The Lightwave Blog

Posted by Stephen Hardy

The Secretary of Commerce on June 19 granted a limited waiver of the American Recovery and Reinvestment Act's "Buy American" provision to most of the broadband equipment that would likely be purchased under the Broadband Technology Opportunities Program (BTOP). The sigh of relief coming from potential BTOP applicants -- not to mention their potential suppliers -- could almost be heard in every corner of the United States (and a few places outside of the country as well).

The BTOP represents the lion's share of the money set aside for telecommunications projects under the Obama Administration's economic stimulus program. ($4.7 billion; the Department of Agriculture's Rural Utilities Service will oversee the dispersal of an additional $2.5 billion.) The "Buy American" provision in the Recovery Act states that no funds, including those earmarked for the BTOP, "may be used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron, steel, and manufactured goods used in the project are produced in the United States." Fortunately, the act also provides the head of a federal department or agency with the authority to waive this provision for any of three reasons, including a determination that applying the "Buy American" criterion would be against the public interest.

That's exactly what the Department of Commerce decided. I'd make the case for why this action was necessary, but I don't have to -- the Department has done it for me within its waiver notice (which you can find here). The provision would put an unreasonable burden on potential applicants to prove that the hardware required to build its network was made from materials from U.S. sources, the Department concluded. There are several reasons for this, according to the notice:

1) Much of the equipment used to manage and operate broadband networks is manufactured outside of the United States, using complicated and constantly varying supply chains.
2) The waiver will facilitate the roll out of modern broadband networks incorporating the latest technology, which is a large part of the BTOP's purpose.
3) As such networks are built and operated, jobs will be created.
4) While the Office of Management and Budget "has clarified which countries would be exempt rom the Buy American provision, some of the key countries that produce broadband equipment would not be exempt."
5) The broadband industry is "very dynamic and global" according to the notice, and therefore the equipment used in a project can change in the midst of network rollout.

The waiver covers broadband switching equipment, routing equipment, transport equipment, access equipment, CPE and end-user devices, and billing/operations systems. It does not cover fiber and cable, the notice emphasizes. However, applicants can apply for a special waiver as part of their applications should they feel it necessary.

It's gratifying that the Department of Commerce has shown some common sense in determing how best to meet the twin goals of aiding U.S. businesses and bringing broadband capabilties to currently underserved areas of the country. Now if we could just get the application process rolling...

Labels: BTOP, stimulus