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Kudlow Says US Has ‘Always Had A Security Concern’ On ZTE, Trump Reversal Was At Chinese Leader’s Request

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WASHINGTON, May 17, 2018 — National Economic Council Director Larry Kudlow on Thursday said President Donald Trump’s calls to reverse a Commerce Department order banning the Chinese telecommunications equipment firm ZTE from exporting American products came in response to a request from Chinese president Xi Jinping.

“I think the president is responding to a request from President Xi to take another look at it,” Kudlow said while speaking to reporters outside the White House.

Trump trades ‘America First’ for ‘Too many jobs in China lost’

But after this past weekend, it is unclear whether any of those actions will stick. As has become his habit since taking office, Trump upended the proverbial table Sunday with a tweet announcing that “President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast.”

Trump added that too many jobs in China had been lost and that he’d instructed the Commerce Department to “get it done!”

The weekend tweet was a dramatic reversal for Trump, who’d convinced voters to put him in the White House with promises that he’d crack down Chinese trade abuses and alleged theft of American jobs — which he described as “rape” — and that he’d label the world’s most populous country a currency manipulator.

Kudlow dismissed the possibility that Trump’s change of heart was linked to a $500 million investment by Chinese state-owned company in support of an Indonesia-based development featuring a Trump hotel, golf courses, and residences.

A report on the investment came just one day after Trump’s tweet, leading some observers to suggest that Trump, who has not divested from his hotel, golf, and real estate empire, might be in violation of the Emoluments Clause of the United States Constitution.

“Oh for heaven’s sakes,” he said, exasperated at being asked to respond to the allegation. “I’m not even going to respond to that.”

Xi wants Trump to reverse an export ban leveled after ZTE execs lied and obstructed justice

ZTE became an issue in US-China relations last month after the Commerce Department’s Bureau of Industry and Security issued an order denying ZTE the ability to export American-made products for seven years.

In March, ZTE executives agreed to settle the sanctions violations by paying a $1.19 billion fine and accepting a suspended seven-year export ban to automatically take effect if it was found that the company violated any aspect of the settlement agreement or committed any more violations of American Export Administration Regulations.

Because the two major components in most mobile phones — Google’s Android operating system and radio chips made by San Diego, California-based Qualcomm — are made in the United States,  an export ban is a potential death sentence for the company.

But the Commerce Department imposed the ban after investigators discovered that company executives had made false statements and obstructed justice during negotiations to settle charges against the Shenzen, China-based company, formally known as the Zhongxing Telecommunications Equipment Corporation, for violating sanctions by selling telecom equipment to Iran and North Korea.

Chinese telecom gear has long inspired security fears in US

Chinese telecom equipment makers like ZTE and Huawei have also long been considered security risks by the American defense and intelligence establishments, which fear that the Chinese government-owned companies insert backdoor that could be used for espionage into their equipment.

As a result, the Pentagon recently banned the sale of Huawei and ZTE phones in the subsidized retail stores located on military bases known as Post Exchanges, and the Federal Communications Commission issued an order prohibiting Universal Service Fund dollars from being spent on gear from either manufacturer.

While Kudlow said the government has “always had a security concern” when it comes to ZTE, when asked by BroadbandBreakfast whether Trump would support reversing the FCC ban, he replied: “I can’t comment on that.”

He also wouldn’t say if security concerns would factor into a decision on whether or not the export ban gets reversed.

“I would just say that Secretary Ross is reviewing some of the remedies and penalties,” he said. “That’s as far as I can go right now.”

Digital Inclusion

Doug Lodder: How to Prevent the Economic Climate from Worsening the Digital Divide

There are government programs created to shrink the digital divide, but not many Americans know what’s out there.

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The author of this Expert Opinion is Doug Lodder, president of TruConnect

From gas to groceries to rent, prices are rocketing faster than they have in decades. This leaves many American families without the means to pay for essentials, including cellphone and internet services. In fact, the Center on Poverty and Social Policy reports that poverty rates have been steadily climbing since March. We’re talking about millions of people at risk of being left behind in the gulf between those who have access to connectivity and those who don’t.

