Why would the US consider nationalising 5G?

Business news | January 29, 2018

By Wisse Hettinga

Wireless Communications

To back up their claims, Axios obtained a powerpoint presentation and memo produced by a senior National Security Council official.

According to Axios, the documents lay out two paths, the first is for the US government to build a centralised 5G network within three years and rent it out to service providers, the second is for wireless companies to build their own networks and compete with each other but have to adhere to US standards that dictate what equipment to use and on how it is installed.

However, if the stated aim is to protect the network against China, the first option would be quite likely as wireless providers would most likely source equipment that meets global standards of which China plays a big part, if not a dominant role.

The second option is what is already happening with the exception that providers are free to source equipment globally. Wireless providers are already in a competitive race to implement 5G and gain market share. However, the better second option could be mitigated in terms of security by excluding Chinese products and setting standards for the USA and its allies. This presumes other countries would want to sign up.

There are significant problems to a purely government run 5G network.

There is an issue of trust as users data can be spied on by any government agency, much like the fear before the advent of mobile that companies like AT&T were working with government to log and store voice calls. The network might be secure from China, though this would be debatable as governments globally already have a poor record when it comes to data security, but it would potentially hand the US government a lot of control over user data and access. Would international companies pull back from the US due to data protection concerns, especially if they could not encrypt their data. Even if the US run 5G network used encryption, government agencies would have the keys. Certainly, international companies in China are wary of the Chinese government and its potential ability to access their data.

Such a project would be huge government infrastructure project subject to the usual cost and time overruns associated with so many government run projects. It is entirely possible that the outcome would be very different than envisaged. The project would not be market driven, killing innovation and potentially missing out on new possibilities. Wireless expertise would need to be acquired and it is not given that such a project could attract the right people. The wireless industry has boomed over the last two decades driven by collaboration, standards and openness. Does anyone remember, in many countries, waiting months for a landline telephone in the seventies and eighties when many telecommunications companies were government owned.

5G as a technology is also in a rapid state of flux, could a US Federal effort to build a 5G network be flexible enough to keep abreast? There is precedent with the military where consumer mobile phone technology outpaced military radio to such an extent that soldiers relied on mobile phones to communicate in Middle East around the time of the second Iraq war. If this comes to fruition, expect the rest of the world to move on and advance more

Nationalisation would lead to stifled innovation and countries such as China would get even further ahead. The approach seems to be blatant attempt to take control of the communications system. However, the second approach that sets standards and requirements would divide the world but keep the networks privately run – akin to industrial protectionism practiced by many countries including China and the EU.

Though it is debatable that Chinese Telecommunications companies are truly private they tend to operate like private companies, but with the benefits of government support at critical times and with R&D. Might, it not be better for other countries to support R&D and encourage a startup culture to compete with China, rather than try and shut down the market to private enterprise through nationalisation. Afterall, China appears to be replicating the success Europe developed with the GSM standard, which came to dominate mobile in the nineties, through support, standards and R&D.