Intel CEO Makes Case for Broadband Aid

Hoping to revive Silicon Valley’s economic fortunes, Craig Barrett, chief executive of Intel Corp., traveled to Washington with other high-tech company executives last week to lobby for greater government financial and regulatory support for high-speed Internet access, or broadband.

Between meetings with lawmakers and regulators, Barrett sat down with a small group of reporters to discuss a range of topics, including whether Intel, one of California’s largest high-tech employers, will expand its operations in the state after voicing concerns last summer about the state’s electricity crisis.

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Question: Why is Intel suddenly calling for more federal support for broadband after many of the high-speed Internet access start-ups have either gone out of business or declared bankruptcy?

Answer: You want competition among the various forms [of broadband delivery] ... cable, [telephone] and satellite. That’s the competition we need.

It’s a difficult environment ... but the investments we are talking about to finance broadband are in the billions and billions of dollars and the only companies that can afford it are [firms like the regional Bell phone companies].

I would think the consumer would benefit from three solid technologies to choose from. You are not going to have competition unless you have massive capital investment.

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Q: Intel comes at this issue a little different from some of the other firms in the industry. I guess your interest is to have things built out so there is more demand for your microchips?

A: If you look at what bandwidth can do for the economy--for the consumer and for small and medium-size businesses--to me it’s a very strong argument, not just for the [advanced] capabilities but for the nation’s competitiveness.

Maybe the fact that our microprocessors have outstripped bandwidth and we’d like to see a better balance--yeah, there’s a parochial interest.

But if you step back and look at the big picture--which is the competitiveness of the United States--I don’t think you can argue against a kind of national bandwidth policy.

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Q: Do you think the lack of broadband usage is due to the lack of infrastructure, pricing, content or something else?

A: Broadband, by today’s definition, is cable or DSL. It’s maybe 200 kilobits [per second] or 300 or 400. But broadband, I think, gets exciting when you get to 5 megabits per second or even 100 Mbps.

So there’s an infrastructure issue because broadband today ... is not sufficient to provide some of the serious content people are interested in. So it’s this chicken-and-egg issue.

I think fundamentally you want to have the regulatory environment such that there is strong competition.

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Q: Do you think it makes sense to have a solution like the Tauzin-Dingell bill (allowing the regional Bell telephone companies to build high-speed Internet pipelines to businesses and homes without having to share the lines with competitors or open up their local markets to greater competition)?

A: I’m kind of neutral on that bill just because they have a lot of stuff in it, including the hot topic of the day, which is to allow the Bells into long-distance immediately without really showing there is new competition for basic telephone service. There is so much in that bill.

I think it maybe doesn’t address the basic issue, which is the regulatory environment for new investment for new [broadband] services.

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Q: There was a time when high-tech executives were too busy inventing the future to make a pilgrimage to Washington.

How responsive do you think the government has been to your industry?Besides broadband, are there other new legislative measures you think would help it grow?

A: I think a stimulus package could not just help the industry but could help the U.S. economy.

Probably the strongest part of the stimulus package that helps our particular part of the industry would be accelerated depreciation of [information technology] equipment. Broadband is a key issue.

We [also] have a vested interest in the education of scientists and engineers in the U.S..... The precursor to educating scientists and engineers is getting kids in K to 12 to understand math and science.

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Q: Are you confident that California has solved its electricity problems to the point where Intel would consider expanding its operation in the state?

A: I’m willing to take a wait-and-see attitude about California.

We benefited from a cool summer, which didn’t stress the system. Energy availability and prices have obviously come down ... but I would like to wait a year or two to see what happens in that space.

We have major expansion plans already targeted in Arizona, where we’ve brought out a major facility, and one under construction in Oregon. And one that probably will recommence, which was kind of mothballed, in Ireland.

We are not beset with having to make a decision to invest in growth in California in the short term.