Time Warner acquisition resistance could turn ugly for Trump

President Donald Trump’s administration certainly has been a different shade of politics for the Oval Office, though actions and alleged prejudice could come back to haunt the Commander in Chief.

Despite being proclaimed a resounding victory for the Republicans, the mid-term elections could have gone a hell of a lot better. With the House of Representatives swinging back into the hands of the Democrats, not only will Trump find passing his questionable legislation more difficult, but his actions over the first two years of the Presidency could be called into question.

In an interview with Axios, California Congressman Adam Schiff, who is also the Ranking Member of the House Intelligence Committee, suggested an investigation into the President would now be able to make a material impact because of the swing of power across the aisle. The President’s tax records will once again become a topic of conversation, though the appropriateness of his objections to AT&T’s acquisition of Time Warner will also come under scrutiny, as will his seemingly personal vendetta against Amazon CEO Jeff Bezos.

While the President’s actions have constantly been condemned by critics and political opponents, there has been little opportunity to do anything considering Trump’s political foundations. With majorities in both Houses of Congress, the Republican party have been able to block, or at least stifle, any investigations. However, with last week’s mid-term elections swinging the House of Representatives into a Democrat majority things might be about to change.

Trump’s opposition to the AT&T and Time Warner deal has been widely publicised, dating back to the Presidential campaign trail. Some have suggested his hatred for Time Warner owned CNN is the reasoning behind the probes and appeals against the acquisition, though this will come under question through the investigations.

“We don’t know, for example, whether the effort to hold up the merger of the parent of CNN was a concern over antitrust or whether this was an effort merely to punish CNN,” said Schiff.

While the deal has been greenlight by District Court for the District of Columbia Judge Richard Leon, the Department of Justice is appealing the decision, suggesting Judge Leon is ignorant to the facts and the economic implications of the deal. It has been reported the Trump administration has been pressuring the DoJ to pursue the appeal and attempt to derail the acquisition.

Looking at the spat with Jeff Bezos, this has been tackled on several fronts. Not only has President Trump constantly berated the excellent reporting by the Washington Post, privately owned by Bezos, Trump has been targeting the tax activities of Amazon. Back in March, Trump tweeted he would be tackling the tax set-up at Amazon, sending share price down 2%, while he has also been reportedly pressuring the Post Office to charge Amazon more, despite the eCommerce revolution seemingly saving the service with the vast increases in package delivery.

These are just two examples relevant to the telecoms and technology industry, but the Democrats are seemingly going for the throat. Tax records will be called into question, as well as reports the President blocked the FBI from moving its headquarters because it would negatively impact business as one of his hotels, located opposite the bureau’s offices.

For the moment, this seems to be nothing more than political posturing, as while the statements might appease those in opposition to Trump, they are nothing more than statements. The Democrats will not assume their majority in the House of Representatives for two months, a long-time in the lightly-principled world of politics. Much could change during this period.

What the change in political landscape could mean more than anything else is a bit more stability. President Trump has been praised by his supporters as a man of action, though actions are of questionable benefit to business executives who crave legislative, regulatory and policy consistency. Only with the promise of consistency can businesses made long-term strategies to conquer the world, but with Twitter a constant threat of change it is understandable some are nervous.

With the Democrats in control of the House of Representatives, Trump will find it much more difficult to force through any controversial or overly aggressive policies, though there is also the threat of legislative standstill. The US political landscape has certainly been an interesting one over the last two years, though it could become even more interesting over the next two for completely different reasons.

Trump set sights on spectrum strategy

US President Donald Trump has unveiled plans to create a National Spectrum Strategy to prepare the country prepare for the introduction of 5G wireless networks.

The presidential memorandum, which was signed last week, directs the Secretary of Commerce to work with agencies and policy makers on all levels to develop a National Spectrum Strategy. As part of the strategy, the Secretary of the department will report annually to the President on efforts to repurpose spectrum, while a Spectrum Strategy Task Force will also be created which, including representatives from the Office of Management and Budget, the Office of Science and Technology Policy (OSTP), the National Security Council, the National Space Council, and the Council of Economic Advisers.

“American companies and institutions rely heavily on high-speed wireless connections, with increasing demands on both speed and capacity,” the memorandum states. “Wireless technologies are helping to bring broadband to rural, unserved, and underserved parts of America. Spectrum-dependent systems also are indispensable to the performance of many important United States Government missions. And as a Nation, our dependence on these airwaves is likely to continue to grow.”

