This afternoon, the R Street Institute filed comments with the U.S. International Trade Commission, supporting its application of public interest considerations to reject Qualcomm’s bid for an overbroad exclusion order in the cell phone market. The comments were cosigned by the Electronic Frontier Foundation, Engine Advocacy, and Lincoln Network.
In an administrative action entitled Certain Mobile Electronic Devices, Qualcomm had petitioned the ITC to prevent importation of several Apple iPhones under that agency’s power to issue exclusion orders banning importation of articles that infringe patents. But Qualcomm’s motivation had very little to do with Apple—instead, the chip manufacturer’s goal, as was apparent from the evidence revealed during the investigation, was to boot out its only other competitor in the market: Intel. Qualcomm and Intel are the only two producers of high-end baseband processors (the chips that allow cell phones to communicate with towers), and Apple is Intel’s main buyer. Shutting down Apple’s domestic iPhone business would create ripple effects that would essentially put Intel out of the baseband processor business.
As the administrative law judge for the ITC realized and as we explain in our comments, the ultimate result of an ITC exclusion order—the entrenchment of Qualcomm as the sole monopoly supplier of baseband processor chips—would be incredibly harmful to the economy and to key national interests. Cell phones are critical to consumers today given the importance of Internet access, and a monopoly in the supply chain would raise prices, slow down innovation, and undermine the national goal of expanding broadband Internet access. And given the importance of mobile infrastructure to cybersecurity, a lack of competition could lead to widespread vulnerabilities that would threaten the safety and security of all Americans.
The ITC will now consider whether to reconsider the administrative law judge’s determination that the threats to competition, consumers, and national security are serious enough to forgo an agency action that would create a Qualcomm monopoly. We hope that the agency will recognize the gravity and breadth of these important issues as it reaches its decision.
Photo credit: Tekke