American leadership in 5G technology would appear to be right in President Trump’s sweet spot: It pits the United States against China, “America First” economics over globalism, and free markets vs. Big Tech.
But Trump’s unorthodox leadership style and eclectic policy mix have open-market advocates worried he may embrace a plan for nationalized 5G during his final days in office.
At issue is a valuable, 5G-friendly swath of the broadcast spectrum currently controlled by the Department of Defense. For years, Washington has been debating how to get some of that bandwidth out of the Pentagon and into the commercial space. The Defense Department is prevented by law from profiting from it, and it’s technologically tricky for them to share it with the private sector. So the assumption was the federal government would hold another spectrum auction and sell off part of that mid-band spectrum capacity.
Enter Rivada, a tech company with a plan to “wholesale” the spectrum on behalf of the government, and a lot of influential political friends. Among them are George W. Bush strategist Karl Rove, former Speaker of the House Newt Gingrich and venture capitalist Peter Thiel, a close Trump ally. Also on board, one of the biggest of Big Tech players, former Google CEO Eric Schmidt.
On Monday, Gingrich was one of eight Trump loyalists named to the Defense Policy Board, which advises the Pentagon on policy issues.
Rivada argues that direct government involvement is the best way for the United States to compete with China. Their opponents, including all five members of the Federal Communications Commission, the U.S. wireless industry and free-market economists like Trump adviser Larry Kudlow, vehemently disagree. At stake, they say, is American leadership in the global tech sector.
“Wireless networks are the foundation on which inventions are being created,” said tech expert Roger Entner, founder of Recon Analytics. “We were the first with 4G and now all the cellphones are using American operating systems. That’s no accident. The biggest apps around the globe are American apps. All that happened here.”
And the competition for 5G is more vital and even more fierce, Entner said. To maintain that leadership, American companies need wider access to more of the spectrum, not a wholesaler acting as a market-control chokepoint for the federal government.
Last ppring, Trump appeared to embrace that view, but has more recently given off mixed signals. In October, a group of 19 senators, led by John Thune, R-S.D., chairman of the Senate Commerce Subcommittee on Communications, Technology, Innovation and the Internet, sent Trump a letter urging him to reject the “government wholesaler” model.
“Nationalizing 5G and experimenting with untested models for 5G deployment is not the way the United States will win the 5G race,” the senators wrote.
It is Schmidt’s support, however, that has raised the most eyebrows from free-marketers. Google is the ultimate Big Tech brand and has not been shy about advocating scale over competition. In 2016, he was appointed to the Obama-created Defense Innovation Board, a partnership between Big Tech and the U.S. military. He used that access to push hard for a corporate, top-down approach to tech, 5G in particular.
Outgoing FCC chief Ajit Pai, on the other hand, makes no secret of his belief that competition among wireless providers, tech companies, etc., will achieve more innovation than government control would.
“We’ve been driven by the engineering,” Pai told Politico regarding his approach to tech regulation. “Not the politics, not the press releases, but what are the facts?”
“That is what 5G leadership is, focusing on the facts and coming up with a solution that delivers better returns on the value to the American people for the resource that belongs to the American people,” Pai said.
Schmidt says America is losing the 5G war to China and, therefore, needs Big Government to swing in action. “We’re definitely playing catch-up,” he said at a tech conference in September. “It’s a national emergency. … I like this notion of sharing the military spectrum.”
Is Schmidt right? Not according to Meredith Attwell Baker, head of the wireless industry group CTIA.
“Over the past four years, the U.S. wireless industry has invested a staggering level of private capital — over $100 billion — to bring 5G connectivity from New York City to Cedar Rapids with a safe and secure supply chain,” she said in a statement. “Our efforts have left countries like China scrambling to catch up. The first U.S. commercial 5G deployments were 13 months before China, and China is still behind seeking its first national network.”
And, she added, a study by the Boston Consulting Group projects 5G will represent three-quarters of U.S. wireless connections by 2025, 15 percent higher than China.
“The U.S. wireless industry is showcasing to the world 5G success does not require Huawei gear,” Baker said.
Entner agrees. “A nationalized 5G network would be five years behind the network that wireless carriers are already building out like mad. And so, what — we will build a nationalized 5G network for five years after the commercial carriers have rolled it out? Who’s going to buy it? So now we’re going to have the government sell directly to customers? That would be fun.”
With billions of dollars at stake, Rivada and its allies aren’t giving up. The military has already put out a request for information on the concept, and some free-market advocates fear that with Trump allies like Gingrich and investor Thiel backing it, the president may sign off on his way out the White House door.
“Having federal agencies become commercial wireless companies either on a wholesale or retail basis would dramatically depart from the private-sector models that have worked so well to make the world leader in the mobile wireless sector,” former FCC Commissioner Robert McDowell said. “In fact, having the government own the means of production is the official definition of socialism. This effort could undermine, not help, the U.S. in the global 5G competition.”