Within 180 days, executive departments and agencies are required to report to the Secretary of Commerce on their anticipated future spectrum requirements, while the OSTP shall submit a report to the President on emerging technologies and the expected impact on spectrum demand. Once these reports have been submitted and assessed, the Secretary of Commerce will have to brief the White House on the status of existing efforts and planned near- to mid-term spectrum repurposing initiatives, as well as a long-term National Spectrum Strategy that includes legislative, regulatory, or other policy recommendations to rework the approach to spectrum management.

While work on spectrum has been underway for some time, this intervention from the White House demonstrates the importance of 5G to the US economy, and perhaps its long-standing battle with the Chinese to maintain control of the global economy.  Although Silicon Valley still maintains the leadership position on the worldwide technology and telecommunications industry, this grip is not quite as ironclad as it was in previous years. With digital taking over in the cockpit as the driver for almost every ‘developed’ economy around the world, a flexible, future-proofed spectrum policy is critical.

“We commend the administration for recognizing the importance of establishing a national spectrum strategy,” said CTIA President Meredith Baker. “With the right approach based on licensed wireless spectrum, America’s wireless carriers will invest hundreds of billions of dollars and create millions of jobs to deploy next-generation networks and win the global 5G race.”

“Spectrum has become one of the most critical inputs for the communications and information technologies that are driving America’s economic growth,” a statement from the NCTA reads. “The services that rely on unlicensed spectrum alone generated more than $525 billion in value for the U.S. economy in 2017. We look forward to engaging in constructive dialogue with the White House, NTIA, and the FCC on the development of a balanced national spectrum policy that will meet the growing need for both licensed and unlicensed spectrum to support next-generation wireless technologies.”

The attention from the White House will certainly be welcomed by the industry, though some have questioned why it has taken so long. With the Trump administration focusing on other areas, in particular looking outwards, some critics have questioned why it has taken so long for the White House to take a firm position in the 5G world. Democrat FCC Commissioner Jessica Rosenworcel is one who has questioned the sluggish nature of the administration, particularly focused on reports and action, suggesting it has allowed other countries such as China and Korea to steal valuable yards in the 5G race.

While specifics are relatively thin for the moment, the spectrum strategy might go some way to settle bickering in the industry. A good example is the battle between the autonomous vehicles camp, which is currently guarding largely unused spectrum reserved to allow vehicles to communicate, and telcos who want the assets opened up for wifi. This is only one example, but without a comprehensive, forward-looking, strategy in place, these arguments will not be settled.

Such a policy will provide much needed clarity in the industry, though six months is a long-time to wait with the 5G world fast approaching.

Apple warns of higher prices with looming Chinese tariffs

Apple’s relationship with the White House looks to be straining at the seams as the iLeader continues to criticise the impending trade war, while the President offers little knowledge of how supply chains actually work.

Using his favourite means to spread tripe, President Donald Trump took to Twitter to hit back at a filing make by Apple with the US Trade Representative. In the filing, Apple argues the tariffs would lead to higher consumer prices, slower economic growth in the US and Apple being exposed to higher competition from foreign rivals.

“Apple prices may increase because of the massive Tariffs we may be imposing on China – but there is an easy solution where there would be ZERO tax, and indeed a tax incentive,” the President wrote in a tweet. “Make your products in the United States instead of China. Start building new plants now. Exciting!”

While some of Apple’s products have been hit by the current tariffs placed on Chinese exports, the iPhone, which accounted for 56% of revenues over the second quarter of 2018, is yet to be effected. As a company which manufactures the majority of its good in China, Trump’s next tariff proposal, essentially covering everything coming out of China, would have a very negative impact.

On the surface, forcing Apple’s manufacturing process back onto US shores would be a political PR win for the President, though the move could be disastrous for Apple and iLifers. There might well be tax incentives in moving the manufacturing process back to the US, but cost of building the factories would be incredibly high, while labour costs are also much higher. Tax incentives might compensate for these incurred costs, as would a price hike to consumers, but there is a bigger issue at hand which the President doesn’t seem to understand.

