The future of technological and economic innovation will be redefined by 5G. Cutting-edge technologies—from self-driving cars to robotic surgery—will rely on widely available 5G for consistent, high-capacity, top-speed connectivity. According to a Global System for Mobile Communications (GSMA) Intelligence Report, 5G is expected to add $2.2 trillion to the global economy over the next 15 years, roughly 5.3% of total gross domestic product during this period.
The 1980s saw the emergence of the first American 1G network, which enabled the release of the Motorola DynaTAC, the first FCC-approved commercial portable cellular phone. The shoebox-sized cell phone needed to be charged for roughly ten hours and could be used for less than thirty minutes. After that, each new network generation yielded higher efficiency and reduced latency (delay time in data transference)—2G enabled texting, 3G enabled mobile web surfing, and 4G made applications like ride sharing and video streaming possible.
A 2019 5G Speedtest demonstrated a commercial download speed of 1.13 Gbps in Providence, RI—11 times faster than 4G. Eventually, 5G could clock in at 100 times faster. Once deployed, 5G could enable innovations like autonomous vehicles, virtual reality (VR), and Internet of Things (IoT) devices (objects like fridges, factory machines, and sensors that are connected to the internet). According to a February 2019 HarrisX poll, 72% of business decision makers agree that 5G benefits will be worth paying more for in their businesses, despite the fact that 5G is still not available in most places in the U.S.
Despite the growing importance of high-speed connectivity, the United States—which paced the world in developing and deploying so many other transformative technologies—is falling behind in the 5G race, while China sprints ahead. The leading American cellular companies—AT&T, T-Mobile Sprint, and Verizon—have only deployed commercial 5G networks within a tight radius of a handful of major cities, typically limited to customers with elite data plans. For now, the major difference between 4G LTE and 5G is just speed, but as coverage continues to roll out to new areas, more services that rely on instant connectivity should become possible.
In this paper, The New Center explains the potential applications of 5G-enabled services and devices, how America fell behind in the global race for 5G, and how we can get ahead.
How Does 5G Technology Work?
Data is transmitted along three “bands” of the radio spectrum, which are categorized as “low,” “mid,” and “high” bands. Each generation of cellular network technology has operated on a portion of that radio spectrum—1G relied on frequency bands between 850 MHz and 1.9 GHz, 2G and 3G primarily utilized the 850 MHz to 2.1 GHz band, and 4G utilized 600 MHz to 2.5 GHz.
Each spectrum band has different characteristics, making them ideal for different operations. Typically, low-frequency transmissions can cover long distances before losing their integrity, with the ability to penetrate dense objects like buildings, trees, and glass. However, significantly less data can be carried this way, making for lower speeds and increased latency. Conversely, higher-frequency transmissions can transmit massive amounts of data, but struggle to get through obstacles.
For the most effective 5G coverage, providers are utilizing all three bands:
- Low-band (sub-1GHz) spectrum—Spectrum is a finite resource, and low-band spectrum’s bandwidth is almost entirely depleted by LTE. T-Mobile secured a large portion of 600MHz spectrum at the 2017 Federal Communications Commission (FCC) auction in the hopes it would help the company facilitate a swift 5G rollout.
- Mid-band (1 GHz – 6 GHz) spectrum—It’s considered ideal for 5G because it can carry plenty of data while also traveling significant distances. Sprint has the majority of unused U.S. mid-band spectrum.
- High-band (24Ghz – 40Ghz) or millimeter wave (mmWave) spectrum—This band could provide speeds up to 10Gbps with minimal latency. However, high-band requires significantly more infrastructure because it only extends around 200 meters and has difficulty penetrating through objects. Providers would need to posit thousands of “small cells” (low-powered cellular radio access nodes with short ranges) and other technologies to offer comprehensive 5G service. Verizon dominates the U.S. millimeter wave spectrum, having secured 4,940 licenses through March 2020’s Auction 103 and the acquisition of several communications companies, with AT&T coming in second.
How Do FCC Spectrum Auctions Work?
In the U.S., any entity or individual who wants to broadcast using radio waves must secure a license from the Federal Communications Commission (FCC). The FCC hosts frequent “auctions” to allocate portions of the electromagnetic spectrum for mobile communications to companies which are (a) found “eligible,” or capable of actually utilizing the spectrum as intended, and (b) can afford to pay the hefty bill upfront, with recent 5G auctions raking in billions of dollars in total proceeds.
What is the Potential Economic Impact of 5G?
Several economic forecasting groups, communications firms, and consulting companies have offered predictions for the economic impact of 5G over the next ten years. While the exact numbers vary between different models, 5G could add more than $1 trillion in global economic output by 2025 according to most estimates.
One of the most extensive studies into 5G’s potential economic impact was commissioned by Qualcomm Technologies in 2019, and carried out by the independent consultancies IHS Markit, Penn Schoen Berland, and the Berkeley Research Group. They approximated that the global 5G value chain will generate $3.6 trillion in economic output and 22.3 million jobs by 2035. This would make the 5G value chain larger than today’s entire mobile value chain, or the revenue that mobile technology facilitates across all sectors.
“5G will be a new kind of network, supporting a vast diversity of devices with unprecedented scale, speed and complexity. 5G will have an impact similar to the introduction of electricity or the car, affecting entire economies and benefiting entire societies.”—Steve Mollenkopf, CEO of Qualcomm
According to an April 2019 HarrisX poll, business decision makers expect the industries most impacted by 5G will be telecommunications, health and emergency services, transportation, and engineering and manufacturing. This list is by no means exhaustive, but illustrates how some major sectors are expected to utilize 5G in their daily functions:
5G technology is already being rolled out in smart factories to make floor production more accurate, efficient, and cost-effective. For example, augmented reality glasses are being used by production engineers to overlay images onto broken components. These glasses overlay images of cables, bolts, part numbers, and assembly instructions to ease the time-consuming process of trying to locate the problem.
5G could enable near-instantaneous sharing of data on the road to give cars the ability to essentially “talk” to each other in real time, and sense other objects and people in their surroundings. This could improve the flow of traffic and prevent more of the 94% of car crashes caused by human error. 5G could also enable more efficient freight transport, where data sharing can be used to streamline shipping, track goods, prevent cargo theft, and reduce fuel inefficiencies and pollution.
5G could enable a seamless viewing experience in streaming live TV, movies, music, and video games. Download speeds could increase more than tenfold over 4G, meaning HD movies could be downloaded in just a few seconds.
Health providers are continually gathering massive amounts of medical data such as multi-gigabyte x-ray images, nonstop-monitoring wearable medical devices, and AI-powered diagnostic programs. 5G will enable providers to capture, review, and share large files without slowing down their existing wired networks.
One of the most impressive potential use cases is “remote surgery” conducted over 5G. In 2019, a doctor located in the southern Chinese city of Sanya used 5G-enabled robotic surgical instruments to implant a stimulation device in the brain of a Parkinson’s patient in Beijing, nearly 2,000 miles away. This procedure would have been impossible using 4G, which can cause lag times as much as two seconds, far too long for an intensive and exacting neurosurgery.
Shifting Generational Leadership in Mobile Technology
Where It All Began
In 1979, Nippon Telegraph and Telephone (NTT) launched the first generation (1G) of mobile networks in Tokyo. Within five years, NTT provided the entirety of Japan with 1G accessibility. Through 1981 and 1982, 1G was launched in Denmark, Finland, Norway, and Sweden using the Nordic Mobile Telephone standard—a protocol that would later be replicated by Saudi Arabia, Russia, the Baltics, and multiple other Asian countries. In 1983, the U.S. approved the first 1G commercial operations, which were launched by the then-so-called Ameritech using Motorola’s DynaTAC mobile phone. Several other countries like Canada, the U.K., Malaysia, Mexico, and China would unveil their first networks in the 1980s.
As to be expected from the first iteration of any technology, 1G suffered from a litany of setbacks. The sound quality of calls was poor—if one could manage to place the call in the first place because of the spotty coverage. Calls were unencrypted, enabling anyone with a radio scanner to eavesdrop. Different operators didn’t support “roaming,” or the ability to connect to the network of a different carrier in a different geographic region. Additionally, the technology was so incredibly expensive (DynaTAC cost $3,995 price tag, or $9,660 in today’s money) that most Americans didn’t use cell phones until 2G had already arrived.
