What tech wants from Washington amid coronavirus
Question is, can it get it?
Don't call it a quid pro quo. But as the tech industry rallies to help society amid coronavirus, it may also be thinking about what the government can do for it.
The technology sector is a big part of the U.S. response to COVID-19 — from Alphabet's Verily working on a web site to determine if people should be tested for the virus, to broadband companies committing to keep vulnerable communities online amid the pandemic. But as the markets crash and foreshadow a potential economic downturn, some people in the tech industry are also asking what Washington can do for them — particularly as Congress weighs stimulus packages to protect future structure of the American economy.
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"Tech companies are clearly asking themselves what they can do to help the country in this crisis," Information Technology and Innovation Foundation President Robert Atkinson told Protocol. But, he added, government should also be looking at ways to invest in the tech sector. "There's a lot more we could do in this space, and we should take this as an opportunity to really remove regulatory barriers and add public investments so that in a year or two we are a much more resilient country," he said.
There's a lot at stake. Under the most optimistic forecast shared with Protocol by Forrester Research Vice President and principal analyst Andrew H. Bartels, assuming the pandemic starts to ease by the third quarter of 2020, he expects the U.S. tech industry's growth to slow from previously projected 4% to 2%. His global projections slip from 3% growth to 1%. If the pandemic lasts until 2021, the worst-case scenario that Bartel puts at around a 1-in-10 chance of happening, he expects "everything would be worse" across the tech economy with "up to 5 percentage point lower growth rates."
The government's initial economic measures should focus first on people and industries directly affected, like travel, lodging and restaurants, Atkinson said. But especially as the government looks to assist companies affected by the economic contraction being caused by COVID-19, the tech sector offers an opportunity to invest in tools to build better responses to the next crisis and spur economic growth at the same time, he added. ITIF laid out some specific examples in a blog post published late last week, touching on everything from broadband to remote voting.
It's not clear just how likely it is that some of tech's stimulus wish list will make the cut of the latest $850 billion round of stimulus reportedly being proposed by the Trump administration. Atkinson gives it 50/50 odds that at least some of the ideas his group are proposing are adopted as part of the larger economic response effort.
"The Hill is very early on in the process of thinking about it," he told Protocol. "There's certainly a lot of interest in all of these things on the Hill, from conversations we've had with folks, but the challenge is always that getting anything done in Congress is very difficult." But, he says, as larger stimulus packages are floated, it might be the "opening of a floodgate."
Here's what to watch when it comes to the tech industry and the coronavirus recovery effort.
The current crisis "means that we are going to explore the expansion of telework, telehealth and tele-education," Democratic FCC Commissioner Jessica Rosenworcel said in a statement last week. Those options, of course, rely on having internet access, and "coronavirus is already exposing hard truths about the digital divide," she added.
Many telecom companies are already offering free or discounted services to those affected by the virus, including through a "Keep American Connected" pledge unveiled by the Federal Communications Commission on Friday. Under that commitment, companies including AT&T, Comcast, Verizon and others have pledged to waive late fees, open up their Wi-Fi networks to anyone who needs access, and not kick people off their service for bill delinquencies related to the virus for 60 days.
But the industry also wants something back: investment in broadband. The ITIF suggests a combination of expansions of existing FCC programs and congressional action to put more money into connectivity incentives.
"There are two issues: the issue of deployment of the network and the issue of adoption," Atkinson said.
On the adoption side, there are obvious changes to Lifeline — a program that started out as a way to provide subsidized access to phone lines and now covers broadband access — that could help. Those would include loosening restrictions on who can apply, as well as expanding the program so households could have at minimum two services: a home broadband and a mobile line, as opposed to the current single subsidy.
On the deployment side, stimulus could include improvements to rural broadband infrastructure, a potential cash infusion for the sector that would also help bring more communities online — an idea that feels particularly important when so much of the country is currently being told to stay home.
In the best-case scenario, where the pandemic is under control by Q3, Forrester's Bartel thinks broadband providers could even come out ahead. "Telecom services, which has projected to be weak, may actually rise as firms support more remote workers," he told Protocol.
Given the policy movement already in this space and increasing reliance on networked tools, these seem like some of the more likely changes to gain traction.
Telemedicine is one of the bright spots in the darkness of the COVID-19 pandemic, according to Martijn Rasser, senior fellow in the Technology and National Security Program at the Center for a New American Security.
"I think you'll see some creative new solutions in that space," he added. And as Protocol's Issie Lapowsky reported last week, the sector is having a trial by fire as the virus spreads and providers look for ways to reduce the exposure of health care workers.
On Tuesday, Medicare announced it would be expanding its deployment of telemedicine in an effort to keep seniors at home during this time.