Managing a supply chain in the manufacturing trade is more than simply understanding how much labour costs. It’s access to raw and manufactured materials, cheap energy and real estate and finally, skilled workers. Once the plant has been built, the transportation and logistics puzzle to access materials will have to be addressed. Finding the right plot will also be tricky, as real estate will have to be cost effective, but it will also have to be close enough to a large enough workforce. This in itself is perhaps the biggest challenge as important aspects of this workforce do not actually exist at scale in the US.

Precision tooling is an excellent example of one of these skills. Precision tooling is a trade which requires years of training, combining artisanal craftsmanship with precision engineering skills. Apple CEO Tim Cook pointed out a couple of years back at a Fortune conference China actually stopped being the low-labour market and instead has a skilled workforce which enables the manufacture of smartphones and other advanced electronics. There are of course cost savings to be made in Chine, but these skills are critical in the smartphone manufacturing industry, and simply cannot be created overnight in the US.

The risk for Apple when it comes to moving the manufacturing process into the US, isn’t simply the cost as President Trump is suggesting. There are immensely complicated supply chain issues which will take months and years to perfect, this was the case for China as well, but the manufacturing industry here has evolved with technology industry. Skills have been taken forward and adapted to the manufacturing process as more complicated techniques and processes become commonplace. The learning process in the US will have to be much sharper.

When you take these elements into consideration, the risk is much more than financial. Apple could probably absorb a couple of years of heightened manufacturing costs, such is the profitability of the organization, but what it cannot allow is for a glitch in the supply chain. This is an incredibly well-oiled machine which produces hundreds of millions of devices every single year. Poking, prodding, moving and shifting this machine will impact Apple’s ability to meet consumer demand.

On one side of the coin, this is not worst case scenario. Less products on the market create a sense of exclusivity, which is turn increases the value of the products. Many luxury brands limit supply to create this sense of exclusivity which inflates prices. Some in the accounting department might like this idea, but Apple is a different beast. Somehow, Apple has managed to create the image of an exclusive, luxury brand, while flooding the market with supply and still maintaining incredibly high prices. Its contradictory and defies logic in the branding and price game.

If there is money to be made, Apple will profit. If it can offer a customer an Apple product, it will make the offer. When there is an opportunity, Apple usually capitalises. However, this saga threatens to impact Apple’s ability to supply the masses with their iFix.

Most of the time, disagreements are about money. But President Trump doesn’t seem to understand anything more than surface complications here. Tax incentives and price hikes will not compensate for the massive issues the Apple supply chain could face.

California defies FCC and Trump by passing tough net neutrality laws

The state versus federal argument looks like it is heading towards full-throttle as California passes what it describes as the toughest net neutrality laws in the country.

The FCC and President Trump’s administration are seemingly set on creating a regulation-free USA, though some states are not having it. California is the latest to demonstrate its mistrust of the US telcos, passing its own net neutrality laws.

“We passed the strongest net neutrality standards in the nation,” said State Senator Scott Wiener, who authored the bill alongside Senator Kevin de León. “The internet is at the heart of 21st century life – our economy, our public safety and health systems, and our democracy. So when Donald Trump’s FCC decided to take a wrecking ball to net neutrality protections, we knew that California had to step in to ensure our residents have access to a free and open internet.”

Looking at the broadest of explanations, Senate Bill 822 prohibits blocking websites, speeding up or slowing down websites or whole classes of applications such as video. Certain aspect of zero rating will also be banned, unfortunately this is where the bill becomes a bit more complicated. Zero rating services, applications or content will be allowed, providing ‘no consideration, monetary or otherwise’ is paid to the ISP by third parties. This is the sort of grey area which lawyers dream about, and will encourage the creative thinkers of the judiciary community to hunt down the loop holes.

While the Trump administration and the FCC have been consistently moving to eradicate every aspect of net neutrality from the rule books, this move from California could threaten to fuel the state versus federal jurisdiction arguments and power plays which we have seen in years gone. In the latest version of the Communications Act, the legislation which underpins all telecommunications regulations in the US, states any state-level rules which contradicts the position of the FCC are invalid. This would suggest Senate Bill 822 will have a short lived life, though should the dominos start to fall who knows what could happen. How many states would have to pass laws contradicting the Communications Act for something to be done?