Europe Coordinates Efficient 2G Rollout
Beginning in the 1980s, the European Commission signed a joint development agreement to allocate spectrum for the Global System for Mobile Communications (GSM), standards for 2G digital cellular networks. By 1994, early European adopters had reached more than 70% 2G wireless penetration (the percentage of unique 2G mobile users compared the population), while the US only had 0.1% penetration. The U.S. wouldn’t catch up to Europe with 2G until 2003, when Japan and parts of Western Europe were already rolling out their 3G networks.
European 2G dominance enabled the rise of the European telecommunications giants including Ericsson (Sweden), Nokia (Finland), and Siemens (Germany), which still control a significant share of the wireless equipment market. In 1993, Ericsson made up 60% of the global digital cellular equipment market, while in 2019 the company still accounted for 43% of the mobile system’s global market share. According to a report by Recon Analytics, early 2G leadership “yielded tangible economic benefits for European countries, including the strong economic contributions of wireless manufacturers to their balance of trade, the employment of hundreds of thousands, and the generation of intellectual capital and property rights.”
The Global System for Mobile Communications allowed European companies to coordinate spectrum allocation and roll out their wireless networks. GSM was created by the European Telecommunications Standards Institute, an industry consortium that licensed various companies to create mobile technology affordably. Conversely, the U.S. government allowed mobile carriers to pursue multiple different network standards, including GSM and a less common method called “code-division multiple access” (CDMA). CDMA is largely owned by the U.S. company Qualcomm, which partnered with Verizon to create cell sites that could handle more network capacity than GSM.
However, having multiple standards meant that carriers’ plans weren’t mutually compatible—consumers couldn’t keep their phones when switching from Verizon, which operated on CDMA, to T-Mobile, which used GSM. Additionally, operating on CDMA made service less accessible and affordable because it was built by Qualcomm using their patented technology, which the company didn’t license to competitors like Ericsson until years later. According to Recon Analytics’ retrospective analysis, while the American approach may have afforded greater technological experimentation, “a fragmented market based on competing standards made it more challenging for U.S. wireless equipment sellers to amass a large customer base.”
Japan Launches 3G With Mobile Application Innovation
In late 2001, Japan’s largest mobile phone operator NTT DoCoMo launched its third generation network that would accommodate high bandwidth applications. It was called “Freedom of Mobile Multimedia Access (FOMA),” which was faster and higher powered than the European-pioneered 2G network. Most notably, FOMA supported videophone and “i-motion,” which allowed subscribers to obtain video content at speeds of up to 384kbps, nearly four times the download speed possible on a 2G network.
At the same time, European mobile operators were being hampered by EU regulation that prohibited them from repurposing their existing 2G spectrum for 3G. Instead, they had to wait for a specific 3G auction and win bids to deploy 3G services. This drove astronomical auction prices and slowed down allocation for spectrum licenses, translating into higher prices for consumers.
For example, in the U.K., thirteen companies competed to win an auction for just five 3G spectrum licenses in 1999. This one auction alone raked in £22.5 billion for the U.K. government, which is more than the U.S. secured in auctions for the six years prior, despite the U.S. being over four times the size of the U.K. But it came at the cost of forcing British telecoms—who were prohibited from sharing the licenses among one another—to acquire enormous debts and resulting drops in share prices, making it difficult for them to fund 3G infrastructure rollout.
The U.S. Leads the 4G Ecosphere
Following Japan’s i-mode success, the U.S. began to ramp up their 3G penetration in the wake of the introduction of high-powered smartphones. From the release of the iPhone 1 in 2007 to 2011, the U.S. added around 20 percentage points a year to its 3G penetration rate.
This swift transition was made possible by the FCC’s sale of more than 3,000 mid-band spectrum licenses between 2005 and 2008. Additionally, in 2009, the FCC enacted a 90-day shot clock to require local governments to approve or reject telecommunication infrastructure applications. If the local government did not process an operator’s request in that time, the application was automatically approved.
While much of Western Europe was still hindered by requirements to issue new 4G-specific licenses, Japan and the U.S. started quickly building their networks and applications in 2011. The U.S. allowed telecom operators to use their spectrum allocations flexibly for new technologies while quickly auctioning off highly desired frequencies. Newfound spectrum availability and accelerated tower siting rules fueled U.S. 4G-enabled innovation, including cutting-edge iPhones and applications like ridesharing, high-definition video conferencing, and augmented reality.
At the start of 2011 in Japan, domestic firms made up over 75% of all mobile shipments and Apple was the only foreign firm to make the top five in terms of market share. By 2014, Apple had become the top firm in terms of market share, with other non-Japanese firms coming in close behind. Despite Japan pioneering the global rollout of 3G, the U.S. was able to set pace for the world in 4G-enabled wireless innovation and value creation.
China Outpaces the U.S. in 5G Rollout
In 2009, Swedish mobile network operator Teliasonera set out to build one of the five earliest national 4G networks and contracted the Shenzhen-based company Huawei, which at the time only represented 1.2% of the mobile phone market. Soon after, Huawei would secure a large contract to completely replace Norway’s network infrastructure, a deal worth a reported €170m over six years that displaced former Nordic-owned suppliers like Ericsson and Nokia. The Chinese newcomer would complete the network swap faster and cheaper than expected—Norway achieved the third-highest 4G LTE penetration of any country by 2017.
Founded in 1987 by Ren Zhengfei, a former engineer for the People’s Liberation Army, the Huawei name was a portmanteau of Zhonghua youwei (“China has promise”). Despite beginning with only a personal investment of $5,000 from Ren and a limited Asia-specific customer base, Huawei began exporting globally within two decades, eventually expanding beyond network equipment into data storage, consumer smartphones, laptops, wearables, and software. Today, Huawei accounts for 28% of the telecom equipment market, compared to just 16% for Nokia and 14% for Ericsson.
Now, Huawei is a leading supplier of the infrastructure for the global 5G rollout. Though the extent of China’s domestic 5G network is opaque, Chinese telecom companies claim to have the largest 5G consumer network in the world. Jefferies Group analysts predict that China will have 110 million 5G users, or around seven percent of the country’s population, by the end of this year.
However, as Chinese telecom companies like Huawei and ZTE have expanded, they have been embroiled in political scandal, facing accusations by governments and their commercial rivals of intellectual property theft, aiding human rights abuses, subverting international sanctions, and facilitating government espionage. Most notably, Huawei critics have pointed to its estimated $75 billion in ties to the Chinese government—$48 billion in support from state lenders from loans, credit lines and other support, along with $25 billion in tax incentives.
One major cybersecurity concern of the U.S. government is the Chinese National Intelligence Law, which allows Beijing to inspect all data collected by Huawei or any other domestic firm. Article 7 of the law states that “any organization or citizen shall support, assist and cooperate with the state intelligence work in accordance with the law.” This effectively permits the Chinese government to put “backdoors” into company hardware and software, enabling 5G networks to be used for government espionage. Huawei has stated that it would never turn over Americans’ data to the Chinese government, even if required by law.
However, legal experts have argued that Huawei and other companies wouldn’t have a choice. Jerome Cohen, a New York University law professor and Council on Foreign Relations adjunct senior fellow, told CNBC, “there is no way Huawei can resist any order from the [People’s Republic of China] Government or the Chinese Communist Party to do its bidding in any context, commercial or otherwise. Huawei would have to turn over all requested data and perform whatever other surveillance activities are required.”
For the past several years, the U.S. and its allies have spearheaded efforts to blacklist Huawei in 5G supply chains and require companies to have special licenses to ship products to the company. While Huawei argues these moves are purely to undercut Chinese competitiveness, multiple governments, industry groups, and intelligence agencies argue that there is ample reason for concern.
What Has Slowed U.S. Rollout?
Much of U.S. Mid-Band Spectrum is Reserved for the Military
In China, 5G has largely been rolled out using mid-band spectrum, the so-called “Goldilocks of spectrum,” because of its wide transmission distances and fast speeds. Conversely, the U.S. has primarily allocated the other two bands: (a) super-fast, highly localized high-band spectrum that requires multiple small cells, and (b) slower-speed, but expansive, low-band spectrum. As a consequence, 5G in China requires significantly less network infrastructure—a single cellular tower in China can cover the same radius as 100 high-speed American towers.
