Why Trump's 5G Plan is More Than a Gift to His Base

The Trump re-election campaign’s wireless open access proposal was a poorly vetted scheme possibly intended to score political points. It was squelched almost immediately after it became public, as shocked White House staff members complained that it contradicted the administration’s support for competing wireless networks. The twist? Open access wireless is actually a terrific idea. Some forward-thinking Democrats and public interest advocates have been pushing it for decades.

The concept, promoted by Republican operatives such as Newt Gingrich and Karl Rove, is for a network supporting fifth-generation (5G) wireless technology to operate on a wholesale basis. Carriers such as AT&T, Comcast and Verizon could buy capacity. So could anyone else: Apple, Amazon, Walmart, Uber or small operators serving rural areas. No company could use exclusive control over spectrum to block competition.

Last year, a leaked National Security Council presentation called for nationalization of 5G networks to improve cybersecurity and better compete against China. The proposal was ignominiously killed and its author left the White House. The Trump re-election campaign’s proposal wisely dropped the government takeover. It shifted the focus to wholesale access, which could be overseen by an independent nonprofit organization, like the independent system operators that manage electricity markets.

Today’s cellphones use fourth-generation wireless technology, or 4G. 5G, a set of standards under development, promises higher speeds, improved coverage and better support for new technologies such as augmented reality, autonomous vehicles and connected sensors in all types of devices. 5G networks require denser construction of towers, reducing the distance between a tower and each device. To make 5G a reality, companies and consumers around the world will have to invest hundreds of billions of dollars over the next decade to upgrade hardware, phones and networks. The countries leading the way could reap huge economic benefits.

The December arrest in Canada of a top official of Huawei, China’s biggest communications hardware provider, raised the stakes considerably. Meng Wanzhou is accused of committing fraud to help Huawei evade sanctions against Iran. The United States is pressuring its allies to ban Huawei from building their 5G networks on national security grounds.

Those moves will not, however, accelerate 5G deployment in the United States. The Chinese government aggressively coordinates and promotes 5G activity, which is proceeding at a breakneck pace. China Tower, for example, added 460 wireless tower sites per day in 2017, more than ten times the rate of American companies, according to a report by Deloitte.

The view of American policymakers, which has been consistent through at least four administrations, is that competition among wireless operators is superior to heavy-handed government initiatives. Nevermind that while American wireless providers have a strong track record on innovation, prices for consumers are high by global standards, and the so-called free market is actually an oligopoly of four major carriers that could soon fall to three.

Way back in 1995, a Columbia University economist, Eli Noam, proposed an alternative: a wholesale spectrum provider that sold capacity to all. Over the next few years, some progressives (myself included) argued that cable broadband networks should be subject to a similar open access mandate. And in 2010, as the Federal Communications Commission developed the National Broadband Plan, a team led by the Harvard legal scholar Yochai Benkler made a detailed case for wholesale sharing. The idea was shot down each time amid furious industry opposition.

Why would the Trump campaign endorse open access? Rivada Networks, a politically connected firm that counts Peter Thiel, a prominent Trump donor, among its investors, appears to be positioning itself for the lucrative contract to provide the technology for such a system. Mr. Trump’s political advisers see the open access plan as a way to improve wireless service in rural areas, a gift to the president’s base.

These motivations should not obscure the value of open access. The communications industry has already shown that a competitive open market sometimes can’t develop without government action. The F.C.C. had to prevent phone companies from squelching internet service providers, and many companies that develop online applications face potential blocking of their services and discrimination by broadband operators.

The primary way the government makes wireless spectrum available today is through exclusive licensing to the highest bidder. That can make it difficult for companies that provide niche services such as telemedicine and smart electric grids, or that serve less populous areas, which the big national carriers often ignore.

Even some architects of the current system are reconsidering. Peter Cramton, for example, helped more than a dozen countries design spectrum auctions. He’s now Rivada’s chief economist. As Mr. Cramton and his co-author, Linda Doyle, wrote in 2017, wholesale open access offers the best hope to break the wireless oligopoly while also using spectrum more efficiently.

They were right. Making capacity available in real time at market prices limits hoarding and encourages innovation. Unleashing our brilliant start-up ecosystem through such market mechanisms, along with opportunities for unlicensed access to wireless capacity, is America’s best hope to beat China in 5G.

But a poorly managed implementation could create a greedy wholesale monopolist, or turn wireless access into a political football, as is the disastrous fate of Australia’s open access fiber network. And the details of implementation are not this administration’s strong suit.

There is also no guarantee that rural wireless providers will rush in to take advantage of the opportunity. A wholesale system will require careful oversight and a long-term commitment by the government. The political campaign’s rapid walk-back does not inspire confidence.

Nonetheless, tech-savvy Democrats should welcome the embrace of their open access vision. Even if it means being more supportive of a Trump campaign position than the White House.

Kevin Werbach is a Professor of Legal Studies & Business Ethics at the Wharton School of the University of Pennsylvania and the author of The Blockchain and the New Architecture of Trust. Follow him on Twitter: @kwerb.

This article originally ran in The New York Times.