President Trump declared Friday he wants private companies, not the federal government, to take the lead in building America’s 5G telecommunications network. “In the United States, our approach is private sector-driven and private sector-led,” he told reporters in a White House appearance alongside Federal Communications Commission chairman Ajit Pai.
Trump’s statement was billed as an effort to promote a new spectrum auction and the allocation of new funds for bringing faster Internet service to rural areas. But, as Fortune‘s Aaron Pressman reported yesterday, both initiatives were old news; Trump’s real aim was to squelch a well-funded lobbying effort to get the government to build the 5G network and lease it to private carriers.
Politico offers a concise primer on the warring factions in the U.S. 5G debate. On one side: Pai and White House economic adviser Larry Kudlow, who say building out the new high-speed network should be left to telecommunications giants like AT&T and Verizon. On the other: a coalition of Trump loyalists including Newt Gingrich and Trump’s 2020 campaign manager, Brad Parscale, who argue that, to ensure the U.S. doesn’t fall behind China, government must seize the initiative in developing 5G.
The Gingrich-Parscale camp touts a plan for the government to share 5G airwaves, via a third-party operator, with wireless companies on a wholesale basis. Backers of that approach, per Politico, “include Rivada Networks, a politically connected firm backed by Trump ally and venture capitalist Peter Thiel that counts GOP operative Karl Rove as an investor and adviser.”
The Gingrich-Parscale plan is a modified version of an idea floated in a U.S. National Security Council memo revealed last year by Axios. The memo advocated federal takeover of the 5G mobile network on the grounds that “China has achieved a dominant position in the manufacture and operation of network infrastructure.” The NSC proposal was “quickly killed off,” according to the Financial Times.
Critics of the Gingrich-Parscale alternative say it smacks of nationalization. AT&T and Verizon, through their trade association, have decried the idea. All four major U.S. carriers are rolling out their own 5G pilot programs, and promise 5G-compatible phones as early this year.
Trump’s comments yesterday appear to clarify which faction he sides with. What’s unclear is whether the market-led approach will enable the U.S. to build out a 5G network faster and more effectively than China.
One prominent skeptic: Democratic FCC commissioner Jessica Rosenworcel, who tweeted Friday: “So far this Administration’s interventions on 5G have done more harm than good.” The Wall Street Journal noted that many Wall Street observers, too, “are skeptical the policies announced Friday would do much to change the daunting math for private-sector companies tasked with building the costly new networks across the U.S.”
A report issued last summer by Deloitte Consulting, summarized here by Aaron, agues China is winning the 5G race. The Washington Post says this report by Cisco Systems offers reasons Americans should “breathe easier” about the competition with China on 5G. Yet another report issued this month by global telecommunications research firm Analysys Mason concludes “the United States is tied for first with China in global 5G readiness.”
About the only thing everyone does agree on when it comes to 5G: the stakes are enormous. More China news below.
Innovation and Tech
Automaker throws shapes. Geely, the Chinese car company that also owns Volvo, launched a new EV brand called Geometry. The company plans to launch 10 EV models under its new brand by 2025 – Tesla, founded in 2003, only offers three models – and claims to have over 26,000 orders for its first marque, Geometry A. Reuters
Layoffs in store. JD.com, China’s second largest ecommerce site, might be downsizing staff. The Information reports the retailer plans to lay off 12,000 employees, which is roughly 8% of its roster. JD.com has refuted the report, claiming it actually plans to make 15,000 new hires this year. Other tech companies, like Tencent and Didi, have been making cuts as China’s tech industry enters a freeze. Fortune
Share and share a like. Xiang Hu Bao, an insurance product from Alibaba affiliate Ant Financial, has racked up 50 million users since launching last October. Anyone aged 30 days to 59 years can join. When a member makes a claim, which can reach a maximum of $45,000, everyone else chips in evenly to cover the payout. Ant hopes to cover 300 million users within two years but says Xiang Hu Bao isn’t an insurance product. If it were, it’d be subject to stricter regulation. Bloomberg
Economy and Trade
Tension in the pension. China’s key state pension fund may run dry by 2035, a think tank has warned, as China shuffles further into its aging population crisis – made worse by decades of a One Child Policy. The urban worker pension fund has a Rmb4.8 trillion ($714 billion) reserve. It’s expected to peak at Rmb7 trillion by 2027 then drop to zero by 2035. South China Morning Post
Go set watchmen. Treasury Secretary Steven Mnuchin says China and the U.S. have agreed to set up “enforcement offices” to monitor the implementation of any deal the two sides strike to end the trade war. Mnuchin declined to comment whether the U.S. would use tariffs as an enforcement tool and keep the $250 billion of levies in place even after an agreement is reached. CNBC
EU cools on China. The EU has taken a tougher stance against China in recent weeks. In March President Macron declared the era of European naïveté in regards to China was over. This week, with Premier Li Keqiang in Brussels for a summit with the EU, the two sides struggled to agree on the text of a joint statement. EU negotiators criticized China for not acting on previous agreements and nearly walked out on talks. Inkstone
In Case You Missed It
Chinese scientists have put human brain genes in monkeys MIT Technology Review
What you may not understand about China’s AI scene MIT Technology Review
Politics and Policy
Protestors punished. Nine key organizers of Hong Kong’s “Umbrella Movement” were this week convicted for their role in the 2014 protests. The nine activists were charged with causing a public nuisance, which could carry a sentence of seven years prison. Supporters of the protests, which called for universal suffrage in local elections, have criticized the conviction as further evidence of Hong Kong’s suppression of free speech and political dissent. The nine convicted will be sentenced in two weeks. South China Morning Post
Ban on bitcoin? China’s state planner included cryptocurrency mining on a list of 450 industries it considers wasteful and hazardous, setting the stage for bitcoin mining to be officially outlawed. Trading cryptocurrency is already illegal in China, yet roughly 70% of the world’s Bitcoin is mined through the country. A ban in China could have knock on effects for the whole industry, but some pundits think it’s not as bad as the headlines say. Wired