With help from John Hendel and Rebecca Kern
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— States sweeten the deal: Ohio is only the latest in a growing group of states leapfrogging Capitol Hill on chip subsidies — and competition between them could get intense.
— Weighing in on broadband: The telecom industry and progressive advocates shared with the Biden administration their wish lists for the impending broadband buildout.
— Two for one: Two separate bills targeting counterfeit goods in online marketplaces passed the House on Friday — but only one faces pushback from lawmakers and the tech industry.
IT’S MONDAY, FEB. 7. Welcome to Morning Tech! The nonstop rain last Friday and Saturday (known commonly as “the newsletter writer’s weekend”) had me thinking about this legendary rant regarding the “honest month” of February…
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CHIP SUBSIDIES SPREAD TO STATES: A massive federal payout for the semiconductor industry is inching closer, as the House’s America COMPETES Act (H.R. 4521) officially heads to conference with the Senate. But statehouses across the country aren’t waiting for Washington to pass the bill, with its proposed $52 billion in chip subsidies — they’re already dropping big bucks to lure chipmakers to their states.
— Buckeye billions: At the moment, Ohio is the biggest spender. Late last month, the state announced it will kick $2 billion to chipmaker Intel to supplement the $20 billion the company plans to spend on two new chip fabrication plants, known as “fabs.” JobsOhio, the state’s economic development agency, will grant the chipmaker an additional $150 million in workforce and development grants.
But Ohio is just the latest and largest example of escalating state efforts to deploy taxpayer money to secure the jobs and tax revenue these plants generate.
Texas plans to provide nearly $1 billion in tax breaks and incentives for a new $17 billion Samsung fab outside of Austin. Officials in Phoenix, Arizona agreed to grant around $200 million in infrastructure spending for Taiwan Semiconductor Manufacturing Co.’s planned $12 billion chip plant. New York offered chip manufacturer Cree $500 million in grants (and more in local abatements and incentives) for a $1 billion facility upstate. And last month, Florida announced $10 million in infrastructure and education spending related to chip manufacturing.
— Jostling for position: With federal subsidies likely on their way, more states in the coming weeks and months will likely sweeten the deal for chipmakers weighing a return to U.S.-based manufacturing. The competition could be fierce. Monique Claiborne, the head of Oregon business group Greater Portland Inc., wrote that the state “must act urgently” to stop Intel, which maintains a major presence in the Portland area, from decamping to Ohio or elsewhere.
— Drop in the bucket: Lobbyists for the chip industry say they’re pleased states are increasingly willing to pony up subsidies — but argue those payments are no replacement for the big bucks Capitol Hill is working to deliver.
“State incentives alone have proven insufficient to reverse America’s steadily declining share of global semiconductor manufacturing capacity,” said Joe Pasetti, vice president of global policy and advocacy at chip association SEMI. “Fabs take years to build and depend on advanced equipment and materials — robust federal incentives for the semiconductor supply chain are needed now.”
JOCKEYING BEGINS AHEAD OF BROADBAND GOLD RUSH — A deluge of comments have flooded the National Telecommunications and Information Administration over the best way to allocate the agency’s upcoming $48 billion in broadband infrastructure grants. Although the bipartisan infrastructure law gave NTIA some guardrails, it will have discretion about how to dole out these funds.
With Friday’s closure of the NTIA’s public feedback period, we now have a peek into the fights we’re likely to see between advocates and the telecom industry. Here are some key comments MT noticed:
Progressives push competition, net neutrality: Left-leaning advocacy groups like Public Knowledge pressured the administration to go beyond the statute by prioritizing funds for networks run by local governments and cooperatives (as well as those adhering to Obama-era net neutrality principles). Local government association NATOA proposed using grant conditions to sidestep state restrictions on municipal broadband.
Telecom industry wants room for the private sector: Trade groups Incompas and NTCA separately argued that NTIA shouldn’t resurrect the White House’s original preference for nonprofits, cooperatives and municipal governments in awarding broadband buildout money.
Need for speed? Progressive advocates like Common Cause want NTIA to go beyond statutory directives and require minimum network speeds of 100 Megabits per second for both upload and download — a provision that critics like the Wireless Infrastructure Association say unduly favors fiber broadband projects. The law only calls for 100 Mbps download and 20 Mbps upload speeds.
Oh, and get broadband maps and transparency right: Several comments underscored the need for more accurate broadband mapping (FCC is on the hook here, timing TBD). One wireless trade group cautioned NTIA not to let “lax processes” undermine an “unprecedented” opportunity.
— Next steps: NTIA plans to issue a formal funding notice to states by mid-June.
MEANWHILE: BRACE FOR A BONANZA OF HILL OVERSIGHT — Commerce Secretary Gina Raimondo was already in the witness chair this month talking broadband, and several Senate Republicans wrote to NTIA Friday, urging that the agency target funds precisely to rural America.
