Economy Will Take Big Hit if Device Ban Stands—Qualcomm Consultant
The International Trade Commission’s (ITC) order barring imports of new wireless devices containing Qualcomm chips could mean a $21.1 billion hit to the U.S. economy, said consultants to the company. The contention by the Brattle Group comes as Qualcomm and wireless carriers led by CTIA turn up pressure on President Bush to veto the ITC order.
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The ITC June 7 ordered a ban on new devices containing the chips (CD June 8 p8) on grounds Qualcomm had infringed Broadcom patents. A 60 day presidential review ends Aug. 6.
The Brattle Group said it was not taking a position on a veto but had been hired by Qualcomm to assess the ban’s cost to the economy. It was estimated at $4.1 billion to $21.1 billion, depending how long Qualcomm takes to develop a handset it can import.
Consumers will be hit hardest -- as much as $17.7 billion, the report said. Carriers and other businesses will lose profits of as much as $3.4 billion total. Brattle said the decision likely will also mean less robust bidding in the pending 700 MHz auction and other future auctions, reducing auction revenues.
“Consumers will be denied access to valuable new products and services, and the prices paid for existing products and services will be higher than otherwise would be the case,” the report said. “A broad array of firms across the wireless broadband Industry -- including carriers, handset manufacturers, network infrastructure suppliers, and providers of content, accessories, and peripherals-will suffer lost profits as a direct result of the order… The ITC order represents a particular setback for the wireless carriers, who have undertaken extraordinary investment -- roughly $30 billion in 2006 alone -- to be prepared to offer new broadband services.”
CTIA President Steve Largent said Friday the Brattle report points to the need for a presidential veto. “The ITC order is particularly troubling because it allows a private patent dispute to inflict unprecedented public harm upon innocent third parties,” he said. “Under the statutory scheme devised by Congress, the Administration is the last line of defense for protecting the public from these massive economic damages. We strongly urge the Administration to disapprove the ITC order.”
The Association of Public Safety Communications Officials said in a statement Friday that Broadcom’s offer to grant public agencies and private not-for-profit organizations royalty-free licenses to the patent would not eliminate the harmful effects of the ITC order. “While we appreciate Broadcom’s offer and their apparent recognition of the very real impacts on public safety, the offer of patent licensing to public safety agencies does not provide an adequate remedy,” APCO said. “The identified issues relating to location accuracy, voice clipping, 800 MHz rebanding, and emergency alert system upgrades are resolved by placing new tools in the hands of the consumer public that provide adequate information delivery to public safety agencies.”