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Trade Progress: Movement on the US/Colombia FTA

The White House announced today that it had reached agreement with the government of Colombia on labor rights, which will “…clear the way for the U.S.-Colombia Trade Agreement to move forward to Congress.”

Cisco applauds both governments for agreeing on a path forward and is pleased that the U.S. Congress will soon consider implementing legislation for the U.S.-Colombia Free Trade Agreement (FTA).

Cisco strongly supports passage of the FTA, whose implementation will provide meaningful commercial benefits. For example, Colombia has agreed to adopt the Information Technology Agreement (ITA), which will result in the elimination of import duties ranging from 5% to 15% on information & communications technology products exported to Colombia, providing economic stimulus to both economies.

Cisco detailed these and other benefits of the U.S.-Colombia FTA in remarks to Congressional staff during a high-tech industry briefing last week.

As a member of the Latin America Trade Coalition and of the U.S.-Korea FTA Business Coalition, Cisco joins our colleagues in the high-technology industry and broader business community to support swift Congressional passage and implementation of the pending FTAs.

Winning the Future with Radio Spectrum

At a White House event today, 112 economists — including Nobel Laureates, distinguished academics, and former government officials from both parties — presented a letter to President Obama on radio spectrum.  The message?

The President should support, and Congress should pass, legislation granting the Federal Communications Commission voluntary incentive auction authority.

In fact, the President’s economic team, and many Congressional Republicans and Democrats, are of the view that this new type of auction is the best path forward to transforming how we use radio spectrum in the 21st Century.  And there is broad consensus that the demand for mobile broadband is rising.  Cisco believes that from 2010to 2015, the United States will see mobile data rising by a factor of 26.

So, there is little controversy about the concept of voluntary incentive auctions, an idea that was born from the FCC’s analysis that it needed to find spectrum quickly to meet the sharply increasing demand for mobile broadband data.  Simply put, incentive auctions provide a financial incentive that allows incumbent spectrum holders to sell existing spectrum so that it can be repurposed for broadband.

The debate is now over the details. How much money would such an auction raise? How much “incentive” do you provide?  Can this voluntary mechanism provide enough spectrum to address the looming spectrum crunch?

Today’s letter makes it clear that the time is now to get those questions answered.  The stakes are too high not to do so.

Consumers, who want high quality data services and who are increasingly buying more and more mobile devices have a stake. So do businesses which depend upon mobile workers and wireless M2M in their future.  So do taxpayers, who should see a significant contribution to the federal treasury – the last significant auction of spectrum raised $19 billion.

This issue isn’t partisan. Market-based mechanisms like incentive auctions are the best way to allow radio spectrum to be placed to its highest, best use and to do so with a minimum of transaction costs.

Congress should move this item to the top of the agenda, and take action soon to give the FCC the authority it needs.

Can 112 economists be wrong? I don’t think so.

Free Trade Update: Korea, Colombia, Panama

On Monday, I offered remarks to approximately thirty staff in the U.S. House of Representatives on the benefits of the U.S.-Korea, U.S.-Colombia and U.S.-Panama Free Trade Agreements (FTAs), along with high-tech industry colleagues from IBM, Microsoft, HP and Intel. It was great to have an opportunity to talk about how Cisco and our customers would be impacted by implementation of these agreements, and for the industry to emphasize the importance of open trade policy to help fuel international competitiveness. Most trade analysts expect Congress to pass the U.S.-Korea FTA first, as American companies would be at a market disadvantage vis-à-vis European-based competitors after July 1, when the EU-Korea FTA goes into effect. Cisco supports passage of all three agreements, and we’re hopeful that the Obama Administration is able to work through any remaining issues on the FTAs with Colombia and Panama as soon as possible.

Super Bowls and Royal Weddings – Betting on a Sure Thing

What do the Super Bowl and Kate and William’s royal wedding have in common?  Both involve Big Ben, absolutely absurd “proposition” bets (How long will it take Christina Aguilera to sing the National Anthem? What color hat will the Queen be wearing?), and each will attract enormous  worldwide audiences.

One other thing:  it’s a sure thing that more of us will watch these events on tablets, laptops, smart phones and other mobile devices than ever before.

Today’s release of Cisco’s 2011 Visual Network Index Global Mobile Data Forecast confirms this:  we have an insatiable appetite for mobile devices and the applications that those devices deliver.

Here’s what the data reveal:   despite the global economic woes in many regions, growth in demand for mobile data has held steady or increased.   Nothing is stopping that growth.  Not offloading mobile traffic to fixed networks via Wi-Fi or Femto cells. Not tiered pricing plans offered by mobile carriers.  Growth projections may adjust year to year, but the direction is clearly up, up, and away.

