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House and Senate Tackle Semiconductor Chip Shortages and Seek to Boost U.S. Production

How COVID and supply chain woes are driving $52 billion in incentives for domestic production of semiconductor chips.

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Photo of Intel CEO Pat Gelsinger courtesy Web Summit

WASHINGTON, April 21, 2022 – Lawmakers on both sides of the aisle in Washington have made explicit the need to tackle the supply chain crisis and semiconductor shortage by introducing and pushing forward separate pieces of legislation that emphasize more domestic autonomy. But the path of these pieces of legislation isn’t exactly cut-and-dried.

Despite a key bill that would make available $52 billion in incentives for the domestic production of semiconductor chips – critical for computers, cars and networking equipment – passing both chambers, one key Republican said his party has been largely shut out of contributing to the language of the legislation.

Representative John Curtis, R-Utah, a member of the House Energy and Commerce Committee, told Broadband Breakfast this month that Republicans have been shut out of legislative discussions for the past year as the Democratic party has enjoyed a majority in the House and the Senate.

Curtis, who is also head of the Conservative Climate Caucus, said he has yet to be approached by the White House on what seems to be a larger piece of the Biden policy plan for semiconductor and supply chain independence.

This sentiment among House Republicans has created friction as the bill heads to conference committee, which is designed to bring both parties to the table to hammer out language they can agree on before it goes to the president for signing.

Conferees were appointed by House Speaker Nancy Pelosi, D-Calif., on April 7, just before the House began its Easter break. Sorting out difference between the House-passed and Senate-passed versions is likely to be one of the first items of business when representatives return to Washington next week.

Broadband Breakfast has been following the intertwining issue of the supply chain crisis and the U.S.’s ambitions to be more independent when it comes to producing the chips needed to power the future.

As the Covid-19 pandemic has held up key supplies in foreign lands and as domestic law and policy have moved to shore up national security by banning Chinese-made products from the country’s networks and more, this publication will outline the key bills that both chambers are mulling over.

The U.S. Innovation and Competition Act, and the COMPETES Act

The first of these bills is the United States Innovation and Competition Act, S.1260. Passed by the Senate in June 2021 with a margin of 68-32, this bill provides funding through fiscal year 2026 to support domestic semiconductor manufacturing, research and development and supply chain security. It also targets funding for wireless supply chain innovation.

The initial goal was for this bill to go to the House for votes, but the House instead presented a bill with similar goals – the America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength Act of 2022 (America COMPETES Act of 2022, H.R. 4521) – which was introduced in the summer of 2021.

It passed the House on February 4 by a margin of 222-210, demonstrating the tension between the parties, and then passed the Senate in late March by a 68-28 spread.

The Competes Act must now go to the aforementioned conference committee to iron out the party differences. After that is done, the bill will make another voting trip through both chambers and, if successful, out to the president for signing.

“Over the past year, the House and Senate have acted independently to pass their own versions of competitiveness legislation,” Senate Majority Leader Chuck Schumer, D-N.Y., said on March 17, as he addressed the Senate. “To reconcile the differences between these bills, both chambers must enter a conference before we send the final product to the president’s desk.”

The CHIPS funding proposal

The separate bills have common ground in that they both call for injecting $52 billion over five years into the Creating Helpful Incentives to Produce Semiconductors (CHIPS) For America Fund, a Treasury Department coffer that was created through the 2021 National Defense Authorization Act.

That money will be divided into a $39-billion financial incentives program and an $11-billion research and development program.

Mike Molnar, the founding director of the Advanced Manufacturing National Program Office, which is responsible for the Manufacturing USA program, said during a question-and-answer session about the CHIPS program Tuesday that the money is “not too much” and that both the incentives program and the R&D program must be paired for their goal to be achieved.

The federal government has been fielding comments since January about the makeup of the program, which will go toward producing chips and semiconductors that may otherwise be imported from countries like Taiwan, China, and South Korea.

Pressure mounts for some form of legislation

In March, a Senate Committee on Commerce, Science, and Transportation heard that only 12 percent of chip manufacturing occurs in America, and 6 percent of that comes from Intel. However, while Intel – which appeared with three other technology companies at the hearing – has remained primarily U.S.-based, Intel CEO Pat Gelsinger said that other countries can make the same chips it makes for 30-80 percent cheaper.

Intel is currently scheduled to break ground this year on a $20 billion semiconductor manufacturing “mega-site” in rural Ohio.

Gelsinger also shared that many overseas companies have government subsidies and incentives, which makes it easier and cheaper for them to make the chips. He said this is a key reason why Congress needs to pass the competitive legislative bill with the CHIPS funding included in the final product.

In February of 2021, President Joe Biden signed the executive order on America’s supply chains to begin efforts to restore America’s supply chains, and this past February, exactly one year later, the administration released a comprehensive plan based on the results of their work correlated with the executive order.

