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ECommerceTimes.com

State of the Union: Tech, Telecom May Get Overlooked

By Keith Regan
Jan 22, 2007 1:15 PM PT

When President Bush takes to the rostrum in the U.S. Congress Tuesday night to deliver his seventh State of the Union address, most experts anticipate a lengthy speech that will offer little in the way of initiatives aimed at boosting the nation's technology sector.

State of the Union: Tech, Telecom May Get Overlooked

With the ongoing war in Iraq and with so-called entitlement programs such as Social Security threatening to cause an explosion in the national debt in coming years, the technology and telecom sectors will likely find their interests overlooked as the President lays out his policy priorities for the coming year.

Those hoping for new initiatives to boost the tech economy and lay the groundwork for the future will probably be disappointed, said Bartlett Cleland, director of the Institute for Policy Innovation's Center for Technology Freedom.

"If you think back to the last several addresses, going back through the Clinton administration -- if you take all the tech conversation from the last 14 or so State of the Unions and put it all together, you wouldn't even get enough for a single speech," Cleland told the E-Commerce Times.

Wish List

For the President, his next-to-last State of the Union comes at a time when his approval rating is historically low, due mainly to his handing of the war in Iraq. The speech also comes in the wake of Democrats seizing control of both the House and Senate.

Experts expect Bush to spend time selling his plan to send more than 20,000 additional troops to Iraq and to highlight the strength of the U.S. economy, which continues to grow and add jobs without significant inflation -- despite a housing slowdown and high oil prices.

There will most likely be issues that could be important to the tech community discussed in the speech and the Democratic response, Cleland noted. For instance, it's almost certain that Bush will mention immigration policy, but likely without addressing the part of that policy that affects tech businesses.

When immigration is discussed, "You won't hear a lot about the highly skilled, highly educated, highly paid technical workers who want to get into this country but can't," he said. "There are employers who want to hire them, who want to keep those jobs in the country, but they can't."

That debate is symptomatic, Cleland argued, of the lack of focus on the importance of technology for the country's future economic independence. "America's tomorrow is technology," he said.

Telecom Issues

In the telecom space, Web companies such as Google and Yahoo! would no doubt welcome an endorsement of so-called network neutrality, which would guarantee them the right to deliver content to consumers over telecom and cable networks.

No such rhetoric is likely to be forthcoming, however, though Congressional Democrats have already begun to file bills to assure some level of network neutrality.

Consumer interest groups will also likely not get any mention of their concerns about telecommunications consolidation and its impact on consumer choice and prices.

The President's speech will likely contain little in the way of telecom-related initiatives or rhetoric, largely due to "the intense focus on the wars in Iraq and Afghanistan, the new proposed health care tax break, and our issues with oil dependency," said Jenny Fielding, chief operating officer of mobile VoIP firm Switch-Mobile.

"I don't think there will be anything related to telecom in the speech," independent telecom analyst Jeff Kagan told the E-Commerce Times.

Though some speeches, such as those at the beginning of a president's term, can be broad-ranging and touch many issues, Bush will likely choose to highlight just a few areas where he believes the key to his administration's legacy may lie.

"My understanding is the speech will focus on a few areas instead of a large number of areas," Kagan added. "I don't think net neutrality is high on the list."

Civil rights and privacy groups may want more explanation of the Bush administration's use of and endorsement of the Pentagon, CIA and other agencies obtaining bank and credit records of U.S. citizens, which the administration says is necessary for homeland security.

Tech firms that have been lobbying for enhanced patent protection that could add more teeth to existing laws will likely be left out of the loop as well, especially since President Bush now must also consider how to handle a Democratic Congress.

Part of the problem is that a discussion such as Iraq can quickly "suck all the air out of a room to discuss anything else," Cleland said. In addition, many of the issues relating to technology -- such as the fact that the corporate tax code is designed for a manufacturing economy, not an information- and knowledge-based one -- are considered too technical to be part of a broad brush policy address.

Climbing the Ladder

Education, something that technology firms say is critical to the long-term health of the new economy, will also likely not be a central part of the speech.

Bush's "No Child Left Behind" effort was a major part of his administration's first term, and he is expected to urge Congress to renew that effort, extending funding and support for its testing and certification requirements.

Extending his first-term tax breaks will be a major thrust of the speech, and Bush is also expected to propose new tax credits for individuals and families who have health insurance.

Energy independence is an area where Bush could provide a boost to tech startups that are focused on renewable energy sources, though it's not clear how far he will propose the country go to find ways to wean itself from foreign oil.

Many in the business community will no doubt favor Bush's hands-off approach, and analysts say regulating the technology sector with a national e-commerce sales tax, for instance, or other sweeping rules, could curtail innovation.

For those who want to see technology highlighted as the engine of economic growth past and future, the president's address will likely fall short of the mark.

"If you see the success of the U.S. as a ladder, a whole lot of people fixate on the rung that we're standing on rather than the one we should be reaching for," Cleland said. "If you focus more on that next rung, all of a sudden you need to be talking a lot more about technology and related issues."


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