How ‘Buy American’ Could Ruin Broadband Stimulus Plans

Analysts Say Strict Enforcement Would Only Hurt U.S. Vendors

Buy Half-American

A pure “Buy American” approach would be “virtually impossible,” said Ron Westfall, principal analyst of broadband infrastructure for Current Analysis. Nearly every U.S.-based systems equipment manufacturer uses components from outside the States, he explained; and getting those firms to move all of their operations and supply chains to America to qualify for stimulus grants would prove far too costly and time-consuming for those companies to even consider.

“Nobody’s going to say, ‘Let’s ship manufacturing facilities to take advantage of a one-time stimulus package,’” Westfall said. “They’d end up worse off than before the stimulus package.”

The solution seems to reside in the middle ground – Westfall’s spoken with vendors who say they’re open to a half-and-half sort of deal.

“A 50-percent provision would be reasonable and preclude players such as Huawei or ZTE from using the broadband package to gain a toehold in the U.S. market," Westfall said.

NTIA has not tipped its hand on such a compromise. Yet, not agreeing to one would make little sense, Westfall said, because a stringent "Buy American" proviso would ironically end up not aiding American infrastructure providers at all.

Cisco, Motorola, Alcatel-Lucent, industry associations and others all have lobbied the NTIA to waive the condition. Zhone, naturally, wants the provision to remain.

NTIA was to have released its rules in April but, as tends to happen with government initiatives, that hasn’t materialized, leaving the industry to twiddle its thumbs. NTIA will have to get cracking, though. The first round of grants distribution is scheduled for end of summer.

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