A letter from assorted industry associations suggests that requirements for the US telecoms industry to purchase the majority of their equipment from US firms could threaten the country’s broadband rollout
In November 2021, President Joe Biden signed the Infrastructure Investment and Jobs Act (IIJA), commonly referred to as the Bipartisan Infrastructure Bill, into law, pledging to spend $1.2 trillion to improve national infrastructure, including broadband access, clean water, electric grid renewal, public transport, and roads.
For the US telecoms industry, this Bill has been a significant boon, with around $65 billion earmarked for broadband infrastructure projects across the country.
However, making use of these funds effectively will be easier said than done.
One of the key issues is the Biden administration’s Buy American requirements, which stipulates that firms using government subsidies must purchase a certain percentage of their equipment from within the US. In January 2021, President Biden increased this requirement to 55% from 50% via an executive order, but he has even proposed increasing the requirements even further, potentially raising the figure to 75% by 2029.
This proposal was immediately met with scepticism from US trade organisations, who raised concerns that such a protectionist policy would damage international relations and ultimately harm US commerce.
“The cost of revamping global supply agreements outweighs the benefit of competing in the federal procurement market; the U.S. may lose out on investments and job creation from international businesses,” said Nancy McLernon, CEO of the Global Business Alliance, a trade association representing US subsidiaries of companies based abroad.
Now, the US telecoms industry is also speaking out against the requirements, asking the National Telecommunications and Information Administration (NTIA) to grant a limited waiver to the Buy American requirements for information and communication technology (ICT) products.
In a letter to Commerce Secretary Gina Raimondo, Transportation Secretary Pete Buttigieg, and Agriculture Secretary Tom Vilsack, a group of telecoms and technology industry associations argued that these requirements were not realistic given global market dynamics and could inadvertently harm efforts to reach government goals of 100% broadband coverage.
“As currently scoped, the 55 percent U.S. content threshold laid out in Title IX of the IIJA does
not reflect the realities of the global ICT supply chain. A broadband network contains dozens of network elements including but not limited to switching, routing, transport, access, operations systems, and customer premises/end user equipment and devices,” explained the letter.
“Devices used in each of these network elements in turn include hundreds of components – each with their own complex supply chains – sourced from around the world from trusted vendors and suppliers. Even network products that are assembled in the United States by U.S. companies rely on foreign inputs from their global partners. While a few individual network elements might meet the 55% domestic content threshold they are extremely limited in number, and it appears that no combination of network products would meet the IIJA’s content requirements from end-to-end.”
Alan Davidson, the head of the NTIA and Federal Communications Commission Chairwoman Jessica Rosenworcel, were also CC’d into the communication, among others.
The letter, penned by Competitive Carriers Association, Cellular Telecommunications Industry Association, NCTA, TechNet, Telecommunications Industry Association, and USTelecom, comes as a response to a call from the NTIA last month to help weigh the impact of these Buy American requirements on the telecoms industry and the national rollout of broadband.
Ultimately, the letter asked legislators to consider a “limited, programmatic waiver”, saying that to do so would be consistent with provisions of the IIJA, which allows exemptions to these requirements in cases where applying them would increase the overall cost of projects by more than 25% and could be deemed “inconsistent with the public interest”.
“Americans without access to broadband cannot wait for a domestic supply chain to be developed out of whole cloth, and the federal government has a clear path forward to ensure the success of the President’s infrastructure agenda by instituting a waiver,” concluded the letter.