The report evaluated the current state of the supply chain, including as it affects technology, how the U.S. can develop its own manufacturing assets, where those assets would fit in the current supply chain, and how it would affect competition.

It’s reports such as those that add credence to lawmakers pushing for funding pieces such as those under the America COMPETES Act, which may still have some ways to go before the president himself can approve it.

Reporter Ashlan Gruwell studied political science at Brigham Young University. She has immersed herself in principles of American politics and voter behavior. She also enjoys traveling internationally and hopes to visit the Nordic Region of Europe next.

Blockchain

Finance Experts Weigh Merging Regulatory Agencies to Tackle Cryptocurrencies

‘A lot of regulatory gaps exist because we have two regulators.’

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Photo of Dawn Stump of CFTC’s Global Markets Advisory Committee from September 2019

WASHINGTON, May 19, 2022 – Crypto market observers are calling for a change in the regulatory system and laws to tackle the quickly growing world of digital currencies.

“We will need new substantial law,” Douglas Elliott, financial regulation expert and partner at consulting firm Oliver Wyman, said on a panel hosted by the Federalist Society on Tuesday. “There are too many ambiguities” with the current regulatory system, he added.

As state and federal governments consider how the growing crypto industry should be regulated, various crypto experts further argued Tuesday for a redesign of the regulatory structure, while others said there was no need for a consolidation of agencies.

Part of the reasoning behind the consolidation is confusion about whether cryptocurrencies are commodities or securities. As such, some are recommending a merger between the Securities and Exchange Commission and the Commodity Futures Trading Commission to handle the regulation of the digital money.

“A lot of regulatory gaps exist because we have two regulators,” said Michael Piwowar, executive director at the Milken Institute Center for Financial Markets, suggesting that Congress merge the two into a single regulatory body.

Thomas Vartanian, executive director at the Financial Technology and Cybersecurity Center, backed the agency merger idea. Vartanian explained that despite the existence of cryptocurrencies for fourteen years, crypto remains largely unregulated.

“Bottom line is we’ve built a business of ten trillion dollars with no regulation and that is a financial risk,” Vartanian said. “We are building a financial time bomb.”

But Dawn Stump, former commissioner of the CFTC, said the best way to address these gaps in crypto regulation is not to redesign the regulatory system.

In August 2021, Stump said in a public statement that due to public misunderstanding about the CFTC’s regulatory oversight authority, “there has often been a grossly inaccurate oversimplification offered which suggests these are either securities regulated by the Securities and Exchange Commission or commodities regulated by the Commodity Futures Trading Commission.”

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Blockchain

U.S. Facing Pressure from China as Digital Currency Adoption Debate Continues

Experts expressed concern about the U.S. falling behind China on the development of a central bank digital currency.

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Photo of Stephanie Segal from CSIS

WASHINGTON, May 12, 2022 – The U.S. is falling behind China as the central bank ponders whether to adopt a digital currency, according to observers.

“If other countries are innovating in a direction that could represent a technological advantage, and the US is not prepared to meet that challenge, the U.S. will be at a disadvantage,” said Stephanie Segal, senior associate of the economics program at the Center for Strategic and International Studies. She and other panelists were speaking at a CSIS event on Thursday.

Segal’s comments were supported by her colleagues at the center, which hosted panelists to discuss the promises and pitfalls of creating a central bank digital currency. These stablecoins, as their called, are backed by other currencies, including fiat money.

Matthew Goodman, senior vice president for economics at CSIS, noted there is a lot of uncertainty surrounding this debate on the digital dollar. While there has been interest in the U.S. for developing such a currency system, Goodman said the US is relatively “behind” and delayed in conversations about CBDC compared to countries like China.

According to Fariborz Ghadar, scholar and senior advisor at CSIS, developing a CBDC is no easy fix, and is a risky step. However the concern about China having already developed a CBDC is a “major triggering point” he said.

Steven Kamin, senior fellow at the American Enterprise Institute, called China’s development of CBDCs “nearly operational” and potentially problematic for the U.S., with China as a world leader in technology. Kamin was speaking at an AEI event in April.

Risks of such a digital currency

A CBDC has upsides, but also presents risks to privacy and cybersecurity, according to Segal. She said a CBDC could create fear about data collection methods, regarding who has access to the data, and wonders if privacy protections would be provided.

Additionally, instead of having various intermediary points of security with the current banking system, a central bank digital currency would only have one point of security, making cybersecurity more vulnerable to threats, according to Segal.

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Smart Cities

FCC’s Multi-Dwelling Decision Could Hamper Smart Wi-Fi Technology, Developer Says

The decision may disrupt managed Wi-Fi in multi-family arrangements.

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Screenshot of Ted Maulucci, president of SmartOne Solutions, in 2017

HOUSTON, May 5, 2022 – The Federal Communications Commission’s decision paving the way for more competition in multi-tenant buildings may inadvertently hamper smart building technology, according to a developer of smart city tools.

