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Gadgets Stuck in Shutdown Pipeline Portend Possible Delay

Device makers such as Google Inc. (GOOG) may have to delay introductions of new smartphones and other products because the partial U.S. government shutdown halted certifications that the gadgets don’t cause interference.

Computers, mobile phones, gaming systems, TVs and wireless medical devices that emit radio waves need to pass a review by the Federal Communications Commission. The FCC clears about 16,000 electronic devices annually, according to figures presented last month to U.S. lawmakers by Jessica Rosenworcel, an FCC commissioner.

That output is now at zero, and it “could be something that’s a real drag on the digital economy the longer it goes on,” Rosenworcel, a Democrat, said in an interview.

The FCC furloughed 98 percent of its staff and closed most of its operations Oct. 1 as agencies shut down with Congress unable to agree on spending. Lawmakers yesterday discussed a proposal to defuse a parallel disagreement on the U.S. debt ceiling that didn’t include language to reopen the government.

The agency may become backed up once it resumes operations, creating the potential for delays in the introduction of devices from Google, Apple Inc. (AAPL), Samsung Electronics Co., HTC Corp. (2498) and LG Electronics Inc. (066570), law firm Hogan Lovells said in an Oct. 9 note.

“Increasingly it’s going to have an impact on the widely known and available consumer products, depending on how long the shutdown lasts,” Michele Farquhar, a Washington-based partner with Hogan Lovells, said in an interview.

Devices Sitting

Companies rely on private test laboratories for much of the certification and need the FCC for final approval, said Farquhar, a former wireless bureau chief for the agency. Products that need approval include smartphones, tablet computers and laptops, she said.

“The longer the shutdown continues, the greater the risk that new devices will sit in warehouses and shipping containers unassembled or pending final design approval,” Hogan Lovells said in its note.

Companies have accelerated electronic product introductions in recent years, with applications at the FCC increasing by 400 percent over the past 10 years, according to Rosenworcel’s testimony to Senate appropriators.

Products typically are planned a year in advance, and devices intended for sale during the fourth quarter that includes Christmas sales normally clear the FCC’s process by June or July, Bruce Franca, a former official in the agency’s Office of Engineering and Technology that vets electronics, said in an interview.

No Impact

Shari Yoder Doherty, a spokeswoman for Mountain View, California-based Google, declined to comment, as did William Moss, a spokesman for the company’s phone-making Motorola Mobility unit. Kristin Huguet, a spokeswoman for Apple, declined to comment.

Some Asia-based electronic-device manufacturers said the shutdown so far hasn’t hindered their U.S. business. “There is no indication of major impact on Sony’s operation from the U.S. FCC shutdown so far,” Tokyo-based Sony Corp. (6758) spokeswoman Misato Suzuki said in an e-mail.

“ZTE’s business in the U.S. isn’t affected,” said David Dai, spokesman for Shenzhen-based ZTE Corp. (000063), China’s second largest maker of equipment for phone networks.

Angela Lee, a Hong Kong-based spokeswoman for Lenovo Group. Ltd. (992), the world’s largest PC maker, said there has been no impact yet on approvals for new devices. “Moreover, Lenovo has a strong and growing business in the federal sector, and we have not seen any impacts due to the shutdown at this time,” Lee said in an e-mail.

Scott Sykes, spokesman for Shenzhen-based Huawei Technologies Co., China’s largest maker of equipment for phone networks, declined to comment on the impact of the shutdown.

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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