Trump Opposes 5G Nationalization, Favors 'Private Sector Led' Work

Trump hailed the FCC's planned auction later this year of 3,400 megahertz of millimeter-wave spectrum and its proposal to build a successor to the USF Connect America Fund aimed at increasing broadband connectivity in unserved rural areas. FCC Chairman Ajit Pai announced the actions Friday morning (see 1904120008). Both announcements drew positive public reaction from many industry officials, but others were more skeptical. Some officials also privately told us they don't believe either of Pai's announced actions is a fundamental shift for the U.S. on 5G or broadband policy.

U.S. efforts to lead on 5G must be “private sector driven and private sector led,” Trump said during the White House event. “The government doesn’t have to spend lots of money.” There is an “alternative of doing it that would be through government investment and leading through the government,” he said. “We don’t want to do that because it won't be nearly as good” nor “nearly as fast.”

Trump's public rebuke of 5G nationalization followed similar comments earlier in the day by Pai, though the FCC chairman has been on record for more than a year as opposing such proposals (see 1801290034). “The market, not government, is best positioned to drive innovation and investment in the wireless field,” Pai said Friday morning during a conference call with reporters. National Economic Council Director Larry Kudlow also opposed nationalization earlier this month (see 1904040048)

“The wholesale network would be the wrong answer for American consumers,” Pai said. Recent scrutiny of the administration's 5G strategy followed March comments by Trump's re-election campaign in favor of the concept of the U.S. government making spectrum being reserved for 5G available to carriers on wholesale. The campaign later walked back the comment amid perceptions it was in conflict with the White House's existing 5G policy (see 1903040058).

Strategy Wariness

The comments from Trump, Pai and others against nationalization may assuage some critics, but others continue to be wary, lobbyists told us.

The 5G wholesale concept has become conflated with nationalization, so some are concerned because supporters of wholesale have continued to meet with lawmakers. Rivada, which backs a 5G wholesale approach, says that concept doesn't constitute nationalization. Rivada adviser and former White House Deputy Chief of Staff Karl Rove met Thursday afternoon with House Freedom Caucus Chairman Mark Meadows, R-N.C., to talk about the 5G wholesale concept and other broadband issues, a House aide and others told us. Meadows' office and spokespersons for Rivada and Rove didn't comment.

Sen. John Cornyn, R-Texas, confirmed to us Thursday that his office recently met with Rivada as planned (see 1903280064) to talk about his Secure 5G and Beyond Act (S-893) but said he wasn't directly involved in the meeting. Cornyn's office didn't comment on what happened during that meeting. S-893, which Cornyn and Senate Intelligence Committee leaders filed in March, would require the president develop a strategy for ensuring security of 5G networks and infrastructure. NTIA would be the lead agency in implementing it (see 1903270065).

Capitol Hill Republicans and industry groups applauded Trump for speaking against nationalization. “We’re not Venezuela,” said House Commerce Committee ranking member Greg Walden, R-Ore. “We do not need a big government role over the networks; we need massive private investment working with the federal government to win the race to 5G.”

The U.S. is “well-positioned to win the race” on 5G deployment, in part because of the FCC's upcoming auction of 3,400 megahertz of spectrum on the 37, 39 and 47 GHz bands, Pai said at the White House event. He announced earlier in the day the auction would begin Dec. 10 and the FCC later approved a public notice on the auction (see 1801290034). The upcoming launch of a $20.4 billion Rural Digital Opportunity Fund targeting broadband deployment in unserved rural areas will “help build the infrastructure of the future” and “support 5G technologies,” he said.

USF Successor

The new fund is itself essentially a successor to the USF Connect America Fund and will provide about $2 billion in annual funding for rural broadband projects over the next 10 years, Pai told reporters. It will draw its funding by repurposing CAF funds.

CAF's term of support is expected to end at the close of 2020, followed by a one-year phaseout period, Pai told reporters. Other USF programs' funds “wouldn't be implicated” by the new program and it won't affect the overall cap. The FCC plans to launch an initial proceeding to set up rules for the fund later this year, but Pai said he wants the funding to be allocated using the same type of reverse auction basis as the CAF Phase II auction.

Pai told reporters he wants the funding to be targeted at unserved areas and projects that aim to provide service at the current FCC minimum of 25 Mbps download and 3 Mbps upload, above the CAF funding requirements that only sought a minimum speed of 10 Mbps download and 1 Mbps upload. The new program, like CAF, is intended to be tech neutral, he said. The FCC's decision to open CAF up to a “wide variety of entities” ultimately helped to drive down the overall cost of deployed projects, so “I strongly hope” the FCC establishes “a similar type of regime” for the new program, Pai said.

NTCA CEO Shirley Bloomfield told us she's “excited” about the FCC's decision to quickly begin to develop a CAF successor, though the commission still needs to figure out many of the new program's salient details. It's important that Pai is already emphasizing the need to make the new program tech neutral since it's going to take many different types of entities to develop the type of “fiber backhaul network” that will be needed to successfully deploy 5G nationwide, Bloomfield said.

Commissioners React

FCC Democrats Jessica Rosenworcel and Geoffrey Starks slammed Pai's proposal for changes to the USF program, though they noted Pai has shared nothing with them. “It looks to me like they are dressing up an old program in new Trump-era clothes,” Rosenworcel said after commissioners' meeting. “It doesn’t look like any funding, but instead the same old, same old.”

“I am extremely interested in the details,” Starks said. “It does seem to smell like something that is repackaging some of the money that we already have.”

Commissioners Mike O’Rielly and Brendan Carr said they couldn’t comment until they see more details. “It’s generally great news … another step forward,” Carr said.

Every time the administration intervenes on 5G, it slows progress, Rosenworcel said. She also criticized the FCC’s reliance on high-band spectrum for 5G when mid-band would work better. “We’re watching other countries move ahead,” she said. “If we truly want to deploy 5G to everyone everywhere we are going.

“The proposed modifications to the USF rural subsidy system” continue “a sensible and bipartisan trajectory started during the 2011 USF reform,” emailed Cooley's Robert McDowell, a commissioner at the time of that program revamp. “That, added to the auctioning of more spectrum and streamlining of burdensome regulations, should be a boost to the US when it comes to 5G, but more needs to be done.”

Several industry groups were optimistic about the proposed new rural broadband program, including the American Cable Association, AT&T, the Competitive Carriers Association, CTA, the Fiber Broadband Association and the Wireless ISP Association.

Public Knowledge Senior Vice President Harold Feld urged Congress to be skeptical about the new program proposal. “Where will this money come from and over how many years?” Feld asked. “Is the Administration promising to provide new money for rural broadband through existing authority, or is the Administration going to need to ask Congress to provide new money? How will this differ from the Connect America Fund?”