Government shutdown delays launch of new tech products

Tech lovers may see fewer cutting-edge gadgets hitting the market in the next few months.

That's because the Federal Communications Commission, the Food and Drug Administration and other US agencies that certify the safety of consumer-electronics devices are closed due to the government shutdown, now in its 21st day.

And if the government doesn't reopen soon, the shutdown could also affect the rollout of the next generation of wireless networks, built around 5G technology that promises to make them significantly faster and more responsive.

Trade group the Telecommunications Industry Association, which represents makers of telecom gear, said Friday that the shutdown is slowing the introduction of new connected devices that need certification from the FCC and that the closure could ultimately hamper 5G deployments.

The shutdown "comes at a vital moment when the US is competing to stay ahead of the world in the race to 5G," said TIA Government Affairs SVP Cinnamon Rogers. If companies can't get their required FCC thumbs-up, there'll be a "serious and negative impact on the approval of new connected devices that are designed to enable both 5G deployment and the full ecosystem of next generation technologies that 5G will support," he added in a statement.

The partial shutdown, which began Dec. 22 after the House of Representatives and Senate failed to come to agreement on President Donald Trump's demand for $5 billion to fund work on a border wall, doesn't look to be ending anytime soon. Neither congressional Democrats nor Trump show signs of caving to the other's demands.

The impasse is having real economic consequences for 800,000 federal workers, who on Friday didn't receive their first paycheck since the shutdown started. But the ripple effects are now starting to be felt more widely, including in the tech industry, where some device makers are being forced to put product launches on hold.  

What's being hit by the shutdown

The FCC officially ceased most operations Jan. 3 but kept some going, such as work on the 5G spectrum auction currently underway. But the agency furloughed more than 80 percent of its staff and shuttered several databases used by certification bodies authorized to work with product developers and labs.

The FCC requires most new devices that emit radio frequency energy to be certified to ensure that the energy doesn't harm humans or interfere with other products or services that use radio spectrum. Almost all the actual testing is outsourced to FCC-authorized companies or Telecommunications Certification Bodies. For many products, though, the FCC must provide the final sign-off.

When the agency detailed its plans for the shutdown, it spelled out that these third parties wouldn't "be able to upload applications for equipment authorization or issue grants of certification," because they'd lack access to the necessary database.

"Any product with a transmitter in it is not getting certified until the shutdown ends," said Ron Quirk, an attorney heading up the IoT practice for Marashlian & Donahue PLLC. "And if it's not been certified by the FCC, manufacturers and equipment suppliers can't sell it, or even market it, in the US."  

What kinds of products are we talking about? Think new phones, tablets, Wi-Fi routers and a host of internet-of-things gadgets, like the net-connected ball that watches your pets, the connected sensors for your home water system to combat leaks and waste, or the $400 internet-connected juicer.

And it's not just FCC-certified devices. The shutdown could also impact some consumer-electronics products that're considered medical devices and thus need approval from the FDA. That includes health care devices shown off at CES 2019 in Las Vegas this week: things like DIY sonograms, watches that measure your blood pressure, or vests that alert patients they're in heart failure.

It's unclear how many consumer-electronics products may be affected by the closure, since it's hard to know where specific companies and devices were in the approval process when the shutdown started. Neither the FCC nor the FDA returned calls seeking comment.

But the list of new IoT devices needing FCC approval alone could be in the thousands, considering the number of new gadgets expected to flood the market over the next few years. In 2017, there were 8.4 billion connected devices. The volume should hit 20.4 billion by 2020, according to analyst firm Gartner.

FCC Commissioner Jessica Rosenworcel took to Twitter to comment on the sweeping effects of the shutdown on equipment makers.

"Go ahead, take a look at the back of the nearest electronic device," she wrote in her tweet. "You'll see an [FCC] number. The agency certifies every innovative mobile phone, television, and computer that emits radio frequency before they can head to market. Guess what is not happening during the shutdown?"

The FDA's policy for device certification during the shutdown is somewhat different than the FCC's. The agency has said it'll still continue to process applications submitted before the shutdown took effect, but it won't process any new applications. Still, attorneys from the law firm Hogan Lovells, who shepherd clients through the FDA approval process, say the backlog that's growing during the shutdown will be a problem once the government reopens.

"Depending on the length of the shutdown, medical product centers may well be looking at a sizable backlog of applications to triage when the agency is fully operational again," they wrote in a blog last month. "Thus, if the current shutdown persists, industry should anticipate that certain agency delays will likely continue for some time."

Smaller companies to feel the heat

Experts also point out that it's smaller startups, rather than huge tech companies, that'll suffer the most from the shutdown.

"It's companies focused on creating a 'unicorn' business around one or two key innovative products that will be affected most," said Marc Martin, a partner at Perkins Coie LLP, who heads the firm's communications industry group. "They don't have a vast array of products in the market to keep them going."

By contrast, companies like Apple, Samsung, and Sony might not be happy about putting their plans on hold, but delaying a product launch by weeks or even months "isn't going to bring down their business," Martin said.

Still, Martin and Quirk say their clients aren't freaking out just yet. The timing of the shutdown, over the holidays, has likely softened the blow, since it's typically a slower period. But concern is growing.

"It's one thing if the shutdown lasts a few weeks," Martin said. "Everyone can take some delay in stride. But if it goes on another month or two months, I'm going to be getting some angry calls."

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