Trump Administration’s Counter-China Wireless Plan Hits Opposition from Telecom Giants

A plan hatched inside the White House to protect next-generation 5G wireless service from Chinese mercantilism and espionage is running into opposition from big American telecom companies such as AT&T.

The clash highlights the increasing tension between the Trump administration and some of the biggest telecommunications and technology industry businesses. Last year, the Justice Department filed a lawsuit to prevent AT&T from acquiring the television news and entertainment company Time Warner.

The brewing fight over 5G wireless service pits big telecom players such as AT&T and Verizon against officials in the Trump administration’s national security team who want to rethink the way the U.S. distributes rights to wireless spectrum and invests in technology that uses the spectrum.

A memorandum produced by officials at the National Security Council argues that America needs a centralized nationwide 5G network before the end of President Donald Trump’s first to stay competitive with China, according to a document first reported on by Axios.

It argues that the U.S. should employ a public-private partnership model, with private companies building a network that will be financed by the U.S. government. Private investors would also likely be invited to participate in providing funds for the plan, perhaps through a special bond issuance, a person familiar with the thinking behind the memo said.

Access to the network would then be rented out to telecom companies such as AT&T and Verizon. It is possible that under this structure start-up telecom companies and tech giants such as Google or Facebook could seek to compete with the traditional telecom companies for access to the network under this model, according to a person familiar with the plans.

The memo also envisions other benefits. A government-led build-out of 5 G wireless service could focus on employing American manufacturers, providing high tech jobs and sparking a renaissance in high-tech manufacturing in the U.S. Backers of the plan also believe that a government-led network build would be more secure and less likely to depend on technology manufactured in China, which critics say poses a threat to the security and privacy of U.S. telecommunications.

Opponents of the plan, including people who work closely with the telecommunications industry, describe the plan as a “nationalization” of “historically private infrastructure.”

The government has played a large in the use of wireless spectrum for decades. It licenses television and radio stations, essentially giving them exclusive use of the “airwaves” within a certain area. As well, the government sells long-term leases that grant exclusive use of parts of the wireless spectrum, mostly to the biggest telecom companies.

“We nationalized the spectrum in 1927. What the telecoms are objecting to is a plan that threatens their oligopoly,” one person familiar with the discussions in the White House said.

The Trump administration appears divided on this matter. In a statement issued Monday, Federal Communications Commission Chairman Ajit Pai said, “I oppose any proposal for the federal government to build and operate a nationwide 5G network.”

(Disclosure: A member of my extended family works for a small telecom technology company that competes with AT&T, Verizon, and similar companies.)

 


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