Sprint is the only commercial network operator with rights to a significant chunk of U.S. mid-band spectrum. Since the 1960s, most mid-band frequencies have been divided among various government agencies, with the bulk going to the U.S. Department of Defense, which uses the airwaves for military communications and research. However, many of the frequencies are going unused, driving up the cost of spectrum and blocking 5G rollout.
In April 2019, the Defense Innovation Board, a Pentagon advisory board of Silicon Valley executives, suggested that the military release some mid-band frequencies to telecom operators. Brendan Carr, one of five FCC commissioners, stated that the FCC and Pentagon were in talks to push this proposal forward, though U.S. wireless carriers have yet to receive any licenses.
Spectrum & Infrastructure Are More Costly in the U.S.
According to a report from GSMA Intelligence, U.S. wireless operators are expected to outspend their Chinese counterparts on 5G capital expenses by 58%, $284 billion to $179.8 billion, over the next five years. This is largely because there are some necessary expenses to setting up 5G which are much cheaper in China’s operating environment.
If a mobile operator wants to offer 5G, it needs to (a) secure spectrum, (b) find unused plots of land to set up cellular towers, and (c) build the tower and install supplementary hardware. However, a mobile operator doesn’t build this infrastructure from scratch, but instead contracts real estate and telecommunications equipment companies that lease their cellular sites.
In the U.S., wireless carriers spend billions in spectrum auctions, acquiring real estate, building cellular towers, and securing supplementary hardware. Conversely, the Chinese government offers carriers discounted spectrum and real estate rates, as the government controls land-use rights. China Tower, the state-owned telecommunications real estate firm, builds cellular towers for all three Chinese wireless carriers, primarily on top of state-owned land. As a result, the country is on pace to have at least 150,000 wide-area base stations necessary for 5G rollout available for public use by the end of the year, while the U.S. will only have 10,000.
In America, the vast majority of the land and rooftops ideal for communications towers are privately owned. The average rent for a ground lease is around $1,300 a month, while a typical steel cellular tower costs $80,000. The process of finding available land and constructing a single tower typically takes between one and six months—to meet 5G mobile demand, the U.S. needs to construct hundreds of thousands of these towers.
China’s government regulator mandates its carriers to share towers, cutting the cost of equipment and energy by sharing power converters, fiber-optic cables, and other equipment on or around the towers. Most U.S. towers have more than one tenant, but there’s an average of 1.5 tenants per tower—half of China’s average of three. Additionally, U.S. carriers are reluctant to share fiber-optic cable with their competitors, meaning each operator must invest heavily in digging new lines for wires.
Lack of Domestic Telecom Equipment
In addition to the cost of basic infrastructure, operators must purchase telecom equipment like radio access networks, which is not widely available from U.S. manufacturers. Huawei hardware is highly advanced and cheaper than its European counterparts—by 20% or more. Since U.S. companies are prevented from using Huawei products due to security concerns, however, they must buy more expensive European products.
New Center Solutions
In late 2019, a bipartisan group of senators from the committees on Foreign Relations, Homeland Security, Intelligence, and Armed Services expressed concern with a lack of a “coherent national strategy” on 5G. In a letter to the White House, the senators lamented:
“5G represents the first evolutionary step for which an authoritarian nation leads the marketplace for telecommunications solutions… We cannot rely exclusively on defensive measures to solve or mitigate the issue, but rather we must shape the future of advanced telecommunications technology by supporting domestic innovation through meaningful investments, leveraging existing areas of U.S. strength, and bringing together like-minded allies and private sector expertise through a sustained effort over the course of decades, not months.”
What has worked for China won’t necessarily work for the U.S. In a country built on principles of property rights and free enterprise, the U.S.’s path to 5G success looks radically different. We can, and should, be doing more to encourage U.S. telecommunications sector research and development through a coordinated government approach, clear standards, and efficient regulatory operations.
Promoting Inter-Agency Coordination
Cooperation is challenging when multiple agencies have overlapping jurisdictions over a given finite resource, and spectrum is no exception. For example, the FCC faced pushback from the National Oceanic and Atmospheric Administration (NOAA) when conducting its Spectrum Frontiers auction—the NOAA chief warned members of Congress 5G deployments using 24 GHz spectrum could reduce the accuracy of weather forecasting by 30%. Similarly, after the FCC granted applications to roll out a low-power nationwide broadband network, the Department of Defense and 12 other federal agencies publicly opposed the proposal, arguing that the move could cripple GPS networks.
Without a national strategy, each telecommunications-adjacent agency will continue to execute its own singularly-focused mandate, rather than identifying national goals and potential barriers that do not cleanly fall into a single division. It may take a president and Congress uniting to break down the parochial government agency interests that to date have stymied broader 5G adoption in the U.S.
The White House and Congress need to do a much better job of coordinating with agencies to tackle the largest obstacles to fifth generation technologies, such as allocating spectrum efficiently, promoting innovation, and securing equipment and infrastructure supply chains.
Expanding R&D Opportunities
The federal government can take the lead to help identify opportunities to extend and deepen federal support for R&D and cooperative efforts to drive research into production. One such opportunity to support next-generation innovation may be the bipartisan, bicameral Endless Frontier Act. This act would expand the National Science Foundation (NSF)—to be renamed the National Science and Technology Foundation (NTSF)—and provide the group $100 billion over five years to advance technology in 10 critical focus areas, including “advanced communications technology” like 5G and 6G. To read more about the Endless Frontier Act, see The New Center’s forthcoming issue brief analyzing the bill’s potential impact on American innovation and competitiveness.
Traditionally a supplementary and underutilized form of health care delivery, telehealth is now one of the frontline pillars of defense against the COVID-19 pandemic. In April 2020, a Morning Consult poll found that 23% of adults have used telemedicine services since the outbreak of COVID-19, and virtual visits surged 50% in March 2020, compared to February. By keeping patients away from busy hospitals, telehealth is helping to reduce the burden on overwhelmed care centers and the risk of infections. However, the potential applications of telehealth extend far beyond this crisis. It could help ease longstanding problems with health care costs and accessibility, particularly in underserved communities. Today, New Center policy analyst Olive Morris checks in with Mei Kwong with the Center for Connected Health Policy to explore the potential of telehealth during and after the crisis.
Olive Morris: [01:03] Can you introduce yourself and your organization?
Mei Kwong: [01:05] Sure. My name is Mei Kwong, the executive director of the Center for Connected Health Policy, which is the federally designated National Telehealth Policy Research Center.
OM: [01:14] Telehealth has sort of a long history. It’s been around in some capacity for decades. Yet, it wasn’t necessarily widespread until recently and it may be a new concept for some of our listeners. Can you just tell us exactly what telehealth is and the different forms that it may take?
MK: [01:33] Sure, telehealth is really using technology to provide some sort of health care service where the patient and the doctor or whatever home health care provider you may be engaging with aren’t in the same location. So you’re just using technology to connect with each other and you’re just not there in person each other.
It has different types of forms in which it can use technology and deliver that service. The most common one and probably the most that people are familiar with is called live video, which is exactly what it sounds like, a real time live video interaction between the two parties. Then there are other modalities, other ways of delivering the services. One is a not in real-time service that’s called store-and-forward, which is kind of self-explanatory. You store some type of information and you forward it to the provider who is not looking at it like right when it comes in, but maybe at a later time.
So, for example, you see your primary care doctor and you have a skin condition and you’re not quite sure what it is. They take a picture of it and they send it over a secure system to a dermatologist. The dermatologist isn’t looking at it right when that email comes in or that message comes in. They may be looking at it at later time. Then a dermatologist looks at it and sends the recommendation or diagnosis back to the primary care doctor. So you’re storing and forwarding some information.
Then the other way of delivering care is something called remote patient monitoring. So that’s a continuous monitoring of a patient and it can be in real-time and not in real-time. So a real time example is if you’re in an ICU unit, you’re intensive is the doctor there, the ICU doctor, who may not be right at that location with the patient at that time, but maybe as monitoring from a different location. But they are doing it in real-time and they’re communicating back and forth with health care personnel, who are there on location with the patient and doing what needs to be done physically.
