INDUSTRY WATCHING ADMINISTRATION FOR BROADBAND POSITION
When President Bush gives his first State of Union address this evening (Tues.), industry will be listening for even most modest reference to broadband. Telecom Industry Assn. (TIA), TechNet, Computer Systems Policy Project (CSCC) and other trade groups have urged Administration to clear regulatory hurdles and provide appropriate stimulus to allow creation of nationwide 100-Mbps national broadband network, far faster than traditional cable modem or DSL service that many associate with broadband. But Bush hasn’t announced formal position on broadband, although many of officials, most recently last week NTIA Dir. Nancy Victory, hinted one was coming. Bush’s mention of broadband in his speech would be very beneficial in promoting issue to policymakers, TIA Pres. Matthew Flanigan told reporters Mon.: “It will be very important in getting us over the hump.”
Flanigan said there was danger of believing broadband already had arrived, with growth in DSL and cable high-speed Internet service. However, he defined broadband as “full, 2- way sound, video and data,” something that needs 10, 15 or even 100 Mbps depending on application and number of users. TIA includes manufacturers such as Lucent, Nortel Networks, Alcatel and Corning. Flanigan said his organization was neutral on which technology could best deliver broadband: “We don’t care about delivery.” Instead, he said, terrestrial and wireless approaches all should be built out in competition for consumers and businesses. TIA Vp-External Affairs & Global Policy Grant Seiffert admitted such competition would help TIA members: “We're the arms dealers in this industry.” But Flanigan and Seiffert cited telemedicine, distance learning and homeland security as some of reasons true national broadband network was in interest of federal govt.
“The telecom industry is close to a depression,” Flanigan said, with capital expenditures expected to drop another 20% or so in 2002 after similar fall in 2001. Spending on IT and telecom infrastructure equipment should turn around in 2003, Flanigan said, but “I'm not sure all of our membership will be around in 2003.” “The money has to start flowing in telecom,” he said, including investment from Wall St., but that won’t come unless industry has regulations that encourage build-outs. One issue backed by TIA is right of incumbent telcos to build out fiber networks without unbundling requirements. That is one provision in bill by House Commerce Committee Chmn. Tauzin (R-La.) and ranking Democrat Dingell (Mich.), but Flanigan said TIA would file comments in FCC rulemaking on unbundling that could free Bells from fiber unbundling obligations: “We believe it’s in [the FCC’s] power to do it right now… We don’t need Tauzin- Dingell.”
Other issues of importance to TIA: (1) Freeing spectrum so wireless providers can offer 3G services. (2) Adding telecom-friendly provisions to economic stimulus bill. On Fri., Senate defeated amendment by Sen. Smith (R-Ore.) that would have allowed 30% depreciation on capital purchases for 3 years (CD Jan 28 p2). Smith has reintroduced amendment with 2-year expiration, and Seiffert acknowledged time period could get even shorter, with industry preferring some depreciation bonus over none at all. TIA also backs inclusion of 5-year carryback of net operating losses and inclusion of broadband tax credits sponsored by Sen. Rockefeller (D-W.Va.). (3) Voting soon in Senate on trade promotion authority (TPA) after passing House last fall by one vote. Calling TPA critical to success of his member companies, Flanigan said TIA was “confident” it would become law.