Hill Envisions Policy Fixes for Administration's Concerns on US 5G Leadership

National security concerns also led a National Security Council official to draft a memo proposing the U.S. build a national 5G network, that drew swift condemnation from FCC Chairman Ajit Pai and many others when it leaked in January (see 1801290034, 1801300051 and 1802120011). Trump also invoked national security concerns in his order earlier this month barring Broadcom’s takeover of Qualcomm in response to the Committee on Foreign Investment in the U.S.' findings that the takeover bid could threaten U.S. leadership in 5G (see 1803120060).

“I don't disagree with the administration's view that America needs to be in the lead on 5G,” said House Commerce Committee Chairman Greg Walden, R-Ore. “We need to stay in that leadership role” as a developer of 5G technology and equipment. “I don't agree” that means the federal government should ever consider nationalizing the U.S. 5G infrastructure as a way of maintaining that leadership role as the NSC proposed in its draft memo, Walden said. He's more confident now that the administration has learned that lesson from the outcry over the nationalization proposal's leak.

Sen. Shelley Moore Capito, R-W.Va., also believes nationalizing 5G infrastructure “doesn't sound right” as a solution to administration concerns about maintaining U.S. dominance of the technology. Such a plan “would chill investment” and ultimately hinder U.S. leadership, she said. But the controversy and Trump's subsequent use of the argument in canceling Broadcom/Qualcomm was “an 'aha!' moment for me,” she said. Both actions show Trump feels “securing our technology and internet superiority is important” and is “not something that we want to see put into the hands of other folks,” Capito said.

Hill's Role

Capitol Hill's role in maintaining U.S. dominance on 5G should be to “clear the decks” for the private sector to “do what it does best, and that's to innovate and lead,” Walden told us. He cited bills to streamline regulatory processes governing 5G deployments, one of the main goals of Trump's infrastructure proposal (see 1802120001). House Commerce lawmakers and staff are reviewing 25 broadband infrastructure-related bills they considered during a January House Communications hearing that they intend to blend into legislation to reflect Trump's proposal (see 1801300051 and 1803080062).

The Hill needs to “ensure spectrum is available” as 5G comes online, including via the Repack Airwaves Yielding Better Access for Users of Modern Services (Ray Baum's) Act FCC reauthorization and spectrum legislative package (HR-4986), Walden said. “We're all in” to ensure 5G is “commercially viable.” HR-4986 includes language from the Viewer Protection Act (HR-3347) to authorize additional repack funding (see 1803080049) and from the Spectrum Auction Deposits Act (HR-4109) that would let the FCC place bidders' deposits for future spectrum auctions in a Treasury Department fund. It includes a revised version of language from the Senate-passed Making Opportunities for Broadband Investment and Limiting Excessive and Needless Obstacles to Wireless (Mobile Now) Act (S-19) spectrum bill (see 1803020027 and 1803060046). HR-4986's language appears likely to be included in the FY 2018 omnibus spending bill, which the White House backed Wednesday (see 1803190054 and 1803210041).

“There's a lot of interest” from the Trump administration on maintaining the U.S.' edge on 5G, said Senate Communications Subcommittee Chairman Roger Wicker, R-Miss.: Keeping that edge is likely “less of a legislative issue than it is an administration issue,” but “we're looking at ways to assist and be part of the solution.” Wicker and Sen. Catherine Cortez Masto, D-Nev., filed their Streamlining Permitting to Enable Efficient Deployment of Broadband Infrastructure Act (S-1988) in October (see 1710200047). That and House companion HR-4842 would aim to accelerate broadband deployment by exempting some projects in public rights of way from environmental and historic reviews under the National Environmental Policy Act and the National Historic Preservation Act. Senate Commerce Committee Chairman John Thune, R-S.D., and Senate Communications Subcommittee ranking member Brian Schatz, D-Hawaii, have also been working on legislation that aims to ease barriers to 5G and other broadband deployments. A draft of their bill, released in October, encountered resistance because it would seek to pre-empt state, local and tribal laws seen as barriers to deployments (see 1710310057, 1711240024 and 1712070075).