And then a non-real-time example of how patient monitoring is: think of somebody who maybe has a chronic condition, such as high blood pressure. Your doctor wants to know what your readings are for a period of time to see if maybe medication is working out for you or if you’re experiencing any type of issues. So you’re at home, you’re taking readings, and you’re sending them to your provider. Maybe, you’re doing it like once a day or you’re sending all the readings at the end of the week. Again, the provider probably isn’t looking at them as those readings are coming in, but maybe looking at a later time. Not in a real-time example, like continuous monitoring.
OM: [04:19] Ok, so then what types of modalities do you feel are most commonly being used in telehealth right now?
MK: [04:27] Live video is definitely the most popular one. It’s the one that probably most people are familiar with. It’s the one that you’re talking about people or payers such as Medicare, Medicaid or commercial payers, it’s what they cover it. If they cover any services delivered by telehealth, that’s usually the modality that they cover. So the other two [modalities], while effective for some things, are not as widespread for coverage as live video.
OM: [04:55] Right. So as someone who’s sort of been working in the state and federal policy for your entire career. I’m curious if you can sort of paint us an overarching picture of the trends that you saw telehealth adoption for the past few years before coronavirus, and then maybe talk about how that pace has sort of been accelerated by this pandemic.
MK: [05:20] So I’ve been doing telehealth policy for about ten years. So I would say it wasn’t really until the last five years where you saw telehealth really pickup. And that’s for a variety of reasons. Telehealth has been around for decades, but it wasn’t really ubiquitous throughout the health system or throughout the country. And part of that was that the technology was not there to do what people could imagine it could do. So it was only kind of more recently that the technology kind of caught up with that. So that was one reason why telehealth wasn’t as widespread pre-COVID.
Another reason is that while the technology finally kind caught up, the policies in place didn’t really catch up. So in general, technology evolves much more quickly than policy. So you have your policy probably trending about ten years behind what the technology could do. So you still have like these old limitations—you can only use telehealth to do “x” and get paid for it. Well, if you don’t have those policies in place and whether to allow somebody to use telehealth to do something and provide a way to pay for it, they’re not going to use it a lot. So you have, like, sort of like low usage. The last five years, the policy has been slowly, incrementally getting better. And that’s both on the state and a little bit on the federal level. Federal has been a little bit slower than what the states are doing.
So this is kind of what your landscape is like pre-COVID. It was getting better, but it was still going at a slow and steady rate. COVID-19 rolls around and it just suddenly explodes. I liken it to that unknown actor who suddenly has been cast to be the star of a new Marvel franchise. It’s like, nobody knew who you were before. You were slow and steady and probably doing good work. But nobody is thinking about you. And then suddenly Marvel’s makes you the new Iron Man or something.
So that’s kind of what happened with COVID, and with good reason, because it was so uniquely suited for this pandemic. To address what some of the concerns were, which was that you had people sheltering in place, and you still need to get them to care. You do that through telehealth. You can still minimize exposure for both the patient and the health care provider. Why you saw so many telehealth policy [changes] like temporary waivers or guidance was because those old policies were still in place that limited telehealth. That’s why CMS had to do so many changes because they hadn’t kept pace with what the technology could do. The policies were outdated. So both on the federal or state level, you saw so many changes. The states vary—there are some states that had to do less. And then there were other states that had not done as much with, and they had to do more.
OM: [08:28] So when you talk about sort of these sweeping policy changes that have happened as a result of COVID, can you just give some top-line examples of changes to Medicare, Medicaid, HIPAA that America’s been seeing?
MK: [08:43] A lot of the policies, like the Medicare and Medicaid policies and probably some commercial payers, they didn’t allow the patient to receive services at home. Well, that was kind of one of the major points during COVID, everybody was saying at home.
So that had to be changed—where the patient was located. Another thing that had to be changed was the type of provider providing services. A lot of Medicare and a lot of Medicaid programs limited what type of health care provider could provide a service via telehealth and get paid for it. Medicare has a very short list; it’s like about eight or nine providers that they allow. That had to be expanded because providers that weren’t on that list were some of your allied health professionals like OTs, PTs, and speech pathologists. They’re not on that list, so that needed to be expanded as well.
And also, types of services that are covered, too. So, again, a Medicare example, they are limited to very specific list of services and they go by that. I don’t know if your audience might be familiar, but how health care professionals usually bill is by a code for a specific service and as a definition of what type of services it is. It has a code number to it and that’s how they get paid. They go back to the payer who says, “you provided this service and we would pay you this amount”, because that’s associated with that code. So it thought that CMS says, “oh, we’ll pay for all services associated with treating a skin rash.” No, they don’t say that. They said we’ll pay for these specific codes. So Medicare definitely had like a specific list of some Medicaid programs, too. So they had to extend that because there were other services that they were hoping could be provided via telehealth to people who were sheltering in place.
OM: [10:56] And how do you think the policy changes have differed between people who are publicly insured versus people who are privately insured, when you have these private insurers doing voluntary changes to their policies?
MK: [11:10] It’s been a little more difficult to get a handle on what exactly all the private insurers are doing. So even even before COVID, it was difficult to understand what they were doing with their telehealth health policy. Part of that was because, unlike Medicare and Medicaid, they don’t necessarily make it public. I mean, I’ve seen health plans come out; commercial payers said, “oh, we’re going to cover telehealth services.” It’s like, well, what does that mean? Does that mean every service you cover, you can do it through telehealth? Is it this sort of like a narrow band of services? It hasn’t been clear what some of the payers are covering when they say cover telehealth. So it’s a little harder to judge how expensive their telehealth policy and coverage have been because simply they haven’t made all the details publicly accessible for us.
OM: [12:10] Yeah, it’s been sort of nebulous even for me, just trying to learn about the different changes that they made. So I think I’ve experienced that.
MK: [12:19] I’ll give you like a very firm example here. So, for example, Medicare has said you can use phone to deliver a service. It’s for these types of services and they’ll say very specific codes or something. But they also have a category which they call “virtual check-in services,” which is a quick check-in that Medicare doesn’t classify as telehealth. They classify it as a technology-enabled service. So that’s like a whole in the weeds type of discussion, but you can use phone to deliver that. So that’s what Medicare does when you’re using a phone to deliver services. They’ve said, “you can use these specific things to deliver services, you could deliver these virtual check-in services.” And that’s what makes phone a way of delivering a service. And the health care provider can get paid for it.
A health plan may also say, “we allow phone to be a way of delivery services too.” But they may mean, “we only mean those virtual check-in services”, and not necessarily like these other band of services that you would typically think of, like an office consultation or a mental health type of interaction, perhaps. So that’s that’s also one of the confusions there. Just like how extensive are those policies? And do they mean the same thing of what people may be thinking because they’ve seen the Medicare policies?
OM: [13:46] Yeah, I think that’s a really clarifying example. So in a recent interview, CMS Administrator Seema Verma said, “the genie is out of the bottle” in regard to telehealth. Do you think that a lot of these policy changes are here to stay?
MK: [14:02] I think some of them won’t be. Which ones? I’m not quite sure. I can kind of guess which ones I think probably have the best chance of sticking around. Other ones I think probably will not stick around. You had mentioned HIPAA earlier, some of the rollback on HIPAA. I don’t think those will stick around, for example.
OM: [14:21] Why’s that?
MK: [14:24] Well, for one thing, the rollback on HIPAA was essentially the Office of Civil Rights saying, “we’re not going to find you for a HIPAA violation.” I don’t think that’s going to stick around. Now, the question is, though, does HIPAA right now have something specific related to telehealth? So there’s no specific policy within HIPAA that focuses in on telehealth.
The question is, does that open up a discussion with policymakers say we need to update HIPAA that we have telehealth. But the fact that, you know, they gave this grace period of not fining people. I don’t think we’ll stick around because they’Il want people to go back to protecting health information, abiding by those rules they understood. Right now is an emergency period. But once the emergency is over, I just see that rolling back to what it was before. But the conversation may be open, they need to really updated HIPAA to include this technology that really wasn’t widely available before HIPAA. So again, policy trending a little bit behind technology.