— The No. 2 Senate Republican, South Dakota Sen. John Thune, is expected to introduce legislation as soon as today aimed at aligning USDA’s threshold for what counts as an “unserved” household with NTIA statutory directives. The bill, a copy of which MT obtained, would also ensure the Treasury Department joins interagency broadband coordination.
SHOP SAFE ACT NOT YET SAFE: Two bills targeting counterfeit and stolen goods sold online — the INFORM Consumers Act (H.R. 5502) and the SHOP SAFE Act (H.R. 3429) — just advanced as part of the just-passed America COMPETES Act (H.R. 4521). But one bill still faces strong opposition from online marketplaces and some Democrats.
— Lofgren, platforms target SHOP SAFE: Rep. Zoe Lofgren (D-CaIif.), an influential House voice on tech policy, said last week that SHOP SAFE could raise administrative and transaction costs for small sellers, which may eventually lead to higher consumer costs. The bill, sponsored by Judiciary Committee Chair Jerry Nadler (D-N.Y.), would require large online marketplaces to implement automatic trademark filters and other trademark-protecting practices or risk being held liable for the sale of counterfeit products.
— Lofgren said she hoped “a sensible resolution” to SHOP SAFE can be worked out as America COMPETES goes to conference with the Senate, and called INFORM Consumers, the other anti-counterfeit bill, a “more targeted approach” to combat fake products. The bill would require online marketplaces to verify the identity of high-volume third-party sellers, and it has the backing of eBay, Etsy and Amazon, as well as Consumer Reports and the AFL-CIO.. A Democratic aide on the House Judiciary Committee, who was not authorized to speak publicly, said committee leadership doesn’t see the SHOP SAFE and INFORM Consumers as incompatible but is open to further clarifying edits.
— eBay (which has its headquarters in Lofgren’s district) is also opposed to SHOP SAFE. Company spokesperson Parmita Choudhury said the bill would “pit even the smallest online sellers up against big brands — shifting the playing field in favor of some of the largest companies in the world.”
ESSENTIAL READING: The closing of the comment period for the Biden administration’s proposed overhaul of the standard essential patent system revealed stark divides within the tech industry — with Apple, Amazon and other tech giants siding against semiconductor giant Qualcomm (among others) and with the administration.
Recap: Standard essential patents protect intellectual property that underpins core technologies used across industry — Qualcomm, for example, holds SEPs in cellular technologies that have been adopted as “standard” in the mobile phone industry. Companies like Apple are supposed to pay licensing fees to Qualcomm for the use of those technologies. But the process is often contentious, and SEP holders like Qualcomm often tussle in court with Apple and other tech firms over the allegedly unauthorized use of patented technologies.
The administration’s draft proposal favors Apple over Qualcomm by making it harder for SEP holders to seek injunctions against companies that allegedly infringe on their patents. In its comment to the Biden administration, Qualcomm said the new proposal “would devalue technologies protected by SEPs and undermine the ability of U.S. firms to invest in the R&D needed to maintain global leadership.”
— Senators take Qualcomm’s side: Sens. Chris Coons (D-Del.), Mazie Hirono (D-Hawaii) and Thom Tillis (R-N.C.)backed Qualcomm’s position, claiming the administration’s proposal “returns U.S. policy to its harmful prior position of favoring standards implementers over SEP owners in license negotiations.”
But the largest tech firms are on Team Biden on this one. Although Apple did not directly weigh in, ACT – The App Association, an Apple-funded group,called the proposal “a much-needed shift in policy.” Amazon alsonodded its approval.
Allison Remsen, executive vice president at USTelecom |The Broadband Association, has been named the association’s first chief strategy officer. … Matthew Masterson is joining Microsoft’s Democracy Forward Initiative, where he’ll lead their information integrity work. … Josh Connolly, previously chief of staff for Rep. Jackie Speier (D-Calif.), is joining LinkedIn as senior manager of U.S. policy and economic graph.
The lithium must flow: A desperate search for the stuff powering smartphone batteries leads investors to California’s Salton Sea, the Wall Street Journal reports.
(Geo)fenced in: The FBI served Google with a warrant requiring the company to turn over all Android location records in the area outside a Seattle courthouse after it was attacked by protesters in 2020, according to The Verge.
Brain drain: Amazon’s surging stock price shouldn’t blind its executives to the company’s worker retention problem, Bloomberg writes.
First in MT: A new survey of more than 2,000 Americans commissioned by nonprofit Trusted Future finds just 16 percent of respondents feel “firmly in control” of their online data.
Crypto for normies: The New York Times finds there may be real-world (legal) uses for cryptocurrencies after all.
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