Should Trump Nationalize a 5G Network?
No one can accuse the Trump administration of being boring, even when it comes to telecom. According to leaked documents, there is a proposal going around the White House to build a federally owned 5G telecommunications system — the next version of a mobile broadband network — or perhaps even to nationalize the 5G networks that private telecom companies are now building. (5G is the “fifth generation” wireless protocol, which promises to be faster and more secure than its predecessor, 4G, but requires new antennas and cell towers.)
The White House proposal, which at the moment is just an idea, appears driven by concerns about security threats related to China’s development of 5G networks. But the strongest case for building a national network is different. Done right, a national 5G network could save a lot of Americans a lot of money and revive competition in what has become an entrenched oligopoly. Done wrong, on the other hand, it could look like something out of Hugo Chávez’s disastrous economic playbook.
Americans spend an extraordinary amount of money on bandwidth. The cable industry is the worst offender: Since cable providers have little effective competition, cable bills have grown at many times the rate of inflation and can easily reach thousands of dollars per year. Mobile phone service is not exactly a bargain, either. And with plans to connect cars, toasters and pets to the internet, broadband bills may continue to soar.
These bills, collectively, function like a private tax on the whole economy. Could a public 5G network cut that tax?
A national 5G network would be a kind of 21st-century Tennessee Valley Authority. The government would build or lease towers across the country, prioritizing underserved areas, and set up a public utility that sold bandwidth at cost. This cheap bandwidth would be made available for resale by anyone who wanted to provide home broadband or wireless, thus creating a new business model for small local resellers.
The new competition might save people money in a few ways. First, it could create price competition for the four national carriers (Verizon, AT&T, T-Mobile and Sprint). More important, it could do the same for cable broadband, whose providers face minimal competition in most areas. And it might give small telecom businesses a new lease on life. As a result, prices could be cheaper and jobs could be created.
As with any public infrastructure, the case for it is strongest if private industry won’t build it and the public benefit is considerable. The case for public roads rests on the assumption that private industry won’t build roads that reach the whole country. In telecom, we see a similar pattern: Companies like Verizon have been happy to build fiber-optic or 4G service in cities like Boston and New York but are less excited about doing so in poor and rural America.
But the case for a national 5G network comes with two major caveats. First, it has to be done right: A strongman approach — nationalizing AT&T’s and Verizon’s nascent networks instead of building new ones — is too Chávez-esque. Seizing private assets in peacetime without good reason sets a dangerous precedent. And you don’t need to be paranoid to fear the combination of the world’s largest government and largest telecommunication companies. Any federally owned 5G network would need to have privacy protections and be as separate from the political branches as possible.
The second caveat is that while the government can be good at building things, its management record is less inspiring. Any national network it builds should be government-owned for its first decade or so, and then sold off to the highest bidder.
The idea of “Trump 5G” has come as an unwelcome shock to the major telecommunications firms and their allies. Ajit Pai, chairman of the Federal Communications Commission, warned that “any federal effort to construct a nationalized 5G network would be a costly and counterproductive distraction” from winning “the 5G war.” Presumably, he doesn’t mean that competition is bad, but that a plan for nationalization will cause private industry to stop investing in its networks. Fair enough. But the economy has countless other areas in which private and public programs compete, and the key question is how considerable the loss of private incentives would really be, and whether the public benefits compensate for it.
That’s a tough call. But if winning the 5G war is the F.C.C.’s priority, a federal network might be how we get 5G to more citizens more quickly. It is surely a crazy idea, but we live in crazy times, and if done right, it merits serious consideration.
Tim Wu is a law professor at Columbia, the author of “The Attention Merchants: The Epic Struggle to Get Inside Our Heads” and a contributing opinion writer.
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