But I do think some of the changes, some of the temporary waivers, will stick around. I’ve gotten questions both on the federal and state level, we’re discussing what to keep. And some of them probably have a better chance than others. For the federal ones, a lot of the barriers were actually statutory barriers. So it would require Congress to pass a bill and the president to sign it. But there are some things that CMS can do administratively and decide on their own to keep around. So those would be kind of like easier things to do if they wish to keep that policy around because they wouldn’t have to go through Congress. So those, I kind of rate as having a higher likelihood of sticking around.
OM: [16:25] One historical barrier to telehealth has been licensing restrictions, leading many states to join into interstate compacts. But, of course, there’s been the issuance of Section 1115 waivers, allowing many doctors who are licensed in one state to practice outside of their state. Do anticipate that these licensing regulations will stick around or change after America fully reopens?
MK: [16:53] I think the licensing issue will become a much more discussed topic than it was before COVID. It was kind of like one of the major barriers identified. It was talked about a lot. I think the discussion will be ratcheted up once we get past the immediate emergency and then you may actually hear policymakers more interested in doing something about it than they were before. You know, it was always a topic of discussion. Sometimes you had policymakers who were resistant. I’ll use California as an example. California is actually not a member of any licensure compact. So there’s just been sort of very strong resistance to joining them.
But I think probably that some of that resistance from policymakers, they have softened in discussing the licensing issue or even even had their interest increased. And the reason I say that is because I think more [people] during this pandemic have become aware that this is a significant issue. And I think part of it may be they’ve either had firsthand experience with it or somebody that know had firsthand experience with it.
I’ll give you an example. I got a policymaker who contacted me and said, “is this true? I have a colleague who’s college student daughter had to come home because the university is shut down.” She couldn’t access her student health provider who she was seeing before this all hit, because it’s a different state now. Why can’t that provider provide a service here in this state? Well, because there’s there would like no specific waiver to provide that service.
And that sparked an interest in that policymaker saying, “wait, you’re telling me this can’t happen because of this licensure issue?” This is from somebody who I know, and had not expressed an interest in the subject before. I think we’ll probably find, like a lot of policymakers who maybe have that firsthand experience or are hearing about from constituents or from friends, relatives, or their own staff, because it’s impacted so many people. Not only like college students, but maybe if somebody got stuck in a state and they can’t travel. I got another call just a few days ago from, like a national organization, saying, “somebody reached out to us. It’s a woman who had cystic fibrosis, who was in one state, but her doctors were in another state and the doctors couldn’t provide services.” I said, “I’m sorry, it’s a licensure issue.”
OM: [19:47] So obviously, there’s a pretty large disparity between the way that different states carry out telehealth and the policies that they have in place. Do you think there are any states that serve as a good example of [telehealth policies that] could lay groundwork for widespread adoption?
MK: [20:05] If you’re talking about their Medicaid policies, California is a good example. So ironically, before COVID, California had just updated and expanded for Medicaid telehealth policies. They had had they still had stuff to do during COVID to expand it. But they actually had less [to do] than what a lot of other states had to do. So California for Medicaid policies has really forward thinking types of policies on Medicaid.
For commercial payers, it depends on what type of statute they have in place. California is one of the states that updated. Then there are a couple other states that have one, you know, more explicit policies on what commercial payers are supposed to do. Hawaii, Minnesota, they’ve got pretty extensive commercial payer policies. So it kind of really depends on what you’re trying to do. But in general, those are kind of the states in those specific areas, like with Medicaid or the partial payer laws, doing what they need to do. Now, the tally up with the commercial payer law, it’s really important how they’ve written them. And it’s also really important how it’s carried out.
There could be some sort of ability for the health plans to interpret it a certain way. So the law would have to be written pretty clearly. And like what, the requiring of the health plan. Then also none of these laws in place actually have any type of punishment if a health plan doesn’t abide by. There’s a there’s never like listed a consequence. So we have encountered conversations with providers where they said, “I tried to do this with my health plan and the commercial plan has told me no.” It’s one or two things: how well was the law written in the first place? There may be a lot of flexibility for a health plan and how they interpret it. They may be able to legally not cover the service that you’re trying to offer via telehealth. And also, if they’re not abiding by what in the law, you’re going to have to make a complaint to whatever authority regulates them in the state and then see what happens. And that’s been kind of rare.
I’m not sure if I heard a lot of people making complaints . There was one of the Midwest states where for the first time, about a year ago, where we did hear of a state agency fine a health plan for not following the telehealth law. They did fine the plan and the plan said it was because [they] just didn’t get our system in place. The law had passed too recently for [them] to get it in place. But that was the first time I had heard of a state action enforcing a private payer.
OM: [23:43] Did you hear any other states bring it up after that or was it sort of an isolated incident?
MK: [23:49] It was isolated, as far as I know. I had not heard of any other states. And they fined it like $150,000 or something. The plan was like, “we’ll pay it. Sorry. We just didn’t get our systems up and running in time.”
OM: [24:07] So I did want to talk a little bit about anticipating problems that are coming out as a result of new policies or some fears that people have about rolling out telehealth. Telehealth providers can now waive patient deductibles and copayments during the emergency. Under normal circumstances, these actions would be interpreted as kickbacks. Some feel that maybe lowering these barriers could cause a wave of billing fraud to CMS. I’m wondering, do you think that that’s going to be a substantial problem? And if so, what can be done to kind of mitigate it?
MK: [24:53] Obviously, there is a concern that during this time when you remove the guardrails, you can just go wild or something, somebody’s going to go wild. And it’s understandable to have that concern. The odds are you’re going to have one bad apple, at least. So I can understand the concerns regarding that, but will that happen? I don’t know.
Part of it is that, historically, there hasn’t been a lot of fraud related to telehealth. I know in recent years there’s been some big news, of arresting 60 people related to telehealth fraud to Medicare. But a lot of that, it’s like that kind of what you see in a typical fraud cases. And it was sort of like, you were prescribing unnecessary prescriptions for people who didn’t even need them. You didn’t even realized you were doing that because you signed them on for whatever reasons. Well, that’s kind of what fraudsters were always doing. You just happened and have had a telehealth element. So it wasn’t just a telehealth thing, but it was something that people had been doing probably since Medicare program was available.
Are we going to see that? We’re human beings and the odds are you likely will have a bad actor. I would not be surprised if there were some [bad actors]. But I would say probably the majority are legitimate reasons for billing Medicare. They are providing services to people who need it, and they are doing everything correctly. One thing is that they would still need to bill properly in order to get paid for for telehealth. When we’re passed this pandemic, it will be interesting to see what the data is. I’m not going to say there’s not gonna be any fraud. Even with the guardrails in place, you’re still going to have some fraud. We’re human. And if somebody wants to do it, you’re going to find a way to do it. The best you can do is that [telehealth] does open it up so you can get the services to the people who need it, and that the provider will get paid for their efforts to provide services to those folks.
OM: [28:36] I just want to ask quickly about reimbursement rates for health care providers. It seems that there’s been some confusion about how health state Medicaids are going to do that. Maybe there’s been some uneven reimbursement rates: doctors not getting paid exactly what they anticipated they would be paid. Have you seen this as a major problem and are there ways to sort of more efficiently roll out these new rates?
MK: [29:23] So Medicare and Medicaid, for the most part, should still be the same rate as to the person. Where I think probably some of the problem has been is going back to our phone example, where I was talking about the virtual checking codes that came up. CMS and Medicare doesn’t consider it telehealth, but it uses telehealth technology or technology to provide the service. That’s gotten murky and confused in a lot of people’s minds.
So Medicare, what it does is it has essentially two buckets: the telehealth bucket, where they define the services provided via telehealth that they reimburse and have all their policies around. Then, they have another bucket of something that they call “technology-enable” or “communication-based services,” which use telehealth technologies, but they don’t call it telehealth.
This is because telehealth is considered a one-to-one replacement for in-person services. Whereas [sometimes] they have this technology to provide services, but don’t necessarily have a one-to-one match up. So those technology-enable services aren’t underneath the same restrictions as telehealth, though CMS has set up other restrictions. I think the two buckets have merged in a lot of people’s minds. They think telehealth [is the same as] technology-enabled services. It’s not treated that way by the program, though, in how you bill and the codes you use. With Medicaid, some of them have adopted those codes too and adopted that separation. But in some providers’ minds, they think it’s all telehealth.
