March 2011

It's the Silicon Valley hiring boom being felt all over California. C

alifornia added nearly 100,000 new jobs in February, and the state's unemployment rate dropped by two-tenths of a percentage point, to 12.2% from 12.4% in January, in part led by a hiring surge in high tech, the California Economic Development Department reported. Top technology companies are competing fiercely for engineers, designers, computer scientists, data crunchers and other workers with specialized technical skills. But the hiring frenzy has also begun to reach workers with other kinds of skills. Internet search giant Google gave all of its 24,000 employees a 10% raise this year. And it announced in January that 2011 would be its biggest hiring year ever. Google does not disclose specific hiring numbers, but its previous biggest hiring year was 2007, when it added nearly 6,200 people around the globe. Facebook has more than 2,000 employees, 1,400 of whom are in Palo Alto, and it's growing at a rate of about 50% a year. Popular social gaming company Zynga, which has more than 1,500 employees, expects to double that number in the next year. The San Francisco company is on a hiring streak: Zynga has hired 224 people in California so far this year, and it hired 563 last year.

In a report released March 25, the Treasury Department said the Obama Administration's proposal to expand, simplify and make the research-and-development tax credit permanent would pour roughly $106 billion into the private sector over a decade.

The credit would support nearly 1 million domestic jobs and that it should survive any overhaul of the corporate tax code. The study also asserted that the R&D credit currently creates a dollar-for-dollar boost in research spending, and that making the credit permanent would have at least that same effect. “Research shows that the R&D credit is a cost-effective way to encourage research,” the report says. “However, uncertainty about the future availability of the credit diminishes its incentive effect because it is difficult for taxpayers to factor the credit into decisions to invest in research projects that will not be initiated and completed prior to the credit’s scheduled expiration.” The R&D credit is scheduled to run through this year, after being retroactively extended during last year’s tax-cut compromise. In all, it has been extended 14 times in its roughly three decades.

Federal Communications Commission Chairman Julius Genachowski spoke at the Aspen IDEA Project in Brussels, Belgium on March 24 about the benefits of cloud computing.

Information is a form of capital, he said. As barriers to accessing funding prevent entrepreneurs, wherever they are, from starting the next great cloud computing company, barriers to accessing information prevent innovators, wherever they are, from growing cloud computing companies, improving productivity, growing GDP, and creating new industries, jobs, and opportunity. How do we begin to address these barriers? One way is to identify the inputs that make communications networks with freely flowing information possible.

They are:

• Robust backbone and middle-mile networks that can handle heavy data backhaul loads;
• Last-mile broadband-wired or wireless-that reaches every citizen;
• Spectrum for mobile broadband, so people can access the cloud wherever they are;
• Interconnection among networks; and
• Public policies that don't inhibit-and indeed facilitate-data flows across international borders.

But he identified five challenges faced worldwide in the provision of each of those inputs: a global broadband availability gap, a global broadband adoption gap, a looming global spectrum crunch, a privacy and security gap, and a regulatory gap.

Earlier this year Republicans on the House Commerce Committee sent Federal Communications Commission Chairman Julius Genachowski a letter warning the FCC to not take any action on proposed data roaming rules without first answering the Members' concerns about the FCC's authority to do so.

On March 17, Chairman Genachowski answered saying that for nearly 30 years the FCC has required roaming in one form or another to "continue to foster the development of seamless automatic roaming services for all [ ] subscribers in the nation." He said he believes data roaming arrangements are best negotiated between mobile providers in light of commercial considerations. Accordingly, he does not support a common-carriage mandate for data roaming. But FCC staff has recommended that a data roaming rule is necessary to ensure vibrant competition in the mobile marketplace, to unleash billions of dollars of investment that is currently sidelined, to create thousands of new jobs and to meet the consumer demand for seamless nationwide coverage, be it for voice or data. The FCC will vote soon on rules that require a facilities-based provider of commercial mobile data services to offer roaming arrangements to other such providers on commercially reasonable terms and conditions, subject to various limitations designed to account for and protect the legitimate interests of the companies that would be providing roaming.