We must not allow this digital divide to grow in the wake of the current economic climate. There is so much more at stake here than simply access to the internet or owning a smartphone.

What’s at stake if the digital divide worsens

Our reliance on connectivity has been growing steadily for years, and the pandemic only accelerated our dependence. Having a cell phone or internet access are no longer luxuries, they are vital necessities.

When a low-income American doesn’t have access to connectivity, they are put at an even greater disadvantage. They are limited in their ability to seek and apply for a job, they don’t have the option of convenient and cost-effective telehealth, opportunities for education shrink, and accessing social programs becomes more difficult. I haven’t even mentioned the social benefits that connectivity gives us humans—it’s natural to want to call our friends and families, and for many, necessary to share news or updates. The loss or absence of connectivity can easily create a snowball effect, compounding challenges for low-income Americans.

The stakes are certainly high. Thankfully, there are government programs created to shrink the digital divide. The challenge is that not many Americans know what’s out there.

What can be done to improve it

In the 1980s, the Reagan administration created the federal Lifeline program to subsidize phones and bring them into every household. The program has since evolved to include mobile and broadband services.

More than 34 million low-income Americans are eligible for subsidized cell phones and internet access through the Lifeline program. Unfortunately, only 1 in 5 eligible people are taking advantage of the program because most qualified Americans don’t even know the program exists.

The situation is similar with the FCC’s Affordable Connectivity Program, another federal government program aimed at bringing connectivity to low-income Americans. Through ACP, qualifying households can get connected by answering a few simple questions and submitting eligibility documents.

Experts estimate that 48 million households—or nearly 40% of households in the country—qualify for the ACP. But, just like Lifeline, too few Americans are taking advantage of the program.

So, what can be done to increase the use of these programs and close the digital divide?

Our vision of true digital equity is where every American is connected through a diverse network of solutions. This means we can’t rely solely on fixed terrestrial. According to research from Pew, 27% of people earning less than $30,000 a year did not have home broadband and relied on smartphones for connectivity. Another benefit of mobile connectivity—more Americans have access to it. FCC data shows that 99.9% of Americans live in an LTE coverage area, whereas only 94% of the country has access to fixed terrestrial broadband where they live.

Additionally, we need more local communities to get behind these programs and proactively market them. We should see ads plastered across billboards and buses in the most impacted areas. Companies like ours, which provide services subsidized through Lifeline and ACP, market and promote the programs, but we’re limited in our reach. It’s imperative that local communities and their governments invest more resources to promote Lifeline, ACP and other connectivity programs.

While there’s no panacea for the problem at hand, it is imperative that we all do our part, especially as the economic climate threatens to grow the digital divide. The fate of millions of Americans is at stake.

Doug Lodder in President of TruConnect, a mobile provider that offers eligible consumers unlimited talk, text, and data, a free Android smartphone, free shipping, and access to over 10 million Wi-Fi hotspots; free international calling to Mexico, Canada, South Korea, China and Vietnam; plus an option to purchase tablets at $10.01. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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Broadband's Impact

Senate Bill Subsidizing U.S. Semiconductor Production Clears House, Going to White House

Bill aims to strengthen American self-reliance in semiconductor chip production and international competition.

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Photo of Sen. John Hickenlooper, D-Colorado, during Tuesday's press conference

WASHINGTON, July 29, 2022 – A $54 billion bill to subsidize U.S-made semiconductor chips passed the House Thursday on a 243-187, and moves to President Biden for his expected signature.

Dubbed the CHIPS Act for Creating Helpful Incentives to Produce Semiconductors Act for America Fund, the measure is expected to incentivize domestic semiconductor manufacturing and also provide grants for the design and deploying of wireless 5G networks. It also includes a $24 billion fund to create a 25 percent tax credit for new semiconductor manufacturing facilities.

Advocates of the measure say that it will also improve U.S. supply chain, grow U.S. domestic workforce, and enable the U.S. to compete internationally to combat national security emergencies.

The measure passed the Senate Wednesday on a 64-33 vote.

