5G Networks vs 1850 Railway Land Grants

5G: How to Beat China in the Race

Quite the brouhaha has erupted since Axios released an anonymous report written by a National Security team member who recommended that the federal government pay for and build a single, 5G wireless network to counter China spying on phone calls – and to enable a secure pathway for new technologies like self-driving cars and virtual reality, and even “true AI-enhanced networked combat.” The memo went on to state this federally-financed “moonshot” project could resemble that of the 1950s-era national interstate system.

What it could have referenced was an even earlier “moonshot” project that the government helped finance: the Transcontinental Railroad. In the 1850s a Congressional Committee reported, “The necessity that now exists for constructing lines of railroad and telegraphic communication between the Atlantic and Pacific coasts of this continent is no longer a question for argument. . . In order to maintain our present position on the Pacific, we must have some more speedy and direct means of intercourse than is at present afforded.”

However, instead of going into the railroad business itself, wise lawmakers opted to issue government bonds that enabled the government to pay the railroads on a “per mile” basis, and also provide about 180 million acres of public land to “land grant railroads.” The land was sold to finance the railroad companies’ construction. And, (ultimately) that’s how the West was won.

Fast forward to one of today’s hottest issues: federalizing 5G. Not surprisingly, the response from the communications industry to the Axios “report” was soundly negative. According to the FCC, carriers have already spent billions of dollars acquiring spectrum and beginning to develop and test 5G networks, which are expected to be at least 100 times faster than the current 4G and cut latency to less than one-thousandth of a second from one one-hundredth of a second in 4G. And, according to Accenture: “America’s wireless companies stand ready to invest $275 billion into building these next-gen 5G networks, creating 3 million new jobs and adding $500 billion to the economy. In fact, roughly 1 out of every 100 Americans will benefit from a new 5G job.”

Perhaps more surprising was the off-the-record response from “members of the Trump Administration,” who said “the document Axios saw was dated, and that it wasn’t a seriously considered proposition. The National Security Council doesn’t oversee broadband deployment, and there’s no way this would get past the FCC, which . . . would likely be united in opposition to such a strategy.” (With 2 million civilian federal workers, and nearly 10 million in the “blended federal workforce” – including contractors, military, and postal workers – there are plenty of people in “the Administration” to pick from.)

Indeed, the Chairman of the Federal Communications Commission, Ajit Pai – has been soundly negative. Originally appointed to the Commission by President Obama in 2012, and designated Chairman by President Trump in January 2017, with the exception of a short stint as Associate General Counsel at Verizon (2001-03) and a year in in the Communications practice of a Washington law firm, Pai’s 21-year career has been spent in government service since graduating from Harvard, then University of Chicago, with his law degree. Upon taking office in 2012, he stated (on the record) three basic principles to which he felt the FCC should adhere “to help promote economic growth and enhance job creation information and communications technology field: (1) the FCC should be as nimble as the industry it oversees; (2) the FCC should prioritize the removal of regulatory barriers to infrastructure investment; and (3) the FCC should accelerate its efforts to allocate additional spectrum for mobile broadband.” He’s also a fan of net neutrality, but not for the federal government building and operating a national 5G network. As he said on Monday:

“The main lesson to draw from the wireless sector’s development over the past three decades – including American leadership in 4G – is that the market, not government, is best positioned to drive innovation and investment. What government can and should do is to push spectrum into the commercial marketplace and set rules that encourage the private sector to develop and deploy next-generation infrastructure. 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.”

So what can the government do that will help propel America’s chances of “winning the race to 5G” and make its rapid development a national priority? According to Meredith Attwell Baker, CEO of the communications industry’s trade group, CTIA, these are two ways only the federal government can help:

Modernize Rules & Regulations: Tomorrow’s 5G networks that rely on small cell antennas the size of pizza boxes shouldn’t be governed by the same rules as yesterday’s 200-foot cell towers. Every level of government should modernize their rules for the deployment of modern wireless infrastructure.

Spectrum Availability: Freeing up new airwaves will help carriers meet America’s mobile needs today and tomorrow. (Mobile data usage has spiked more than 200% in the past two years and will grow 5-fold by 2021.)
One of the reasons the federal government had to step in to help finance the railroads was that banks viewed the Transcontinental Railroad project as too risky. And, the one thing the government had was plenty of vacant land. In the end, four out of the five transcontinental railroads were built with help from the federal government.

Today, it’s not land the telcos need, it’s Spectrum and Regulation Modernization. With the contribution of these two elements, the federal government could take pride in playing a significant role in enabling America to win the 5G race – without building a nationalized telecommunications business itself.

Mimi Grant, President, Adaptive Business Leaders (ABL) Organization – Round Tables and Events for CEOs of Technology and Healthcare Companies