Privacy-advocacy groups, coalitions of private businesses, attorney generals and more have been challenging the FCC dismantling of the rules, and the escalation of this saga seems to be entering into uncharted territories. We have been talking about a need for an opposition win in the net neutrality resistance, but whether this can topple some dominos remains to be seen.

This is not the first state wide resistance to the FCC’s attack on net neutrality, with Washington State passing House Bill 2282 in March, with the rules coming into effect on June 6. While there has been a lot of posturing and promises about defying the FCC position, that is until Wiener and his meaty balls stepped up. Perhaps this might encourage other states to move forward with their own ambitions.

That said, the telco lobbyists and supporter of more light-touch regulatory environments are powerful. Over the last couple of years, dozens upon dozens of proposed laws to increase user privacy and scale back the untouchable power of the telcos have been defeated by money. In Kentucky for instance, House Bill 332 failed. This bill proposed no telco or ISP would collect personally identifiable information from a customer as a result of the customer’s use of the telecommunications or internet services without the customer’s approval. In Nebraska, LR 453 would have allowed for an interim study to examine the impact of net neutrality, though this failed.

There are countless examples of the sticky telco fingers prodding various bills, which perhaps make the passing of both the Washington and California bills a bit more impressive. With the net neutrality debate continuing to rumble on, the conflict between the states and the White House will only escalate. If more states start passing net neutrality laws, ignoring federal guidance and the chain of command, what will be the reaction of central government?

Trump declares war on Google

US President Donald Trump has tweeted that Google search results about him are biased in favour of leftwing media.

Leaving aside whatever Machiavellian motives Trump has for tweeting for the time being, this move seems to mark an escalation in the debates over the role the big internet companies play in controlling the flow of public information and discussion. Being openly accused of acting in bad faith by such a powerful person is not something Google can afford to ignore.

Here are the tweets in question, which have apparently been slightly revised since they were first published.

Unsurprisingly Google rejects these accusations. At time of writing it didn’t seem to have published a blog, or whatever, on the matter, but it has sent statements to a bunch of media. In keeping with the theme of this piece here’s an NBC Politics tweet containing the statement.  

Trump isn’t the first to flag up perceived leftwing bias from internet giants such as Google and Facebook, and may well be opportunistically riding that wave ahead of US midterm elections in November, in which all of the seats in the House of Representative and a third of the seats in the Senate are up for grabs. At the very least it seems likely he’s trying to swing search results in his favour at this critical juncture.

This is also a sensitive time for Google, especially on this topic. Its claims not to let its search results be affected by political ideology come just a few days after it had to deal with internal concerns that it’s planning to do just that in order to get back into the Chinese market. There is huge pressure on internet giants to censor undesirable content from their platforms, but if they accept the role of censor then they can’t be surprised if they also get accused of bias.

US effectively bans ZTE and Huawei from any valuable government work

President Trump has now signed the Defense Authorization Act into law, effectively banning the use of ZTE and Huawei components in many government or state-funded projects.

The new rules should hardly come as a surprise considering the political paranoia which has been swelling to tsunami levels over the last couple of months. With Republicans checking under their bed every night for the naughty Chinese government, it was only going to be a matter of time before the vendors were officially banned from US projects.

Although the vast majority of the bill is directed towards more traditional aspects of national security, a few clauses, specifically sections 886 and 889, point the finger at the two Chinese vendors. The bill had been working its way through the legislative red tape maze for months, with the House hitting back at measured included in the text which would have overruled the President’s olive branch extended to ZTE when turning over the ban. While Congress wanted a more extreme ban on the two companies, this is the new rules are somewhat off a compromise, but just as damning.

The ban will be rolled out over the next two years, with the pair effectively not being allowed to provide any components or services to processes or infrastructure which would be considered ‘essential’ or ‘critical’. Should the components be used to route or view any data on the network, they hit the sh*t list. Companies or departments which currently have these components in their networks have been instructed to remove and replace them. The FCC will be prioritising funding to assist with these projects.

Legal action will of course be launched over the coming months, the US is a big prize for the Chinese vendors, though we ponder how effective any challenge from Huawei and ZTE, or protests from the Chinese government, will actually be. The duo have been in the sights of the isolationist-inspired government for some time, with this bill perhaps being a critical blow.

