A similar threat to competition, and one that Public Knowledge should be credited for highlighting, is broadband data caps.  There is a case for data caps that manage congestion – manage a scarcity of bandwidth – but they shouldn’t be used to create scarcity in order to monetize data.

 

The Internet is too important to our common interest to enable bits and bytes to be viewed only in terms of dollars and cents.  It is time for legislation to establish disciplines on data caps that give innovators and entrepreneurs the opportunity that is a pillar of our nation’s economy: the freedom to compete.  Promoting this freedom begins with the Internet connection, but it must be rooted throughout the Internet ecosystem.

 

A related concern is the affect of software patents on America’s ability to innovate. Congress should begin a review – a cost-benefit analysis – of software patents’ contribution to the economy.  The acquisition of these patents appears less about deploying innovation and more about employing a legal arsenal.  The patent system should not, as Julie Samuels at EFF says, operate as a tax on innovation, as it does now.  How are you promoting innovation if you stand behind a law that enables a few lines of code to be patentable for 20 years?  Software is different than a new invention.  It is a building block -- a new set of instructions -- that should be continually built upon and improved.

 

No discussion of the innovation agenda can take a pass on privacy.  For example, it is particularly troubling that the documents Americans leave lying around their kitchen counter receive more privacy protections than the content Americans store in the cloud.   A rewrite of the Electronic Communications Privacy Act should address this imbalance. Your help is needed to make this happen. 

 

Also central to a pro innovation agenda are responsible approaches to cyber security. Last year, the CISPA “cyber-security” proposal moved easily through the House only to be stopped in the Senate after there were real questions raised about privacy and the overall effectiveness of the bill.  CISPA, like PIPA and SOPA, was a reaction to a legitimate problem – the vulnerability of critical infrastructure, like our energy networks, to cyber attack. But CISPA missed the target. 

 

Let’s address the goals of CISPA without creating a cyber-industrial complex that would produce an endless, losing, cat-and-mouse game in which nimble hackers win all the time.  And let’s make sure cyber security isn’t used in a way that exposes the electronic communication of every American to government and corporate snoops.

 

Having talked about content that Americans want to remain private, let’s spend a minute about content that should be shared. But what chills the sharing of ideas and collaboration is the maximalist approach to copyrights and patents.  Rights-holders are too eager to use their power to scare off challenges to the status quo, and this perpetuates stagnation.

 

Indisputably, the protection of intellectual property is important.  The balance between providing rights-holders a monopoly and promoting competition and innovation is just as important.  It must be continually re-examined and reconsidered. 

 

Members of Congress are going to file legislation that would penalize false representations, strengthen Fair Use, and provide real due process and for seizures of property.  These efforts should be supported.

 

You can’t guarantee the freedom to compete by stopping at our borders.  Unfortunately, the nation’s trade policy and the global trade rules do.  I believe the Internet is the shipping lane of the 21st Century.

 

Today, countries are increasingly imposing barriers to digital goods and digital services for non-competitive purposes.  China’s current practice of blocking Google and Facebook is about giving its domestic providers of search and social networking an artificial advantage.  It’s anti-competitive protectionism.  The discussions in Dubai last month demonstrated the growing interest in foreign regimes to control and censor the Internet. 

Let us provide the Obama Administration with clear, statutory negotiating instructions that require it seek open Internet disciplines in all trade discussions. 

 

In conclusion, I will touch on a subject that I alluded to earlier.  SOPA and PIPA were responses to a legitimate problem: international copyright infringement and commerce in counterfeit goods.  Specifically, foreign websites that are infringing and selling consumers fake– if not unsafe – merchandise. 

 

One of the lessons of the SOPA and PIPA discussion is the recognition that when foreign websites that are providing content – digital or tangible – to consumers within the borders of the United States, any approach to this problem must occur through the prism of international trade policy. 

A priority of mine in the new Congress will be to continue to analyze this problem and to ultimately advance legislation to address it.  We can fish for tuna without killing dolphins.

 

We can unleash and encourage more innovation if the nation’s policies ensure one thing: insurgents should be afforded the same opportunities in the marketplace as incumbents.  Freedom, that enables competition, should know no boundary established by government or corporation.

 

Thank you all for coming out this morning.

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