CAPRE Exclusive: US-China Trade War Has Caused 5G Rollout Over $1 Billion USD in Losses
DENVER, CO – CAPRE’s Construction, Design, Engineering Evolution and the Optimization of Hyperscale, Colocation & Enterprise Data Centers Summit dove deep into many of the topics pushing the tempo in the Mountain West data center industry, and CAPRE invited Matt Wendel, Director of Public Affairs and Communications for Colorado Technology Association, which recently celebrated its 25th anniversary, to conclude the day with a 45-minute keynote address about what his organization does and why it matters for the state of Colorado’s data center industry.
Wendell’s afternoon Keynote Address, The Technology Economy from a Public Policy Perspective: What are the Effects of Trade War and the Anticipated 5G Rollout on Colorado-Regional Jobs and Infrastructure? took a broad look at how public policy impacts technology in the Mountain State, but then zoomed into how recent policy developments, such as the Trade War, are having real impacts on the industry’s trajectory.
“Why care about public policy when it comes to technology?” asked Wendell to the gathering of data center insiders. “Public policy establishes the rules within which the technology industry can operate. A couple of examples of that are taxes and incentives. No matter where you’re located, you’re paying taxes. It depends on your municipalities, your state, whatever you’re in. Your tax rate is set through public policy. It’s set by lawmakers, public officials. There’s a direct line running through public policy that affects how technologies can operate and if and how you can grow your business.”
For example, Wendell shared how several years ago, the Colorado Technology Association was a key part of legislative efforts to establish incentives around data centers – to increase the amount of companies building in Colorado as well as moving there. “Ultimately it was not successful, but we think it’s something we can work on moving forward,” shared Wendell.
Next, Wendell shone light on how public policy can also accelerate or inhibit innovation, using ride-share apps such as Uber and Lyft as an example. “We helped to be part of the stakeholder process, moving legislation forward so that these companies could continue to operate here, moving forward. We found it important to grow that sector, and had a great relationship with them that we wanted to keep moving forward.”
According to Wendel, the same process is now happening with electric scooters – some cities love them, some hate them, but either way, regulations are cropping up. “Some will promote growth, some might limit them,” shared Wendell.
Next, Wendell fast-forwarded to the present day, looking to the trade war between the U.S. and China and the effects on the economy. “There have historically been concerns by companies who wanted to do business in China around intellectual property, trade practices, and a lot of tech companies wanted these issues to be dealt with – especially if they wanted to expand,” he outlined, then explaining that President Trump seized on this during his 2016 desire, with a plan to address it.
“That being said, in early 2018, President Trump announced tariffs on solar panels on steel and aluminum. China retaliated in kind with tariffs on US products, leading to the back and forth we’re still seeing today, with a big impact on the tech industry,” he recalled, setting the stage for the real financial effects members of the tech industry are currently seeing – and those impacts are real.
“In June 2019, the technology industry suffered $1.7 Billion USD, and since July 2018, $10 Billion USD,” he revealed. “We’re seeing that hit the technology industry, impacting everything from lithium batteries to routers to tablets to televisions. “These are the things where prices may be raised for consumers in the United States.”
Another major decision that Trump made with consequences for the tech industry is the banning of companies from doing business with Huawei – a huge provider of components for 5G devices. “A lot of companies like Apple use them as a supplier,” he explained. Some companies do have exemptions, and he expects the White House to likely ratchet down some of these rules to allow more companies to do business with them.” Wendel then touched upon the losses to the rollout of 5G – which weren’t insubstantial. Since July 2019, the industry has totaled losses worth $131 Million USD, while since July 2018 that number has totaled $1 Billion USD.
“Is this good policy?” he asked the room. “A lot of these trade practices [by China] were a concern of many people in the industry, but some are wondering if [the trade war] is the right way to go about it.” Wendell then shared that COMPTIA recommends that the Trump administration pull back on tariffs that are disproportionately affecting the technology industry. As a potential remedy, Wendell shared, a lot of industry organizations are looking to the deals between U.S, Canada, and Mexico, which are currently being hammered out now, but there’s no guarantee that such a framework could help the industry weather the storm.
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