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Thursday, October 8, 2020

ANALYSIS/OPINION:

Government officials have been exploring the concept of creating a nationalized 5G network that would be shared between the private sector and the Department of Defense. On Sept. 18, the department issued a request for information on that very prospect. This should come as no surprise, since the military has a near-monopoly of the crucial mid-band spectrum needed for 5G development. 

Of course, they’re trying to preserve their control over that part of the spectrum. But if they do, then the U.S. could very well lose the race to 5G — and that wouldn’t bode well for us. After all, the stakes in our competition against Communist China are high.  


The switch from a private management of telecoms to a nationalized version for 5G would be far from smooth. For example, the costs alone in time and money would be enormous. Going through such a process would likely have a price tag of tens of billions — money that would suddenly need to come from taxpayers. To make matters worse, the Treasury loses the funds they would otherwise gain from the Federal Communications Commission’s traditional method of auctioning off the spectrum to the highest bidder.

The government would have the responsibility of re-creating the same networks developed and deployed by private carriers today, which is something they’d likely be very bad at. That’s not to mention the time it would take to build and deploy thousands of new towers and microcells. The years required for this project virtually all but guarantee the country does not win the race for 5G in the process.

America is a country that takes a vastly different approach to infrastructure investment than its counterparts, allowing for significant private investment in the deployment of broadband. While the significant funding efforts from China might make some think we ought to do the same in the U.S., it’s important that we don’t stray away from what has made us successful in the past. The U.S. operates best when private investment and competition are happening from telecom companies fiercely competing with one another, creating new and higher quality goods and services that benefit consumers. 

One of the arguments for nationalizing 5G networks is a false perception that the private sector is simply not willing or has the capacity to do this endeavor. That’s simply incorrect. In 2020, it’s projected that telecom companies will have spent $1.6 trillion globally on infrastructure. With a market that’s projected to produce more than $13 trillion of economic activity by 2035, there’s plenty of incentive there to make sure that private development of 5G networks continues at a steady pace. There’s more to be done, but our work thus far is truly remarkable.

National security, of course, also comes into play. With China’s aggressive moves in the 5G arena with Huawei posing potential national security risks, some would posit that it might be best to try and bring the development within 5G in house to mitigate the potential risks from China. Yet, this argument comes up short.

First, the government would end up needing to buy the same equipment to run the 5G networks that the telecom companies are already using. Public spending drives away private dollars that otherwise would have been dedicated to those technologies, essentially crowding out future private investment in 5G network management and potentially even technologies. 

Additionally, swapping ownership formats from the private sector to the public does little to actually improve the security of the network. In fact, it might put security at further risk. It has always been poor policy to have such networks honey-potted into one central location. Multiple private competing networks make the task of compromising networks for nefarious actors like China significantly more difficult. 

The reality is that there is no need for the government to own and control its 5G network to effectively mitigate the risks posed by China. The FCC has already taken action to address some of these security concerns, anyway. The agency issued notice over the summer prohibiting the use of federal dollars to purchase equipment from Huawei and ZTE, both Chinese companies, deeming their hardware a security risk to the communications infrastructure. 

Right now, support for nationalization seems minimal enough — President Trump, Larry Kudlow, members of Congress from both parties, and other executive agencies like the FCC, have all expressed opposition to the proposal — but it’s certainly not extinct. It’s critical to have an honest conversation about these issues to ensure the country does not stray off course. America has experienced some of the best technological advances because it allows for the private sector to take the charge. As we approach the final leg in the race for 5G, we can’t afford to change course.

CORRECTION: An earlier version of this opinion piece incorrectly stated the position of Newt Gingrich, former speaker of the House. Mr. Gingrich has called for a public-private partnership to quickly build a real 5G network that is carrier-neutral and wholesale only, allowing both existing industry players and new, entrepreneurial startups to get in the game.

• James Czerniawski is the technology and innovation policy analyst at the Libertas Institute, a free-market think tank in Utah, and an associate contributor for Young Voices. Follow him on Twitter @JamesCz19.


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