Excerpt: # Likening the task to the 1960s effort to put a man on the moon, # John Chambers, chief executive of Cisco Systems Inc., is asking # that the federal government commit to making broadband connections # available to every home by 2010. ---- http://interactive.wsj.com/articles/SB993418457489449631.htm # # Tech Industry Seeks Its Salvation June 25, 2001 # In High-Speed Internet Connections # # By SCOTT THURM and GLENN R. SIMPSON # Staff Reporters of THE WALL STREET JOURNAL # # High-tech executives think they've found a cure for the industry's # deepest slump in a decade: High-speed Internet access for # everyone. # # For years, telephone and cable-TV companies have been promising # to build high-speed "broadband" networks, which let consumers # and small businesses tap the Internet 20 or 30 times faster than # conventional phone lines, yet the rollout has been slow. There's # little agreement, even within the tech world, on the ground rules # for building such networks, which would cost tens of billions # of dollars. But suddenly the topic has rocketed to the top of # the technology industry's agenda in Washington, where # traditionally distant tech executives are asking for help. # # The chairmen of International Business Machines Corp., Intel # Corp., Motorola Inc. and others last week met with key lawmakers # and National Economic Council officials to support bills that # would provide tax credits for building high-speed networks in # rural areas and economically depressed inner cities. Other # executives propose broader tax breaks, comparing broadband # Internet links with the government-financed interstate highway # or rural electric systems. # # Likening the task to the 1960s effort to put a man on the moon, # John Chambers, chief executive of Cisco Systems Inc., is asking # that the federal government commit to making broadband connections # available to every home by 2010. A Cisco lobbyist calls the effort # "our No. 1 goal" (although a spokesman says Mr. Chambers doesn't # think the government would be the one to build the network). # # Some tech executives argue that extending broadband networks # would help revive the national economy, because tech spending # contributed such a large share of economic growth in recent years. # "The stimulation would go well beyond hardware and software # providers," says Phil Bond, Hewlett-Packard Co.'s top Washington # lobbyist. # # But some analysts are struck by the sudden change in an industry # that previously distanced itself from Washington. Technology # companies "are going to Washington looking for a bailout," says # Scott Cleland, chief executive of the Precursor Group, a # Washington-based independent research company. "That tells you # their situations are awfully bad because when times were good # they were telling the government to stay away." # # Monday, more than 40 tech executives are set to meet at H-P's # Palo Alto, Calif., headquarters to rally behind the broadband # effort and discuss possible policy initiatives. Other tech groups # have similar efforts under way. Last week's lobbying was # orchestrated by the Computer Systems Policy Project, which # represents big computer companies. "The administration is # listening carefully to all segments of industry and working with # lawmakers and regulators to assess policy alternatives to # accelerate broadband deployment," a White House spokesman says. # # The renewed push for broadband stems from widespread disappoi # ntment with the Telecommunications Act of 1996, which was supposed # to encourage competition, particularly for local phone service. # But many of the upstarts that challenged the Baby Bells couldn't # make profits and got hurt in the collapse of the high-tech bubble. # And companies that built data networks to carry an expected flood # of Internet traffic are starving for business. # # Tech executives fear that broadband deployment will slow even # further. A year ago, the pace was a secondary concern for big # tech companies. Then the dot-com bubble burst. Companies cut # their purchases of tech gear, and executives of tech companies # faced declining sales, losses and layoffs. Now, potential sales # resulting from a new wave of high-speed Internet connections # look like a port in a storm. # # When Mr. Chambers broached the subject before 50 executives at # a February meeting of TechNet, an industry lobbying group, 20 # hands shot up, according to a person who was in the room. TechNet # quickly assembled a "working group" on broadband policy, including # Mr. Chambers and executives from Intel, Microsoft Corp., 3Com # Corp. and ExciteAtHome Corp. Its recommendations are expected # in September. # # Executives hope ubiquitous high-speed links can ignite another # "virtuous cycle" of innovation and spending on tech gear, like # the one that accompanied the first phase of the Internet in the # late 1990s. Telecom-gear makers would sell equipment to build # the networks. PC- and chip-makers would sell consumers new # computers to keep up with faster connections. Software makers # and content creators would update programs. "We're convinced # now more than ever that broadband is crucial to our industry," # says Peter Pitsch, an attorney in Intel's Washington office. # # A unified tech industry could be influential in the national # debate. "I've always felt the computer folks would tip the balance # if they ever came into the thing in a serious way," says Jeffrey # Eisenach, president of the nonprofit Progress and Freedom # Foundation, a group backed by the Bell phone companies that is # sponsoring the meeting at H-P. # # But there's little agreement in the industry about how to get # the job done. The differences are apparent on the central # telecommunications question facing Congress this year: whether # to relax 1996 rules limiting the role of Bells in building and # operating data networks. Until recently, big tech companies were # reluctant to take sides because they had customers in rival camps. # Now, their reluctance may be fading. # # In a speech last week, Intel Chairman Andrew Grove endorsed # loosening some of the restrictions. That was a bit of a shift # for the chip giant, which had invested in several Baby Bell # challengers in the heady days after the 1996 law was passed. # # "If we want to see broadband, we have to follow the money, as # cruel and unfair as it sounds," said Mr. Grove, who lunched with # Ivan Seidenberg, chief executive of Baby Bell Verizon # Communications Inc., the following day. Mr. Grove called for # "a new approach" in which the Bells "should be allowed to invest # with the fair expectation of making a lot of money." # # Others blame the Bells for stifling competition, then dragging # their feet. "I'm afraid if we leave it to existing incumbents, # the speed at which broadband will progress would not be # satisfactory," says 3Com Chairman Eric Benhamou. He suggests # government-subsidized loans, or tax rebates for signing up # broadband customers. Most tech lobbyists, though, consider it # politically toxic to mention those ideas.