By Clay Chandler and Eamon Barrett
April 13, 2019

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.

Clay Chandler


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