Some Hill Democrats see national security concerns about 5G innovation as also implicating a range of cybersecurity issues, including the security of the supply chain, a Democratic aide said: “When the equipment is made in China, there's going to be a concern about the rush to deploy” 5G if it's done “in a way that's difficult for us to monitor.” Maintaining U.S. 5G leadership also necessarily raises questions about the FCC's decision since the start of Pai's chairmanship to “aggressively run away from doing anything on cybersecurity, the aide said. “It's a question of who's in charge here.” The FCC's decision in early 2017 to rescind several cybersecurity-related proceedings and proposals promulgated under then-Chairman Tom Wheeler was seen as a sign of an agencywide shift on cybersecurity policy under Pai's chairmanship (see 1702060059).

M&A Fears

The administration remains “deeply anxious about 5G from both the perspective of U.S. competitiveness and national security,” said Larry Downes, senior fellow-Georgetown Center for Business and Public Policy. “The principal reason the White House gave for blocking the Qualcomm deal before any real antitrust review had even started was concern that Broadcom was too closely tied to Huawei,” Downes said. “The worry is that Huawei and China more generally are stepping up their investments in 5G technologies to a point where they could threaten other equipment providers’ abilities to compete -- Cisco, Intel, Ericsson, Nokia, etc. That in turn raises questions of security, can the U.S. trust 5G networks powered significantly by equipment made by Chinese providers for which there may not be alternative suppliers with scale?”

The Chinese are certainly taking our IP and are trying to hack into U.S. networks, said Phoenix Center President Lawrence Spiwak. “The reality is we don’t really have big U.S. makers of equipment anymore,” he said. Companies like Lucent are gone from the scene, he said. “One should not discount the Chinese threat if there’s not going to be any sort of alternative to supply,” he said. “It’s a big deal in that sense.”

Downes sees potentially “increased intervention in relations with non-U.S. vendors,” including restrictions on government equipment purchases, more skepticism of potential cross-border mergers and acquisitions and complaints at the World Trade Organization and elsewhere of unfair trade practices. “The concern over 5G seems to fit within a broader emerging narrative on trade that has spooked the markets with fears of uncontrollable trade wars,” he said. "That could actually make it harder for everyone to deploy 5G."

“Every American should want our country to lead the world in 5G,” said Mobile Future Senior Policy Adviser Robert McDowell. “Europe and Asia vowed to dominate the 5G economy after the U.S. beat them to the 4G finish line. But the recipe for our continued success doesn’t stem from more government intervention, or worse, government ownership of 5G networks. It has been an unfettered American private sector that invented the mobile economy for the entire world.”

“Maintaining a global lead in 5G means getting U.S. wireless networks upgraded quickly in order to induce innovators to invest in new mobile applications, like augmented reality, remote control of [drones], and IoT,” said Mercatus Center Technology Policy Research Fellow Brent Skorup. “The FCC is taking concrete steps to expedite wireless deployment and, fortunately, it seems that Congress realizes that this is a job for the private sector.” Skorup said the proposed nationalized 5G network likely wouldn’t have lived up to expectations. “The funding for such a network is unclear, the cybersecurity benefits are uncertain, and a government-managed wholesale wireless network is unlikely to succeed commercially when carriers can use many alternative spectrum bands for their 5G services,” he said.

The administration is serious about U.S. competitiveness, said Thomas Duesterberg, Hudson Institute senior fellow. “Trump is different, but he wants to make a statement,” Duesterberg said. Trump’s “image is as a good negotiator and we’ll have to see how serious he is here,” he said. Carolyn Bartholomew, vice chairman, U.S.-China Economic and Security Review Commission, said the administration also appears serious about taking on China: “We have people who are aware of the problems [with China] and are more willing to take difficult steps.”

"The U.S. leads the world in mobile network and device innovation. Private U.S. firms are expected to invest something like $275 billion in 5G networks over the coming years,” said Bret Swanson, visiting fellow at the American Enterprise Institute. “We should continue streamlining permitting for small cells and quickly expand mid-band and high-band spectrum availability. To the extent Washington signals it wants to build networks, it could put this private investment at risk."

“As far as national competitiveness is concerned, we should be leaning on policy levers to get 5G deployed,” said Doug Brake, Information Technology and Innovation Foundation director-telecom policy. “This means primarily fast tracking spectrum auctions and finding a new regime to see effective streamlining of more small cells." Navigating "national security concerns in the telecommunications supply chain requires careful, long-term planning," he said. "Congress is the right body to act here.”