Internal memo cites security as primary motivator for a government-owned 5G network, according to Axios; Pai opposes

Based on a document the media outlet says was “produced by a senior National Security Council official,” Axios is reporting that the Trump administration is examining a government-led and funded build out of a 5G mobile network in a three-year timeframe. Alternatively, according to the document, carriers could build their own 5G networks, which is happening anyway.

Whoever produced the PowerPoint presentation and memo reproduced by Axios likens a government-owned 5G network to the Interstate Highway System, which was championed by President Dwight D. Eisenhower. In fact, the title of the PowerPoint is “Secure 5G: The Eisenhower National Highway System for the Information Age.”

In a statement released Monday morning, Federal Communications Commission Chairman Ajit Pai, without directly referencing the Axios report or document it is based on, said he opposed “any proposal for the federal government to build and operate a nationwide 5G network. The main lesson to draw from the wireless sector’s development over the past three decades—including American leadership in 4G—is that the market, not government, is best positioned to drive innovation and investment.  What government can and should do is to push spectrum into the commercial marketplace and set rules that encourage the private sector to develop and deploy next-generation infrastructure.  Any federal effort to construct a nationalized 5G network would be a costly and counterproductive distraction from the policies we need to help the United States win the 5G future.”

According to the internal administration document, the primary impetus for this consideration is a protecting against security threats from China. The author reports that, “China has achieved a dominant position in the manufacture and operation of network infrastructure. China is the dominant malicious actor in the information domain.”

Scrutiny of Chinese network infrastructure suppliers Huawei and ZTE seems to be a hot topic at the moment. In the run-up to CES, AT&T, reportedly facing pressure from politicians, scrapped a deal to sell Huawei devices in the U.S. market, and  Rep. Michael Conaway (R-Texas) wants to formally bar Huawei and ZTE from doing business in the U.S. with his HR 4747, which has drawn 11 co-sponsors.

Back to the memo obtained by Axios. The author notes that Huawei “has gone from a market share in radio infrastructure of roughly 11% in 2011 to share equal to or greater than Ericsson and Nokia…the Chinese may be poised to lead in 5G.”

The memo author accuses Huawei of using “market distorting pricing and preferential financing to dominate the global market for telecommunications infrastructure. China sets aside up to 70% of its mobile infrastructure market for Huawei and ZTE, only allowing Western vendors to compete for the remainder. The magnitude of the Chinese market allows the companies to effectively fund their R&D with domestic sales while insulating the companies against global infrastructure spending down turns. The government has also extended an estimated $100 billion line of credit to Huawei to finance deals abroad.”

The memo contemplates “single-block” or “multi-block” 5G. The single-block scenario is described as the U.S. building and operating “one physical network using the mid-band spectrum it could lease time back to carriers to sell as a service.” The downside of this option, according to the memo, is that it would create a “new paradigm” in the mobile network operator market.

The so-called multi-block option is described as carriers building their own 5G network “based on 100 [megahertz]spectrum blocks.” The upside of this option is “less commercial disruption. Carriers already anticipate rolling out 5G, but at a far slower pace. Getting them to build and own the network will be an easier sell.”

There’s a lot of unpack in the memo, including the comparative development of artificial intelligence in the U.S. and China, working to bring network infrastructure manufacturing to the U.S., developing a labor force capable of building a 5G network, the role of fiber and analysis of carriers’ spectrum holdings. It’s worth a read.

From the memo’s conclusion: “We must move quickly to make 3.7-4.2 GHz spectrum available. We must move quickly to standardize the wireless, network and infrastructure standards. We must standardize siting requirements and advance the nationwide deployment of fiber. We must strongly signal to equipment manufacturers our intent to build a secure supply chain. For the greatest effect, we must elicit allies to cooperatively build similar networks in their countries and work together to build them in emerging markets. If we do, the U.S. will reap the benefits of 3% GDP growth, millions of new jobs and a dominant position in the information domain.”

Editor’s note: RCR Wireless News has not confirmed the provenance of memo published by Axios.

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