The reason I’ve gone through that explanation is that some of those technology-enable services pay a lot less than what you would get for a telehealth-delivered service, because the telehealth-delivered services is paid the same amount as in-person.
Something I’ve heard specifically from doctors is that they say, “I used telehealth and I only got paid ten dollars.” I dig a little deeper, and they did a service over the phone and were told to bill a specific virtual check-in code, which does pay ten dollars. The provider though they were doing an office consultation [to be paid] ten dollars. No, you just coded it wrong, as a virtual check-in code.
OM: [32:54] Are there ways that doctors can get more familiarized with these billing codes? What channels would they go through to figure out the root of the problem?
MK: [33:10] Billing is a whole other world that’s very complicated. You could take courses and courses on how to bill Medicare, and then you add this other [telehealth] layer and it get even more complicated. Usually they have to send a question into the telehealth resource centers, which CCHP is one, and we try to sort through the problem. Medicare and Medicaid are usually very good about clarifying which codes to bill and if you fit into the definitions for one of those codes.
Commercial payers are a little more difficult. It’s difficult to get hands on their policies, from an outsider viewpoint. I would assume it’s easier for a provider in their network that can ask them for it. But it is a very difficult landscape to navigate. The biggest issue that I’m hearing from providers during this time is that [billing] is so complicated and [they] have a mix of Medicare, Medicaid, and commercial patients and how to bill for telehealth is different. It is extremely confusing.
And for a consumer to understand what they can do, it’s going to vary for them. The options where they can get information [about coverage] varies. They can ask their health plan what they cover. If they get insurance through their employer, they can talk with their HR department. The resources available to consumers at that specificity are extremely small. California is one of the few states with a consumer portal that provides telehealth information. They can type in their zip code and see the health plans that say they consider telehealth-delivered services, and then [be directed to] the health plan’s site. That varies because [consumers] are sent to the health plan’s site and the available information varies from plan to plan. But that is one of the few examples where states or the federal government [tries to give] more information to the consumer. The Department of Health and Human Services did put out a website with more information for educational information for patients using telehealth. And that was only available during COVID, so nothing was really available pre-COVID. CCHP tried to put out as much information for consumers [as possible], but that’s an area where the consumer relies more on the primary care provider to tell them about it.
OM: [37:45] If our listeners are interested in learning more about telehealth [generally], what sort of resources does CCHP recommend?
MK: [38:07] If they want to get into the policies, they can definitely come to the CCHP website. We track all the state Medicaid policies, the Medicare policies, the state legislation, and the policy changes of COVID. But that can be too dense for some people. [They can also go to] telehealthresourcecenter.org, where you can access all 14 telehealth resource centers and general information. Those two are you best places to start. Depending of the type of person you are [such as a provider, consumer, older person, or parent], there’s a lot of different organizations that are focused in on telehealth such as AARP and the School-Based Health Alliance. I would start with the telehealth resource centers and especially CCHP if you’re interested in the policy side. Feel free to reach out to a telehealth resource center [and ask for] good resources, then we’ll be able to narrow it down on your specific issue.
AV: Thanks for listening to this week’s episode on Centering on Coronavirus from The New Center. Please be sure to visit newcenter.org to sign up for our updates and stay tuned for another episode next week.
President Trump’s threat to reign in social media companies
Last Thursday, May 28, 2020, President Donald Trump issued the Executive Order on Preventing Online Censorship, two days after Twitter placed a fact-checking label on one of his tweets regarding mail-in voting. On May 29, Twitter flagged two additional tweets from the President’s account (@realDonaldTrump) and the White House’s official Twitter account (@WhiteHouse), about protests and looting following the brutal killing of George Floyd by a Minneapolis police officer.
President Trump tweeted that he would “send in the National Guard and get the job done right… Any difficulty and we will assume control but, when the looting starts, the shooting starts.” President Trump posted the same message on Facebook soon after his Twitter posting.
Twitter issued a warning label on the tweets, stating that they violated company policies against “glorifying violence.” President Trump responded by announcing a new executive order compelling the Federal Communications Commission (FCC) and Federal Trade Commission (FTC) to reexamine the scope of Section 230 of the Communications Decency Act of 1996.
Reforming Section 230 would have far-reaching implications for social media platforms and their users—President Trump described the move as “a big day for social media and fairness!” However, telecommunications law experts are arguing that this Executive Order may not be legally enforceable at all.
Section 230: The foundation of the modern internet
Section 230 states that technology companies aren’t considered “publishers” of third-party content, but rather “platforms,” protecting them from liability through safe harbor provisions. In the early years of the internet, it ensured nascent digital platforms and products could grow without being crushed by litigation. However, the provisions are now being widely criticized as outdated and overly broad. Section 230 opponents argue that companies like Google and Facebook need to be more accountable for illicit or misleading content posted by their users and advertisers. President Trump’s Executive Order asks the FCC and FTC to reconsider Section 230, so that the U.S. government may be able to take action against providers that “restrict speech in ways that do not align with those entities’ public representations about those practices.”
Twitter spokesman Brandon Borrman responded to the executive order: “this EO is a reactionary and politicized approach to a landmark law… Attempts to unilaterally erode [Section 230] threaten the future of online speech and Internet freedoms.”
As Twitter doubled down on their warning labels earlier this week, Facebook CEO Mark Zuckerberg firmly stated that the company wouldn’t be labeling President Trump’s same post on Facebook. Zuckerberg’s stance prompted several hundred Facebook employees to refuse to work in a “virtual walkout” on June 1, with some even threatening resignation.
Support for Section 230 has been crumbling
In recent years, Democrats and Republicans have found common ground in questioning Section 230 liability protections, but they have done so for different reasons. President Trump has been an outspoken critic of technology companies “doing everything in their very considerable power to censor in advance of the 2020 Election,” echoing the widespread Republican sentiment that social media companies attempt to curb conservative messaging on their platforms. Conversely, Democrats have condemned what they see as the rise of hate speech and conspiracy theories on social media without appropriate guardrails against the dissemination of misinformation.
In a speech on December 10, 2019, Attorney General William Barr stated that the DOJ is looking into Section 230 and that the law has “extended far beyond what Congress originally intended.” He argued that platforms have legal immunity from “blocking or removing third-party speech—including political speech—selectively” and allow communications within terrorist organizations. Prominent corporate opponents to Section 230 (in its current form) include Oracle, Salesforce, and Microsoft. Facebook CEO Mark Zuckerberg has stated that without Section 230, he wouldn’t have been able to start Facebook, but the company now must take a “broader view of its responsibility,” without providing concrete details.
Is this EO legally enforceable?
Under the Executive Order on Preventing Online Censorship, the Trump administration will first direct Commerce Secretary Wilbur Ross to file a petition with the Federal Communications Commission (FCC), demanding that they clarify if technology companies should be liable for third-party content.
The FCC, an independent agency, could refuse the Secretary’s petition. The FCC’s leadership is composed of two Democratic commissioners, two Republican commissioners, and Republican Chairman Ajit Pai, though the agency is ostensibly nonpartisan. The two Democratic members have publicly denounced President Trump’s idea, while Republican Commissioner Brendan Carr has openly lauded the Executive Order. Chairman Pai has stayed tight-lipped on his position but noted that the FCC would “carefully review any petition for rulemaking” filed by the Trump administration.
Even if the FCC were to approve this request before the 2020 election, a new ruling on Section 230 would attract legal challenges. Experts expect legal battles would be fought on two fronts: (a) challenges to the rule change as an unconstitutional limitation on free speech, and (b) challenges to the FCC’s rulemaking authority, as the agency doesn’t have the legal mandate to regulate content on social media platforms. As the Executive Order stands, there is little likelihood that it will be legally enforceable in its current form.
The most enforceable way that America can revoke Section 230 is through Congress. With renewed attention to the statute, policymakers will likely begin submitting new legislation or reintroducing old proposals. Before the executive order, Trump allies Senator Josh Hawley (R-MO) and Rep. Matt Gaetz (R-FL) separately announced their plans to introduce Section 230 repeals over allegations of election interference and anti-conservative biases.