Although the ban does seemingly go against the wishes of President Trump, who had worked to overturn the ZTE ban, we suspect the White House will be secretly happy with the outcome. Tensions between the US and Chinese governments have been on the rise again in recent months, primarily due to the anti-foreigner rhetoric which is being championed by the ‘Leader of the Free World’ in the Oval Office.

Confusion, contradiction and chaos; the three Cs of the Trump administration.

The new rules should hardly come as a surprise considering the political paranoia which has been swelling to tsunami levels over the last couple of months. With Republicans checking under their bed every night for the naughty Chinese government, it was only going to be a matter of time before the vendors were officially banned from US projects.

Although the vast majority of the bill is directed towards more traditional aspects of national security, a few clauses, specifically sections 886 and 889, point the finger at the two Chinese vendors. The bill had been working its way through the legislative red tape maze for months, with the House hitting back at measured included in the text which would have overruled the President’s olive branch extended to ZTE when turning over the ban. While Congress wanted a more extreme ban on the two companies, this is the new rules are somewhat off a compromise, but just as damning.

The ban will be rolled out over the next two years, with the pair effectively not being allowed to provide any components or services to processes or infrastructure which would be considered ‘essential’ or ‘critical’. Should the components be used to route or view any data on the network, they hit the sh*t list. Companies or departments which currently have these components in their networks have been instructed to remove and replace them. The FCC will be prioritising funding to assist with these projects.

Legal action will of course be launched over the coming months, the US is a big prize for the Chinese vendors, though we ponder how effective any challenge from Huawei and ZTE, or protests from the Chinese government, will actually be. The duo have been in the sights of the isolationist-inspired government for some time, with this bill perhaps being a critical blow.

Although the ban does seemingly go against the wishes of President Trump, who had worked to overturn the ZTE ban, we suspect the White House will be secretly happy with the outcome. Tensions between the US and Chinese governments have been on the rise again in recent months, primarily due to the anti-foreigner rhetoric which is being championed by the ‘Leader of the Free World’ in the Oval Office.

Confusion, contradiction and chaos; the three Cs of the Trump administration.

ZTE’s export ban is set to be lifted

The US Commerce Department has signed an agreement with to lift the export ban on ZTE.

In keeping with the style of the current US administration the move was communicated via a tweet.

In practice this will complete the outstanding part of the $1.4 billion penalty agreement ZTE reached with the Department in June, coming on top of the $1 billion it already paid. In addition, the original seven-year export ban will be converted into a ten-year suspended ban, and ZTE will still need to hire an external compliance monitor appointed by the Department.

The price ZTE has paid to get here, in addition to the monetary loss, includes a wholesale change of its Board and its management, the loss of half of its market value, damage to its brand, and a lasting suspicion from its customers. They will look for potential alternative suppliers if they have not already done so.

With the ban lifted, ZTE will be able to resume its global business using American technologies and components, in particular the microchips. This will be good news for companies like Qualcomm, Intel, TI, Broadcom among others, and even better news for the smaller suppliers who have relied more heavily on ZTE. Indirectly, as ZTE is one of the major Android handset makers, lifting the ban will also be a positive to Google.

However, not all is rosy for ZTE yet, especially its fortune in the US market. The FCC named ZTE in its NPRM as one of the suspect vendors whose equipment and services could pose threat to national security, therefore limiting the prospect of ZTE expanding its infrastructure business in the US.

Going further up the political hierarchy, the bi-partisan “National Defence Authorisation Act” passed in the Senate included an amendment aiming to reverse the “goodwill” extended by President Trump to China to save ZTE from death. The bill will be discussed with the House for a comprise version. Chuck Schumer, the Senate Minority Leader, was clearly unhappy with the latest agreement:

With the uncertainties in the FCC and the Congress hanging over its head, and seen against the backdrop of the US-China trade dispute, instead of being the beginning of the end of the ZTE saga, as its lawyer claimed, this agreement is more like the end of the beginning. How the rest of the chapters will pan out remain to be seen. In short term, however, the agreement is a boost to the market. ZTE’s share price rose by 25% on the Hong Kong Stock Exchange.

Senate puts stoppers on Trump’s plan to save ZTE

The US Senate has voted 85 to 10 in favour to reinstate penalties on ZTE, despite President Trump’s attempts to ease pressure on the business and effectively save it from extinction.