"These changes allow seniors to communicate with their doctors without having to travel to a health care facility so that they can limit risk of exposure and spread of this virus," said Medicare administrator Seema Verma in a press release, adding that it also gave clinicians on the frontlines greater flexibility in their treatment options.
But regulatory challenges are still limiting the effectiveness of the tools, according to ITIF — and it's one of the things they want changed as part of the legislative response to the current health emergency.
"It's not about invention, it's about getting the regulatory and payment systems in place and making sure everyone has broadband and a computer or a cell phone at home to be able to do this," according to Atkinson.
The ITIF released a study about breaking down telemedicine barriers back in 2014, and endorsed the Telehealth Modernization Act, which would have removed some regulatory barriers to the technology's deployment. It didn't pass. Atkinson thinks the U.S. would have been better prepared for the current pandemic if the government had acted then.
"We would have had this rich and robust telemedicine system — much more so than we have now," he said. "But lawmakers didn't want to impinge on state's rights and alienate doctors."
Investment in federal digital infrastructure
The pandemic is proving to be a test of everyone's digital systems, including the governments — and that could be an opportunity to create more robust systems for the next crisis, tech industry advocates have argued.
The ITIF, for example, wants stimulus packages to include "at least $10 billion to the General Services Administration for the Technology Modernization Fund." The TMF was set up to provide funding for federal technology upgrades and operates under a loan model where agencies repay costs based on savings provided by upgrades. However, ITIF suggests using it as a vehicle to move $3 billion for federal upgrades and $7 billion to state and local government upgrades — and waiving the paybacks for projects that "require all spending to be focused on making it easier for citizens to interact online with government."
The group also proposes cash infusions elsewhere, to do things like improve election systems and make them more responsive to the realities of an election when we're all trying to socially distance.
"Congress should also allocate at least $1 billion for states to make improvements in election technology. These funds should be made available as grants to all states that agree to adopt universal no-excuse absentee voting," ITIF proposes.
Congress could also put money toward programs that provide opportunities to explore new technologies. For example, ITIF wants Congress to allocate $2 billion for "smart city funding" — investing in things like data analytics and the Internet of Things to improve public services
Many of these kind ideas are almost deferred digital maintenance: upgrades to federal systems that need updating anyway, that might happen now that a new conversation has started about where to invest to keep the overall economy going. For tech companies, they represent potential contracting opportunities and a way to expand the market of their products.
Supply chain localization
Speaking of keeping the overall economy going, the pandemic exposed just how brittle many supply chains — especially for complex electronics — really are right now. The heavy reliance on Chinese manufacturing for everything from simple consumer goods to electronic components means the global economy is still struggling, even as China's factories come back online.
Ultimately, many tech companies may end up looking to diversify and reshore more aspects of production so they are better prepared to stay operating when the next big crisis hits, according to Rasser. This may not necessarily be a change the tech industry wants, but it's one that they're likely going to have to face, he added.
"It will be a big reckoning for industry, with restructuring in terms of raw materials and sourcing, and foresee quite a bit of that will come back to the United States," Rasser said. This could result in a reordering of supply chains with a focus on bringing production physically closer to markets, for consumers in the U.S. and around the world.
That obviously won't mean everything gets built down the road, but that more things might be — and the government prioritizing maintenance of a certain level of manufacturing capacity as a matter of national security.
That could mean turning to the government for incentives to ease the process of moving some previously international operations back to the domestic market, which may ultimately align with some of the political winds in Washington — where President Trump argued for bringing back local manufacturing as part of his agenda.
"I think the administration has a real opportunity to accelerate the kind of economic disentanglement they've been pursuing," Rasser said, referencing reliance of the U.S. economy on imported goods, particularly from China.
There's one thing, beyond tangible subsidies that the industry might receive in stimulus packages, that will be critical going forward, experts say: better communication.
A case in point is the confusion over Alphabet's involvement in the coronavirus response. President Trump announced Friday that Google had 1,700 workers pulling together a website to help triage coronavirus testing — to the surprise of the company because, instead, Alphabet subsidiary Verily was working on a limited prototype of such a tool. And when it was released over the weekend, it was limited to the Bay Area, required logging into a Google Account and quickly hit capacity.
As the pandemic continues, the government may find itself involved in ever more complicated public-private partnerships — for example, Rasser theorized, asking makers of one type of machinery, such as automobiles, to switch to making ventilators instead if medical demand hits a certain threshold.
"This just underscores how closely integrated government and private industry need to be because the line between public and private sector — that distinction gets really blurry, really quickly when you place a whole of society crisis like this," Rasser said. Replays of the Alphabet debacle might not go down so well if they keep happening over and over.
The technology sector itself will hopefully help foster better communication as the pandemic spreads, Atkinson said.
"I hope this is a wakeup call for American society, but particularly Congress and the administration to say 'how do we make sure we fully avail ourselves of technology so that when this happens again we will be better prepared,'" he told Protocol.