WASHINGTON-As President-elect Bush crafts a diverse team of Republicans with Pentagon, state government and Old Economy business experience and confronts a slumping stock market increasingly subject to the vagaries of high-tech shares, it remains to be seen whether the next administration can achieve the success New Democrats had in harnessing the power of the silicon chip and the Internet for domestic and global economic gain.
Appointees to the Bush Cabinet, including names mentioned to fill key slots, may give some clue to how the next administration will approach a slew of digital issues that cross a broad range of policy boundaries.
So far, Bush has surrounded himself with national security advisers with deep Pentagon experience. Former Joint Chiefs of Staff Colin Powell has been tapped to be secretary of state. Last week, Bush nominated Donald Rumsfeld for a return tour at the Department of Defense. Rumsfeld headed DoD under President Ford. And, of course, Vice President-elect Richard Cheney was secretary of Defense in the administration of the president-elect’s father.
Normally, such a collection of individuals who have strong Pentagon experience and who are expected to be among the closest and most trusted advisers to Bush would be of little consequence to the wireless industry.
But it is.
The Pentagon and other federal agencies hold radio frequencies that the World Radiocommunication Conference last year in Turkey earmarked for third-generation mobile-phone systems. In addition to the 1710 MHz-1885 MHz band used by DoD, the WRC-2000 designated the 2500 MHz-2690 MHz and 698 MHz to 960 MHz for 3G.
The biggest challenge facing the wireless industry is the development of 3G systems that some believe could obsolete the personal computer in the Internet Age.
To make the mobile Internet a reality, additional radio spectrum will be needed in coming years to create the fat pipe that carries high-speed voice, data, video and multimedia.
In October, realizing the domestic and global economic importance of the 3G issue, President Clinton ordered federal agencies to determine whether the 1700 MHz band can be shared or cleared altogether to make room for 3G mobile-phone operators.
An initial study found some sharing of the 1700 MHz band between the Pentagon and 3G mobile-phone licensees was possible. While the Pentagon has vowed to cooperate with Clinton’s 3G directive, it is no secret that top military brass still resent being forced by the then-Democratic led Congress in 1993 to surrender spectrum for sale by the Federal Communications Commission.
The Pentagon battled the wireless industry over spectrum in 1997, resulting in legislation that allowed DoD to reclaim some frequencies lost to industry. The bill also laid the legal foundation for compensating the relocation of federal radio communications systems displaced by wireless firms.
Even though the Cold War is over, defense experts say spectrum is more crucial today than it was when the nation faced nuclear war with the former Soviet Union. Recent reports have concluded military preparedness in the 21st century will depend on mobility, swiftness and interconnectedness.
Thus, the radio spectrum so key to future Internet-friendly mobile phones is just as valuable a resource to the U.S. military. Rumsfeld acknowledged as much last week: “We are in a new national security environment. We do need to be arranged to deal with the new threats … with information warfare, missile defense, terrorism, defense of our space assets and the proliferation of weapons of mass destruction throughout the world.”
Rumsfeld’s reference to terrorism is not inconsequential for the wireless industry. Terrorists have become sophisticated users of high technology. As such, Bush’s national security team is expected to feel constant pressure from the FBI and Justice Department to press the limits of wiretap authority as it relates to mobile phones, pagers, the Internet and other digital devices. Encryption export policy could pose problems for Bush for similar reasons.
Bush’s pick for the Justice Department, Sen. John Ashcroft (R-Mo.), is no stranger to the telecom industry. Ashcroft, an strong conservative who was defeated for re-election, was a member of the Senate Commerce Committee. The panel oversees the FCC.
A name repeatedly mentioned as a candidate to head the commission is Michael Powell, a moderate Republican who is an FCC commissioner and son of the secretary of state nominee.
Combined with Bush’s selection of Texas oil businessman and campaign chairman Don Evans to head the Commerce Department, the Bush administration is expected to be pro-business champions of deregulation.
But that does not necessary guarantee the Bush administration will promote high-tech the way the Clinton-Gore administration did.
During the 1990s, New Democrats forged a strong bond with Silicon Valley that would come to translate into political support and the longest run of economic growth in history.
From the start, Clinton’s team-especially Vice President Gore and his staff-understood the exponential power of high technology in terms of economic growth, business efficiency and global competitiveness.
At the same time, the New Democrat’s embrace of high technology hit bumps in the road. Clinton’s strong support by trial lawyers made it hard for him to embrace Republican-crafted legislation to curb shareholder class-action lawsuits against high-tech firms.
The Bush administration also will face the prickly issue of Internet taxation, a matter that could prove big for the wireless industry if mobile commerce takes off.
Bush’s Cabinet will include various state officials-current and former-from around the country. Cities and states are growing increasing anxious about the prospect of losing tax revenues to e-commerce. Bush will be faced with balancing his desire to keep the New Economy on track while respecting the GOP’s support for local control-all this against the backdrop of a hostile group of congressional Democrats who believe Bush came in second in Election 2000.