The move from Trump could be viewed as an olive branch to ease growing tensions between the US and China, some of which can be attributed back to the President itself, though this bipartisan vote effectively side-roads any recovery efforts. The Bill will have to be reconciled with another bill already passed by the House, though it does look like Trump’s grand plan to ease international tension between the US and China starting to unravel.

The measure was included in a wide-ranging Bill focused on national security, known as the National Defence Authorisation Act, was backed by Senators from both sides of the aisle, with Republican Senators Tom Cotton of Arkansas and Marco Rubio of Florida teaming up with Democrats such as Minority Leader Chuck Schumer of New York and Elizabeth Warren of Massachusetts. With the provision being heavily backed by both sides, the Senate faces a showdown with the White House at an uneasy time for international relations.

This news should hardly come as a huge surprise though. When Trump suggested he was keen to save ZTE, and also when the Commerce Department tabled the deal, politicians from both parties were keen to object. A question was asked of the President; how can a company which is a suspected threat to national security be let off the hook so easily? Little seems to have been done to ease concerns, and it would now seem Trump will be powerless to save the struggling vendor.

ZTE found itself in hot water after violating US trade sanctions on Iran and North Korea, before then being caught out lying to US officials. The original seven year ban on using US products, services and IP brought the vendor to the edge of extinction, forcing it to cease operations, though Trump’s call-to-action seemingly brought ZTE back onto the straight and narrow.

For those who feared the escalating trade war between the US and China, this could be considered one of the worst possible developments. Some might have viewed the move to save ZTE as a pragmatic decision to get on friendly terms with China, though the actions of the Senate may well throw the relationship back into disarray. With tariffs set to come into play on July 6, and an the imminent retaliation from China, the situation could be about to get a lot worse.

Trump’s ZTE moves ease tensions, but $50bn tariffs still on

The last couple of weeks have seen President Trump try to get back on the good side of Chinese authorities by saving ZTE, but confirmation of trade tariffs on Chinese goods is another contradictory twist in the on-going saga.

The tariffs were promised back in March, and since then Trump has proved to be the aggressor, as well as the saviour of the almost-doomed ZTE, before having authority to ease sanctions eased stripped away by Senators. The determination to save ZTE has been reiterated over Twitter, with some outsiders possibly assuming this a move to ease tensions with the Chinese government, only for the tariffs to be reconfirmed.

The whole seesaw exchange has been a baffling one to follow, purely because there hasn’t been much consistency to the swerves, swipes or strokes. Perhaps this is the ‘deal maker’ strategy from Trump; lure opponents into a false sense of security, before upping the ante and then presenting a less aggressive, more palatable response. Emotionally stress the opponent with erratic behaviour and manipulate them into accepting a deal due to the fear of it disappearing after a bad night’s sleep in the West Wing.

In terms of the tariffs, the total has dropped from $60 billion to $50 billion, but the Trump administration is maintaining a tough stance of trade equality. The final list of tariffed items will be released by June 15, but in the meantime the US will be working to restrict the amount of investment which can be made by Chinese entities or individuals into ‘industrially significant’ US companies or technologies, as well as removing trade barriers into the Chinese market.

“…the United States will request that China remove all of its many trade barriers, including non-monetary trade barriers, which make it both difficult and unfair to do business there,” the statement reads. “The United States will request that tariffs and taxes between the two countries be reciprocal in nature and value.”

The Trump administration seems to want to play hardball with the Chinese government, but for the moment, it is difficult to judge who is gaining the upper hand. In a globalised economy, the imposition of tariffs leans towards isolation, which will never benefit anyone in the long-run. That said, we have not seen any significant reaction from the Chinese government just yet. There has been a bit of posturing, but nothing meaningful.

The US has shown the world what it can do. With a single signature, US sanctions brought a multi-billion organization to the edge of extinction. It was not only a message to China, but perhaps a hint to the rest of the world as well; you might want to develop Plastic Pavements or Silicon Roundabouts, but we are still the bosses of the technology world. Unfortunately we do not know what the repercussions of Chinese aggression could be.

Perhaps the Chinese government is willing to let the Trump administration flap around, erratically and emotionally throwing threats and compromises across the Pacific for the meantime. Eventually doing an awkward impression of a testosterone-fuelled teenager will grow tiresome, and a sensible, diplomatic solution will presented. Maybe this is when China will start to produce meaningful observations and actions.