By Claus Hetting, WiFi NOW CEO & Chairman
This Monday the FCC decided to expand its so-called ‘Covered List’ of banned communications equipment to include “all consumer-grade routers produced in foreign countries” ostensibly because such devices “pose unacceptable risks to the national security of the United States or the safety and security of United States persons.” The move is likely to unleash a long list of consequences which will – ultimately – be passed onto consumers in the form of substantially higher costs. Read the FCC’s statement here.
Consumers across the US will likely pay a lot more for their future home Wi-Fi 8 (or newer Wi-Fi 7) router – even if they’re able to get ahold of one at all, that is. The FCC’s latest decree bans the import of foreign-made ‘routers’ (including Wi-Fi routers and mesh) ostensibly because of security risks although there is arguably little public evidence that such a sweeping move is justified.
The consequences to consumers and businesses are likely to be dire as manufacturers no doubt are scrambling to work out what all this actually means in practice and what they can do about it. As far as we know there is no domestic US manufacturing of any consumer-grade Wi-Fi router at this time. This is the first sweeping ban on an entire category of equipment as previous bans have for the most part been limited to certain manufacturers, such as Huawei, ZTE, and Kaspersky Lab.
To our knowledge consumer-grade Wi-Fi routers available in the US are manufactured nearly exclusively in China, Taiwan, and Vietnam. These include popular home networking products by major Wi-Fi router brands such as NETGEAR, TP-Link, Google Nest, eero, Ubiquiti, and many others.
If one is to take the FCC’s blanket ban at face value it would mean that all of the above vendors will somehow be required to move production to the US in order to continue to offer state-of-the-art Wi-Fi routers and mesh (note however that all currently FCC authorised products are exempted from the ban). Foreign manufacturing cannot easily be relocated since it is typically based on long-term contracts with foreign manufacturing entities. Such contracts will be costly to terminate.
Moving Wi-Fi router production to the US will entail massive investments in new manufacturing plants. These are costs that ultimately will be passed on to consumers – and by the way, is assembly enough or what constitutes manufacturing in this case? It is also likely that the demand for newer and more costly routers will be reduced simply because of their higher price tags. This would damage the revenues of – for example – major US networking companies such as eero, Google Nest, NETGEAR, and Ubiquiti. In fact, their business models may be entirely upended by this ban – at least in the short term.
Add to this a long list of unanswerable questions. What if a company decides to invest massively in router manufacturing plants in the US – only to see the politics change once again? Will the blanket ban set off retaliatory measures by China and others on US-manufactured products? Why did the FCC not also choose to ban foreign manufacturing of enterprise-grade routers? FCC and the White House may inadvertently have opened Pandora’s Box.
And what about stifling innovation and productivity? It is likely to take years for Wi-Fi router manufacturers to establish US-based manufacturing. In the meantime rollout of the latest Wi-Fi technology will basically end since new products cannot be launched. This could be devastating to the US’ leadership position in home networking technology. The move also plays heavily into the hands of operator-provided Wi-Fi routers and mesh since these appear not to be covered by the ban nor is enterprise-grade equipment. Perhaps consumers will begin buying SMB enterprise Wi-Fi kits for their homes in order to enjoy the latest technology.
One thing is for sure: The White House and the FCC have unleashed a litany of knock-on effects (many of them hard to predict) that will damage the Wi-Fi industry writ large – and hike connectivity prices for consumers and small businesses. Wi-Fi innovation and evolution will be severely hampered. It is very hard to see how this will benefit anyone at all. It is a very, very high price to pay for hypothetical security risks, which – even if they do exist (which we doubt) – in the end may not be mitigated at all.
/Claus.
