Tag Archives: techfreedom

Trump builds a virtual wall to fence high tech companies in

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© Yann Forget / Wikimedia Commons, via Wikimedia Commons

Broadcom will not buy Qualcomm, and will not become the third largest chipmaker in the world, behind Intel and Samsung. Not because the eye watering price – $117 billion, the largest such high tech transaction ever – is too high. Not because the deal doesn’t make economic sense. It’s because U.S. president Donald Trump says it will harm U.S. national security.

Using his authority to define what national security needs are and squash transactions that threaten them, Trump categorically blocked Broadcom’s Singapore-based corporate parent and its Californian affiliate from buying San Diego-based Qualcomm.

The apparent worry is that technological and market leadership in 5G mobile chipmaking will leave U.S. shores and go overseas, to Broadcom and China-based Huawei, with the result that neither U.S. consumers or the military would be able to trust fundamental technology and products in the coming decades.

Trump didn’t pull this idea out of thin air. In February, six intelligence agency chiefs told the U.S. senate intelligence committee that people in the U.S. shouldn’t use mobile phones made by Huawei or ZTE, the number two Chinese manufacturer. According to CNBC, FBI director Chris Wray spoke for the group and said…

We’re deeply concerned about the risks of allowing any company or entity that is beholden to foreign governments that don’t share our values to gain positions of power inside our telecommunications networks.

The irony is that the FBI’s values include the belief that it should have a back door to the contents of any mobile phone or computer, and its sister agency, the NSA, has spilled malware into the cyber ecosystem.

There are good reasons to wish Qualcomm remains Californian and independent, not least because companies do not become more innovative as they get bigger. Quite the contrary. But technological leadership and prosperity cannot be guaranteed by walls that keep investors and immigrants out and companies in, or by government management of the high tech economy.

Don’t blame local government for a lack of California broadband competition

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Kicking back in California is no kickback.

I admit to being a Californian, so my objections to (what I consider to be) a rant by senior members of TechFreedom, a think tank as they put it, might be specific to my native State. That said, their contention in a Wired editorial that local government is to blame for poor Internet service is not consistent with the facts.

The core of their argument is that local governments control access to utility poles and underground conduit, and they restrict competitors – particularly cable companies – from accessing it in order to extract kickbacks.

Before building out new networks, Internet Service Providers (ISPs) must negotiate with local governments for access to publicly owned “rights of way”…Local governments and their public utilities charge ISPs far more than these things actually cost. For example, rights of way and pole attachments fees can double the cost of network construction.

The history of broadband in California is the exact opposite. State rules prevent cities and counties from charging for right of ways. Relatively few local governments own electric utilities and almost none provide telephone service. Los Angeles and some nearby cities are the huge exception, but the vast majority don’t own utility poles and they control little enough telecoms-grade conduit.

Many that do – Palo Alto, Lompoc, Alameda for example – have built out competing broadband systems. Any competitive onslaught has been pointed in their direction by cable and telephone companies. I’m not saying it isn’t fair competition, but it is effective and shows that incumbents are hardly the victims of this piece.

In fact, the municipal franchises that developed over the past fifty years provided an alternate means for what were then upstart cable companies to get onto poles. Since then, the California legislature has pre-empted most local franchises, taking what the authors consider to be a major source of mischief off the table.

To be fair, telecoms companies run into problems when they try to put equipment boxes on public streets or sidewalks or build wireless facilities, but that’s more often the result of complaints from nimbys and the tin foil hat brigade than pushback from government officials.

Right now, the major source of competitive obstructionism in California is the cable lobby in Sacramento. On the whole, local governments are trying to be the solution, not the problem.