Section 230 needs to change, but do it the right way.
Section 230 should be updated for a new era, but it should be done so by Congress, where any changes will likely be bipartisan and durable over time. If designed well, new frameworks for regulating harmful content can contribute to the internet’s continued success by articulating transparent, predictable, and balanced ways for government, companies, and civil society to share responsibilities and work together. If designed poorly, these efforts may stifle expression, slow innovation, and create the wrong incentives for internet platforms.
In June 2019, The New Center suggested potential reforms to Section 230 provisions in a policy paper entitled “Big Tech: Public Discourse and Privacy.” The New Center proposes the following solutions to create a sustainable framework for platform liability and responsibility:
- In line with the First Amendment, online speech should be free unless inciting violence or promoting dangerous obscenity
- Operators should have liability for any demonstrable negligence, as determined by the Federal Trade Commission
- Platforms should provide meaningful notice to those who have their content removed
- Platforms should allow users the right to appeal any content takedown
- Platforms should issue public reports detailing the amount and types of content they remove, along with justifications for removal
Twenty-two million people filed for unemployment in the last month, and many of them are gig workers who had never before been eligible for these benefits.
In our latest installment of the Centering on Coronavirus issue series, The New Center policy analyst Olive Morris sat down with a member of the nontraditional workforce, a restaurant worker named Katherine from central Georgia, to discuss the financial and employment hardships brought on by coronavirus. After you listen, be sure to check out the accompanying issue brief, “Centering on Coronavirus: The Gig Economy,” to understand the unique challenge the coronavirus pandemic poses for America’s nontraditional workers—many of whom aren’t afforded the same financial, regulatory, and legal protections as the traditional labor force.
Olive Morris: My sister-in-law, Katherine Makuch, is a wife and mother of three children, all under the age of 4. She and her husband, my brother, are servers at [a restaurant called] Texas Roadhouse in Macon, Georgia. She makes the bulk of her income from tips, which have been increasingly hard to come by since the outbreak of coronavirus. This pandemic has forced millions in unemployment and totally upended work across America. Here’s Katherine, as she tells it.
Katherine Makuch: We took a vacation before Georgia’s governor issued a state of emergency and locked down the state. We were out of town, and I had already taken off two weeks, so I finished my two-week vacation and came home. I worked a weekend before they closed our dining room and when I came back to work, they had taken everything off the tables. The sugar caddies, the salt and pepper shakers, the menu, all the stake sauces—the tables were just bare.
KM: They put black linen cloths over every other booth, so people had to remain six feet apart. They offered that for a few weeks before they finally closed down their dining room.
OM: And you just came into work one day and saw that?
KM: Yeah. I had asked a few of my coworkers what the situation was and they kind of prepared me, but it was very dramatic. I’m used to seeing my job a certain way, and it was completely different when I came back from vacation.
OM: Not only was Katherine’s job different, her entire city was different. She expected people to panic buy, but she didn’t expect the type of things they would be buying, like guns. As soon as the coronavirus outbreak started getting widespread attention, her handgun was stolen out of her truck. She tells me this story about trying to buy a new gun, and finding the shops flooded with people.
KM: I went to a gun store here in Macon to buy a new firearm. It was really busy, and I didn’t expect it to be busy. I remember, I went to two different gun stores—a pawn shop, then I went to an actual gun store. The pawn shop was packed; it was full of people. I really was not expecting that. Usually, in pawn shops, it’s usually pretty empty. It’s never full like that unless it’s a flea market or a gun show. They had the guns that I was looking for, something small and compact that could fit in a purse. The gun store had a lot of amateurs, people who had obviously never handled a firearm by themselves. They were purchasing Glocks, looking at ARs, or shotguns. It was a lot. I called my husband and I asked if I needed to buy any extra ammo for the house and he told me, “yeah, see what they have in bulk.” But they didn’t have any ammo in bulk. They had small boxes of 22’s and 9mm, but nothing in bulk at all. The guy at the gun store said if I was going to buy ammo, I should do it now because it’s being sold out all across the city.
OM: More than 22 million Americans have had to apply for unemployment insurance in the past month. I asked Katherine, had she had to? And what had that process been like?
KM: We did, probably about a week after we got back from [vacation], about five days after they closed our dining room. We realized that we were not going back to work anytime soon, so we applied for unemployment. We still have not gotten it. That was probably about three and a half weeks ago.
OM: Katherine then described how she reached out to her company’s hotline, which was helping workers get unemployment benefits.
KM: Texas Roadhouse has a support hotline called “Roadie Support”. We were instructed by our general manager to call Roadie Support, and they would be able to push our unemployment application further on their end to get it approved or processed faster. I remember, I applied on a Friday and called Roadie Support that following Monday, and then by Tuesday, I received an email that my application was processed. I got an amount for how much I was supposed to be receiving weekly, which was about $200 for myself, a week.
OM: Since the outbreak of coronavirus and applying for unemployment, Katherine has since gone back to work, but it’s different than how she left it.
KM: Texas Roadhouse is doing a “curbside to go” thing, where you can call in to place an order or order online. We will have somebody bag it up for you and bring it to your car. Or, what they have me doing is working under this giant tent where cars drive through. If they haven’t placed an order, but they want to place an order in person, they park off to the left. I bring them menus and peanuts and drinks. They have picnic tables set up outside and you can order through me and you can sit outside and eat, but it’s not full-service. It’s minimum wage and they have anywhere from nine to 19 servers working and we all pool tips.
OM: So since you’ve gone back to work, do you still expect to get unemployment?
KM: Yes. My boss told me that [the state of Georgia] is not going to be withholding unemployment from anybody. You just cannot work more than 31 hours a week.
OM: And how many hours a week are you working now?
KM: My first week, I clocked in 29.75 hours.
OM: You have such a good memory.
KM: Yeah, I kept up with it. I even had coworkers telling me, “Kat, you need to clock out.” I would clock out, but I would still do my work so that I could finish my job without exceeding my hours. This past week, I’ve gotten into the groove of how it works. I was able to break down the tents a lot quicker, so I averaged 25 hours last week. My hours were cut again this week, and now I’m down to about 18 hours.
OM: Why were [your hours] cut again?
KM: Corporate got very serious about guest perception. Everybody has to wear masks and gloves. Now they’re doing a mandatory temperature check before I’m allowed to clock in. They’re going to take everyone that had already worked and split us into two groups, Group A and Group B. Group A was going to work Wednesday through Saturday, and Group B was going to work Sunday through Tuesday. Instead of doing two shifts a day, they’re going to change everybody to doubles, so we’d all go in at noon and close at 8, or 9 on the weekends. That’s just in case someone gets diagnosed with coronavirus in either Group A or Group B, they can go ahead and cut that entire group who’s been exposed.
OM: So, right now, Katherine is working 18 hours a week at minimum wage, while trying to sustain three children. She’s acutely aware of the amount of money she’s making, and the hours she’s worked. Something you’ll come to see about her through this interview, Katherine has a near-photographic memory for numbers. She’s been this way since high school, as long as I’ve known her. She gave me a detailed breakdown of her financial situation since returning to part-time work.
KM: I’m tired of working for minimum wage. $200 a week is nothing.
OM: Is that how much you’re making with minimum wage right now?
KM: Yeah. The week that I worked the most hours, after taxes, my paycheck was literally $123.57 [for the week]. As far as cash tips go, you go back and pick up your tips from the day before. And the cash tips average out to be about $8.
OM: What? Wait, $8 a day in tips?
KM: $8 in cash and then credit card tips can be anywhere between $20 and $45. When this first started, I had three ladies on three different days come by and leave hundreds of dollars in tips for everybody to split. People were being very generous at first. Were making minimum wage, but they understood that it was nothing compared to what we were used to making.
