Arris executives met with Federal Communications Commission officials last week, asking the federal government for grace under Trump administration-imposed Chinese import tariffs that Arris says will drive up annual costs for broadband equipment in the U.S. by $200 million.
“The proposed tariffs would effectively impose a massive tax on our country’s broadband ecosystem by significantly raising the costs of key broadband inputs,” read an Arris FCC filing. “Ultimately, American consumers and businesses, including small and midsize businesses, would pay the price. Moreover, the imposition of tariffs would create a drag on future broadband innovation, putting U.S. broadband leadership, including 5G wireless efforts, and American jobs at risk.”
The filing was first reported by Light Reading, which said it was discovered by Raymond James analyst Simon Leopold. Leopold estimated that with the step-up of the Trump Administration’s import tariffs from 10% to 25% on Jan. 1, 2019, the total costs of U.S. broadband equipment could spike by $500 million annually.
Arris said the products impacted by the tariffs include “telephony/broadband/data gateways, cable/telephony modems, nodes, wireless access points, bridgers, routers, controllers, and transceivers.”
In its filing, Arris included a letter, signed by 170 members of Congress, asking the United States Trade Representative (USTR) to exclude broadband from the tariffs.
At the very least, Arris would like some time for the U.S. broadband industry to adjust.
“If USTR proceeds with the proposed additional tariffs, it should provide sufficient time, at least 12 months, for companies to make the necessary supply chain changes,” Arris said. “Arris broadband equipment is complex and involves highly customized manufacturing operations. Working with its manufacturing partners, Arris will incur significant time and expense in shifting operations outside of China, particularly given the need to ensure the security of proprietary information and technology for ARRIS and its broadband provider customers.”
The Suwanee, Ga.-based tech vendor also said the tariffs threaten the larger goal of 5G deployment.
“This future wireless technology holds particular promise for broadband deployments in rural America, where it may not be economically or geographically feasible to widely deploy wireline fiber networks,” the filing added. “Given the transformative potential of 5G, the U.S., along with countries like China, South Korea and Japan, is racing to deploy 5G technology. According to one report, China is currently leading the world in 5G readiness, with the U.S. close behind.”
But “the proposed tariffs would raise the cost of these critical inputs, slowing the adoption of new 5G technologies by Ruckus customers and diverting resources away from Ruckus’s investments in 5G,” Arris said.