The FCC finalized rules in February that prohibit internet service providers from entering exclusive revenue sharing agreements in which landlords get a cut of service provider contracts in order to increase service provider competition.

But the rules will mean managed Wi-Fi will suffer, according to a technologist at a Broadband Breakfast panel on Wednesday. That’s because such smart tools require a core group of subscribers – often done through a “bulk” purchase – to be economically viable. The result is more complicated community networks as competition between providers increases, he said.

“A lot of providers are building networks that only deliver internet to the home,” said Ted Maulucci, president of SmartOne Solutions, a smart tools developer from Canada. “They are not building networks that allow you to segregate networks within the building . . . The biggest problems we face are solved by network. The networks have to be created right.”

Maulucci called for the government to push for network building standards necessary for this technology.

Screenshot of Ted Maulucci, president of SmartOne Solutions, in 2017

Smart devices are becoming increasingly popular in multi-family units. Smart buildings are pre-engineered with this technology to promote sustainability, convenience, and safety in multitenant dwellings.

A shared interface allows residents to control thermostats, let people into the building, and view security camera visuals. Machine learning helps communities modify consumption behavior to promote sustainability and alerts residents of possible security threats through analysis of aggregated data.

Networks supplying broadband internet support these added benefits, making a community network essential for functionality.

Our Broadband Breakfast Live Online events take place on Wednesday at 12 Noon ET. You can also PARTICIPATE in the current Broadband Breakfast Live Online event and REGISTER HERE.

Wednesday, May 4, 2022, 12 Noon ET – The Future of the Smart Home, and the Future of the Smart Apartment Building

Americans are increasingly integrating smart technology into their homes and digitizing facets of everyday life. Going forward, what aspects of digitization in the home may need to be regulated by government policy? Are there any changes people are making to their homes that the tech industry should be concerned by? With all the issues surrounding broadband access in many multi-dwelling units, is there any hope for the possibility of smart apartment buildings for residents as standards of technology continue to advance? Join us for this Broadband Breakfast Live Online event from the Broadband Communities Summit to look at these questions and more.

Panelists for this Broadband Breakfast Live Online session:

  • Kevin Donnelly, Vice President, Government Affairs, Technology and Strategic Initiatives, National Multifamily Housing Council
  • Amy Chien, Director of Strategic Innovations, BH
  • Kurt Raaflaub, Head of Product Marketing, ADTRAN
  • Ted Maulucci, President, SmartONE Solutions – A Smart Community Company
  • Guillermo Rivas, Vice President, New Business Development, Cox Communities
  • Drew Clark (presenter and host), Editor and Publisher, Broadband Breakfast

Kevin Donnelly is Vice President for Government Affairs, Technology and Strategic Initiatives at the National Multifamily Housing Council and represents the interests of the multifamily industry before the federal government focusing on technology, connectivity, risk management and their intersection with housing policy. Kevin is a part of NMHC’s Innovation and Technology team and leads its Intelligent Buildings and Connectivity Committee.  Kevin has spent over 15 years in the public policy arena at leading real estate trade associations and on Capitol Hill. Kevin received his BA from Rutgers University and his Masters in Public Management from Johns Hopkins University.

Amy Chien, Director of Strategic Innovations, BH

Kurt Raaflaub leads ADTRAN’s product marketing and public relations team, and has more than 25 years’ experience in telecom, mobile and cable. He has global product marketing, market intelligence, media and analyst relations responsibility for the Adtran end-to-end fiber broadband portfolio. Responsibility includes evangelizing the operator benefits of modern open and disaggregated access architectures based on open networking and data center principles.

Ted Maulucci is A mechanical engineer, MBA and an award-winning Chief Information Officer in the Real Estate sector. Ted is a pioneer and a visionary who has created the concept of Smart Communities. He is President, SmartONE Solutions.

Guillermo Rivas is the vice president of new business development for Cox Communications. He manages the teams responsible for building strategic relationships with developers, builders and owners of apartments, condominiums or single-family projects. In this role, he helps develop programs for the builder community to maximize the return of their investment through Cox’s advanced fiber to the home network, Pre-enabled Wi-Fi, Managed Wi-Fi and IoT network solutions that improve the Resident experience.

Drew Clark is the Editor and Publisher of BroadbandBreakfast.com and a nationally-respected telecommunications attorney. Drew brings experts and practitioners together to advance the benefits provided by broadband. Under the American Recovery and Reinvestment Act of 2009, he served as head of a State Broadband Initiative, the Partnership for a Connected Illinois. He is also the President of the Rural Telecommunications Congress.

WATCH HERE, or on YouTubeTwitter and Facebook.

As with all Broadband Breakfast Live Online events, the FREE webcasts will take place at 12 Noon ET on Wednesday.

SUBSCRIBE to the Broadband Breakfast YouTube channel. That way, you will be notified when events go live. Watch on YouTubeTwitter and Facebook

See a complete list of upcoming and past Broadband Breakfast Live Online events.

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