Canadian network gear makers get a shot at US broadband stimulus projects

The good news: the US government has clarified the rules of engagement for its rural broadband expansion projects, paving the way for Canadian network equipment makers to get a piece of the action. The bad news: the rules provide no favours for members of the North American Free Trade Agreement (NAFTA), so Canadians will be competing against the world. “There’s no favourable context for NAFTA,” says Kevin Suitor, VP of corporate marketing at Markham, ON-based wireless broadband gear maker Redline Communications Inc. “It doesn’t exclude goods coming from China, the Philippines, or low-cost areas like that.” The US federal government has set aside $7.2 billion to roll out broadband in areas currently lacking high-speed infrastructure, as part of its national economic stimulus effort. In charge of the funds are the Department of Agriculture via its Broadband Initiatives Program, and the Commerce Department’s National Telecommunications and Information Administration via the Broadband Technologies Opportunities Program. On July 1, the feds announced the rules for organizations looking to get some of that money for broadband rollouts. The question for Canadian broadband equipment providers: Would they be allowed to bid on the projects, or would the “Buy American” provision of the U.S. Recovery Act keep them off the field? It states that none of the stimulus money should be used to buy material from non-American companies. But according to the funding rules, Canadian companies can take part. Late last month, the Commerce and Agriculture departments released special waivers specifically exempting broadband equipment providers from the Buy American provision. The departments say that enforcing the provision on broadband equipment purchases “would be inconsistent with the public interest.” There are not enough broadband equipment makers in the U.S., and forcing organizations to buy American gear would increase the cost of the projects by more than 25%. But there nothing stopping state or municipal governments from imposing their own “buy local” provisions on local broadband projects, according to Judy Bradt, head of Summit Insight, an Alexandria VA-based company specializing in connecting Canadian businesses with US government contract opportunities. She recently briefed a number of Canada’s top trade professionals on the US stimulus package in webinars and workshops across the continent. US organizations may well decide to shop locally regardless of the federal waivers – but it wouldn’t necessarily be a good move. “Well, yes, a state or local government could do that if they wanted to, particularly local governments, which are not covered by any of the agreements on government procurement,” she says. But other things come into the picture. She points to the Halton Hills resolution passed by the Federation of Canadian Municipalities at its annual meeting in Whistler BC last month. The group called for the U.S. government to reconsider its Buy American policies because they could hurt Canadian companies. “Recovery is still a precarious thing, and no one is keen to set off a protectionism battle,” Bradt says. She adds that it makes sense for the Commerce and Agriculture departments to exempt broadband equipment providers, saying it streamlines the funding process. “The Federal Transit Administration, which oversees many hundreds of billions of dollars of grants for transit projects each year, has a whole department of people doing nothing but working on and administering waivers and evaluations of allowable foreign content on federally funded grants,” Bradt says. “It’s a huge expensive bureaucracy. Federal departments didn’t have enough contracting officers to run the procurements they had in their plans even before the stimulus dropped.” Still, Redline is concerned because the new rules effectively erase earlier provisions that did favour certain broadband equipment makers. Under another Agriculture program, equipment makers had to apply for a spot on a list of approved gear providers for rural broadband initiatives. Redline had made it onto that list. “We had some level of preferential access,” Suitor says. “With this waiver...it appears that any preferential access doesn’t exist.” He says the company plans to stay on top of developments. “I’m looking at the schedule for the workshops they will be holding beginning next week in Washington, and I’m looking at when I can attend sessions,” Suitor says. “In the meantime as well, we’ll have our legal counsel doing reviews and putting comments in through the public comments process.” The waivers cover: Broadband switching equipment Broadband routing equipment Broadband transport equipment Last-mile access equipment End-user access equipment Billing and operations systems The waivers do not cover: Fibre-optic cables Cell towers Stefan Dubowski is a freelance writer in Ottawa. You can reach him via sdubowski@rogers.com.

Canadian network gear makers get a shot at US broadband stimulus projects

News | July 3, 2009

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