Congressional supporters tout benefits

House Energy and Commerce Committee Chairman Frank Pallone, D-N.J., voiced his support on the House floor, calling it “a win for our global competitiveness.”

The CHIPS Act of 2022 provides a five-year investment in public research and development, and establishes new technology hubs across the country.

Of the funds, $14 billion goes to upgrade national labs, and $9 billion goes to the National Institute of Standards and Technology research, of which $2 billion goes to support manufacturing partnerships, and with $200 million going to train the domestic workforce.

In a virtual press conference on Tuesday, Colorado Democratic Sen. Michael Bennett said that America’s semiconductor industry has lost ground to foreign competitors. “Today, only 12% of chips are manufactured in the United States, down from 37% in the 1990s.”

He said relying on cheaper products produced in China and overseas for so long, it has caught up with the United States.

Bennet suggested to move manufacturing labs to Colorado, where it can support it due to the plenty of jobs in aerospace and facility and infrastructure space.

“We don’t want the Chinese setting the standard for telecommunications. America needs to lead that. This bill puts us in the position to be a world leader,” said Bennet. “We are at a huge national security disadvantage if we don’t do this.”

Sen. John Hickenlooper, D-Colorado, joined his Rocky Mountain state colleague in support: “There is a real sense of urgency here to compete not only to re-establish the U.S. to make their own chips, but to compete internationally.”

He said that semiconductor chips are vital to almost every business and product, including phones, watches, refrigerators, cars, and laptops. “I’m not sure if I can think of a business that isn’t dependent on chips at this point.”\

“This is a space race,” he said. “We cannot afford to fall behind.”

Industry supporters say measure is necessary

The U.S. has lost ground to foreign competitors in scientific R&D and in supply chain industry during a recent semiconductor crisis, said France Córdova, president of the Science Philanthropy Alliance, at a U.S. Chamber of Commerce Foundation event on July 19. The U.S. only ranks sixth best among other prominent countries in the world for research and development, she said.

“The CHIPS Act of 2022 and FABS Act are critical investments to even the global playing field for U.S. companies, and strategically important for our economic and national national security,” said Ganesh Moorthy, president and CEO of Microchip Technology Inc.

Bide expected to sign measure

With the Biden’s Administration’s focus to tackle the semiconductor shortage and supply chain crisis through the Executive Order made in February, the Biden administration has been bullish on the passage of the CHIPS Act, in a Wednesday statement:

“It will accelerate the manufacturing of semiconductors in America, lowering prices on everything from cars to dishwashers.  It also will create jobs – good-paying jobs right here in the United States.  It will mean more resilient American supply chains, so we are never so reliant on foreign countries for the critical technologies that we need for American consumers and national security,” said Biden.

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Health

Providers Call for More FCC Telehealth Funding as Demand Grows

‘I think obtaining funding from the Universal Service Fund would go a long way.’

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Photo of FCC Chairwoman Jessica Rosenworcel

WASHINGTON, July 26, 2022 – Health care providers in parts of America say they are struggling to deliver telehealth due to a lack of broadband connectivity in underserved communities, and recommended there be more funding from the Federal Communications Commission.

While the FCC has a $200-million COVID-19 Telehealth program, which emerged from the Coronavirus Aid, Relief and Economic Security (CARES) Act, some providers say more money is needed as demand for telehealth services increases.

“The need for broadband connectivity in underserved communities exceeds current availability,” said Jennifer Stoll from the Oregon Community Health Information Network.

The OCHIN was one of the largest recipients of the FCC’s Rural Health Care Pilot program in 2009. Stoll advocated for the need for more funding with the non-profit SHLB Coalition during the event last week. Panelists didn’t specify how much more funding is needed.

Stoll noted that moving forward, states need sustainable funding in this sector. “I am hoping Congress will be mindful of telehealth,” said Stoll.

“The need for telehealth and other virtual modalities will continue to grow in rural and underserved communities,” she added.

Brian Scarpelli, senior global policy counsel at ACT, the App Association, echoed the call for FCC funding from the Universal Service Fund, which subsidizes basic telecommunications services to rural areas and low-income Americans. “I think obtaining funding from the Universal Service Fund would go a long way.”

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