OM: Though Katherine hadn’t seen any state unemployment benefits yet, she did get $3,900 from her stimulus check, a financial package created by the CARES Act passed in March. This kind of money goes a long way in Macon, Georgia. I then asked Katherine if she knew about how the federal government is contributing additional funding to unemployment benefits. Also created through the CARES Act, unemployed Americans are eligible for $600 a week, on top of whatever their state unemployment benefits are. Remember, when she applied for unemployment, Georgia’s Department of Labor reported that she would receive $200 a week. Katherine should have been eligible for a federal boost of $600 a week until July, meaning she should be receiving around $800 a week, nearly four times what she’s making at [the restaurant] now. Katherine, like many Americans right now, isn’t sure if and when she’s going to receive state benefits or this federal boost.
KM: I have no idea. Nobody has spoken to me about it. As far as I know, none of my coworkers have heard anything about it or given any kind of instruction. All of my coworkers have applied for unemployment. The last time that I checked the Georgia Department of Labor’s website, it did mention the extra $600 [a week] stimulus check, but it didn’t say how we were supposed to get it. But I would imagine that if you applied for unemployment, they would just send it to that bank account that you have attached to your application, or they would just use the account you have for your last tax return.
KM: Do you want to know a fun fact?
OM: Yeah, go ahead.
KM: The state of Georgia released emergency food stamps for anyone who has ever had an active food stamp card. They were giving out about $1,500 in emergency food stamps.
OM: Do you guys have that?
KM: Yes. I actually hadn’t received benefits since January, because I was finally in a place where I did not need to rely on food stamps to buy groceries for myself. I didn’t renew my application. I was unaware that they were doing that. One day, I decided to check the balance on my EBT card and just see what’s on it. I looked, and it was $1,500 that had been deposited three days prior.
OM: And no one let you know about this?
KM: No, I wouldn’t have been aware.
For more Context on Coronavirus, read the rest of our series:
“Vaccine Development” is focused on how the typical vaccine development process is being accelerated–technologically, bureaucratically, and financially–to meet this unprecedented challenge.
“Voting During a Pandemic” details the various implications of the coronavirus on our elections, how states have responded, and why a massive expansion of mail-in voting may be the only feasible way to conduct the November general election.
“The Ventilator Shortage” gives an overview of the importance of ventilators in the fight against coronavirus, what is causing their current shortage, and how governments and the private sector are responding to it.
“The Gig Economy” discusses the importance of the gig economy and the unique challenges of nontraditional workers in the fight against coronavirus.
“Diagnostic and Antibody Testing” explores how the United States got behind the testing curve and how we might still be able to correct our course and move toward a safe reopening of our economy.
On Wednesday, January 29, President Donald Trump signed the United States-Mexico-Canada Agreement (USMCA) into law, which will replace the North American Free Trade Agreement (NAFTA) that came into effect in 1994. The agreement enjoyed wide bipartisan support in both chambers of Congress, with only ten senators voting against the USMCA, including 2020 presidential candidate Bernie Sanders, eight Democrats, and one Republican.
Despite opposition, a contentious provision remained in the USMCA that grants liability protections for internet platforms, echoing language from Section 230 of America’s Communications Decency Act of 1996. In the agreement, many technology companies aren’t considered “publishers” of third-party content, but rather “platforms,” protecting them from liability through safe harbor provisions. Effectively, this shields companies like Google and Facebook from legal penalty for illicit or misleading content posted by their users and advertisers.
These provisions were met with backlash from both sides of the aisle. In December 2019, Democratic House Speaker Nancy Pelosi made a push to remove safe harbor provisions from the draft USMCA, but her request was made after the deal’s finalization. Similarly, Republican Senator Ted Cruz wrote in a letter to U.S. Trade Representative Robert Lighthizer that “members of both the Senate and House of Representatives [are] seriously considering whether to amend or eliminate Section 230’s grant of immunity” and that he believed “enshrining it in our trade agreements would be a mistake.” Despite their qualms, both Pelosi and Cruz voted in favor of USMCA in their respective chambers.
Although Democrats and Republicans have found common ground in questioning these liability protections, they have done so for different reasons. Senator Cruz has been an outspoken critic of what he’s called “Silicon Valley’s blatant political censorship,” echoing the widespread Republican sentiment that technology companies have been trying to curb conservative messaging on social media platforms. Conversely, Democrats have condemned what they see as the rise of hate speech, misinformation, and conspiracy theories on social media.
Outside of the trade agreement, the original Section 230 has also come under fire from both the Department of Justice (DOJ) and some in the private sector. In a speech on December 10th, Attorney General William Barr stated that the DOJ is looking into Section 230, and that the law has “extended far beyond what Congress originally intended.” He stated that platforms have legal immunity from “blocking or removing third-party speech–including political speech–selectively” and allow communications within terrorist organizations. Outspoken technology company opponents to Section 230 include Oracle, Salesforce, and Microsoft. Facebook CEO Mark Zuckerberg has stated that without Section 230, he wouldn’t have been able to start Facebook, but the company now must take a “broader view of its responsibility.”
Section 230 and an array of social media regulations are currently being reevaluated by stakeholders. In June 2019, The New Center suggested potential reforms in a policy paper entitled “Big Tech: Public Discourse and Privacy.” The New Center proposes the following solutions to create a sustainable framework for platform liability and responsibility:
- In line with the First Amendment, online speech should be free unless inciting violence or promoting dangerous obscenity
- Operators should have liability for any demonstrable negligence, as determined by the Federal Trade Commission
- Platforms should provide meaningful notice to those who have their content removed
- Platforms should allow users the right to appeal any content takedown
- Platforms should issue public reports detailing the amount and types of removed content, along with justifications for removal
For solutions forged in the center, read the full paper here.
Earlier this month, the California State Legislature passed the year’s final amendments to the California Consumer Privacy Act (CCPA), a bill to enhance personal data privacy and consumer protection online. These changes are expected to be enacted into law by October 13th, pending a signature from California Governor Gavin Newsom. On September 25th, policymakers released an additional “CCPA 2.0” initiative—The California Privacy Rights and Enforcement Act of 2020—to be placed on next year’s presidential election ballot. Among other things, CCPA 2.0 would establish an independent data protection agency, create a new class of “sensitive information” (such as passport and social security numbers), and include additional notice requirements for businesses.
Since its inception, the CCPA has been a political lightning rod. Congressional Democrats have called the bill a “floor,” not a “ceiling,” for federal privacy legislation. Conversely, Republicans have argued that stringent privacy laws create high compliance costs which pose a threat to small businesses, innovation, and consumer choice.
Policy experts have noted that California’s privacy laws often become de facto national standards. Members of Congress on both sides of the aisle have warned against simply transposing the CCPA into a model for federal legislation, even though Congress has yet to produce a politically viable alternative.
One major sticking point in the federal legislation debate is “preemption”—the ability for a federal law to preempt (override) state laws, such as the CCPA. Republicans have advocated strongly for preemption, warning against a patchwork of state laws that may disrupt interstate commerce and compound compliance costs. Some Democrats, particularly those with a hand in crafting or promoting the CCPA, are opposed to the idea of preemption, fearing that a national law might water down state laws.
In 2018, Congress had reached a consensus on the need for a strong federal privacy framework in the United States. Senator Robert Wicker (R-MS), head of the Senate Commerce, Science, and Transportation Committee, stated that he anticipated “a federal law on the books by the end of 2019.”
But Congress has yet to act. Still, many in Congress and the tech industry recognize that a clear nationwide privacy standard would be easier to comply with than different state by state laws.
Earlier this year, Senate Majority Whip John Thune (R-SD) stated that “the question is no longer whether we need a federal law to protect consumers’ privacy. The question is what shape it should take.”
In June 2019, The New Center suggested potential reforms in a policy paper entitled “Take on Big Tech: Protecting Privacy and Public Discourse”. The New Center proposes the following solutions to create a sustainable and sensible framework for managing privacy concerns:
- Enacting federal legislation to protect online privacy
- Allowing the FTC to issue trade rules under the guidelines of the Administrative Procedure Act (APA), or creating a new privacy watchdog organization with APA rulemaking ability
- Creating a legal framework to promote transparency in content moderation
- Fostering a system of algorithmic accountability for AI use in moderating online content
- Restoring of the Office of Technology Assessment
For privacy solutions forged in the center, read the full paper here.
Olive Morris is a policy analyst for The New Center, which aims to establish the intellectual basis for a viable political center in today’s America.