Several major companies are in the process of building the next-generation 5G cell networks, but Axios reports that the Trump administration is considering essentially nationalizing the entire thing. That may or may not be a good idea, but it clearly runs counter to the prevailing Republican ideology.
Axios reporters got their hands on a Powerpoint presentation and a memo from a “senior National Security Council official” advocating such a takeover. Those documents argue that it is necessary to do so in order to protect against Chinese interference and dominance of the cell technology sector, though it doesn’t make clear why a single network controlled by the federal government would help in those areas.
The main points: The documents say America needs a centralized nationwide 5G network within three years. There’ll be a fierce debate inside the Trump administration — and an outcry from the industry — over the next 6-8 months over how such a network is built and paid for.
Two options laid out by the documents:
- The U.S. government pays for and builds the single network — which would be an unprecedented nationalization of a historically private infrastructure.
- An alternative plan where wireless providers build their own 5G networks that compete with one another — though the document says the downside is it could take longer and cost more. It argues that one of the “pros” of that plan is that it would cause “less commercial disruption” to the wireless industry than the government building a network.
Between the lines: A source familiar with the documents’ drafting says Option 2 is really no option at all: a single centralized network is what’s required to protect America against China and other bad actors.
- The source said the internal White House debate will be over whether the U.S. government owns and builds the network or whether the carriers bind together in a consortium to build the network, an idea that would require them to put aside their business models to serve the country’s greater good.
State and local governments would also object because it would infringe on their authority to make determinations about where and when to expand local infrastructure for such things. And the FCC itself would likely oppose it (the FCC is an independent body within the executive branch and, despite having members appointed by the president, have shown no reluctance to buck the wishes of any president). For that matter, we have no idea what Trump himself thinks about it, but he’s shown himself to be an opponent of most government intervention in markets.
And it isn’t clear that this would actually make the network more secure. Even if the federal government controlled the entire 5G network infrastructure, that would still be tied in with older networks and contact points. A chain is only as secure as its weakest link, as the old saying goes. There would still be multiple vulnerabilities to be exploited. Nor is it clear that this would do anything to break Chinese dominance of the cell technology industry. Indeed, this is where free markets really are better — they really do spur technological innovation. I’m all for government supporting that with a range of possible investments, but competition does create more innovation than letting the government control an entire sector.