Consider this:

  • By 2015, there will be more than 5.6 billion handheld or personal devices and more than 1.5 billion machine to machine devices.
  • During that same period, global mobile traffic will outgrow fixed data traffic by 3.3 times to 75 exabytes annually (compare: 19 billion DVDs – that’s a lot of movies!)
  • Mobile video, in all kinds of applications, will make up 2/3 of mobile data traffic in five years.

All over the globe, we want computing power in our hands and on our laps, and once we have it, we want more of it and we use more of it – all driving more packets over mobile networks, which themselves will become faster over the next five years.

The phenomenon is truly global. From countries like India (Compound Annual Growth Rate CAGRof 158% for the forecast period) and Mexico (CAGR of 131%), to the Middle East and Africa (regionally, a CAGR of 129%).

No corner of the globe is exempt so long as there’s some way to get those batteries charged.  By 2015, Cisco projects the world will be consuming 6.3 exabytes/month of mobile data.   In the US, we tapped, clicked, talked, and watched about 16.4m gigabits/month of mobile data in 2009. In 2015, that number grows to 914.6 million gigabits/month – a CAGR of 83%.

Governments and regulators around the world would be well served to heed the example of US policymakers, who are actively on the hunt for new spectrum to meet the rising demand for mobile data.  The US FCC and the Obama Administration want to identify, and repurpose, 500 MHz of spectrum for wireless broadband use by 2020, and deliver the first 300 MHz of that total by 2015.  Congress is already at work to provide needed tools, such as voluntary incentive auctions, to help deliver radio spectrum that is the lifeblood of mobile networks.

It’s a safe bet we’re going to need more radio spectrum to keep up with demand.  At least for those of us who care about football highlights and Kate Middleton’s wedding dress.

Standards Play a Vital Role in Fueling Innovation

On Tuesday morning I was honored to represent Cisco in a roundtable discussion sponsored by the National Institute of Standards and Technology (NIST) about the role of the federal government in standards.  (Watch the webcast here.)

Standards play a vital role in fueling innovation, promoting competition, lowering technology costs and accelerating market growth – particularly when they are the result of an industry-led, consensus-based open, and transparent process, and voluntarily-adopted in the market.

Secretary of Commerce Gary Locke opened  the event, reminding us of “…the tremendous impact standards can have on U.S. competitiveness, innovation, job creation, and – ultimately – our standard of living.” U.S. Chief Technology Officer Aneesh Chopra then inspired attendees by stressing the importance of open dialogue and public participation in government.  Phil Weiser, White House National Economic Council Senior Advisor on Technology and Innovation, moderated the panel discussion on what role the U.S. Government should and shouldn’t play in the domestic and international standards arenas.  And Commerce Undersecretary and NIST leader Pat Gallagher reiterated NIST’s commitment to driving effective standards development for Smart Grid and other initiatives.

I focused on three main areas where the U.S. Government has a vital role to play and supporting and defending U.S. interests in standards:

The US Government can serve as convenor of industry-led standards efforts, as currently demonstrated by the leadership that the NIST has provided in the Smart Grid Interoperability Panel process. By creating an open platform for participation of over 1,500 entities – from utilities, academia, regulatory agencies, ICT solutions providers and the like – NIST serves an invaluable role in shepherding and accelerating the identification of interoperability standards that are essential in building a secure, robust smart grid capable of meeting this country’s current and future energy needs. As part of that effort, we believe that NIST could go even further in giving preference to standards that are developed in standards-development organizations that meet four key tests:

  • Allowing negotiation of royalty rates at the time a standard is being adopted, rather than after everyone has accepted it;
  • Setting the value of IP based on the centrality of its contribution to the standard;
  • Valuing intellectual property based on the available alternatives at the time the standard is adopted, and;
  • Not utilizing injunctions except where a prospective licensee refuses to a pay an objectively- determined reasonable and nondiscriminatory (RAND) royalty.

To be clear, we’re not suggesting that NIST would mandate a standard itself, rather that it would set a framework of transparency in the standards-development process.

After nearly 12 years since its last revision, the USG could also consider updating OMB Circular No. A-119, which establishes policies on Federal use and development of voluntary consensus standards and on conformity assessment activities. The Circular could be revised further to give preference to the federal government’s use of products and solutions that are standardized in SDOs which observe the four-part test: ex ante negotiation, value based on centrality of contribution, valuation prior to adoption and avoidance of injunctions.

The US Government may also want to consider its role as defender of U.S. competitive interests abroad. While certain U.S. trading partners appear to use standards and the standards development process to create technical barriers to trade that favor domestic industries and jeopardize American intellectual property rights, the US Government should consider using all of its available policy and political tools to promote and safeguard U.S. interests, including the launch of legal proceedings in the World Trade Organization.

President Obama has said that American industry does best when the is a level playing field, and on Tuesday night he spoke of the importance of innovation in his State of the Union address. Cisco will work in partnership with the U.S. and other supportive governments to facilitate and ensure a level playing field by encouraging industry-led, open, transparent standards development processes, and their voluntary adoption.