Nationalizing 5G Is Not the Way to Win

Nationalizing 5G Is Not the Way to Win
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A bold article published by Axios two years ago that included leaked documents by a senior National Security Council official recommended a government-operated 5G network as a solution to win the 5G race. The idea of a government-built 5G network was met with loud resistance from industry experts. Back then, the idea did not go anywhere, as wireless providers had already spent billions to acquire spectrum and deploy 5G, with some of them already having 5G trials in operation.

Yet, the idea of nationalizing 5G seems to be resurfacing again, and this time with more thunder. The Department of Defense (DoD) recently published a Request for Information exploring ways in which it can own and operate a 5G network. The RFI comes as the DoD expands 5G testing and follows a recent spectrum sharing deal.

With the DoD looking to drive the development and adoption of 5G for military purposes, the voiced justification for nationalizing 5G has a specific security and economic component: winning the 5G race.

As politicians seek a Kumbaya moment in 5G, the answer does NOT lie in interfering with market competition. There is no evidence suggesting that the government is better positioned than the market to drive investments and innovations in this critical technology; and there is plenty of evidence that government provision of broadband costs twice as much as the private provision would cost.

A recent market analysis by Boston Consulting Group finds that U.S. telecom and technology companies spent a total of more than $130 billion on research and development (R&D) in 2018. Comparatively, on a global scale, U.S. companies spend 7.2% of revenue on R&D, compared with 1.7% in Japan, 2.6% in China, 3.6% in Germany, and 5.6% in South Korea.

While the costs of rolling out 5G are high, so are the benefits. 5G is expected to offer unprecedented bandwidth, speed, and capacity that are vertical for several emerging technologies including, but not limited to, autonomous vehicles, manufacturing automation, and remote healthcare services.

While the intent is clear that the government wants to reap some of these benefits, the big question is HOW would it pay for it? How will the government find the hundreds of billions of dollars needed to deploy and maintain a 5G network nationwide? It would most probably further burden the taxpayers.

The idea of a nationalized 5G network is not only unrealistic, but also unwise. Members of the House Energy and Commerce Committee, as well as several senators have come out strongly against this idea and warned that this would only further complicate the progress done so far by the Federal Communications Commission (FCC) and the National Telecommunications and Information Administration.

Wireless broadband deployment is one of the FCC’s highest priorities and the FCC’s chairman has echoed the concerns of a proposed nationalized 5G network, emphasizing that “the market, not government, is best positioned to drive innovation and investment.” He added that “any federal effort to construct a nationalized 5G network would be a costly and counterproductive distraction from the policies we need to help the United States win the 5G future.”

China has already assessed the economic potential of 5G networks. A Brookings report shows that China has reported more than 200 million 5G subscribers before the full deployment of the technology and anticipates growth of at least three million jobs over a five-year period. More concerning, China has outspent the United States in wireless communications infrastructure, all while the U.S. has lost some time in its attention to a range of regulatory and legislative directives that have constrained activities.

If the U.S. government fully appreciates and seeks to maximize the economic opportunities associated with 5G, then no persuasion should be needed to understand that prioritizing a government-owned 5G network does exactly the opposite for consumers.

Dr. Krisztina Pusok is the director of policy and research at the American Consumer Institute, a nonprofit educational and research organization.

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