White House Is Planning To Nationalize 5G Network: Report

Zero Hedge – by Tyler Durden

In a stunning – if accurate – report published Sunday night, Axios claims that White House national security officials are considering an unprecedented federal takeover of a portion of the nation’s mobile spectrum/network to protect against Chinese attacks, in what may well be a pre-emptive shot, hinting at upcoming trade wars between the two superpowers.

Axios got its hands on PowerPoint deck and a memo, both of which were purportedly produced by a senior National Security Council official, which were presented to other senior officials at other agencies during a recent meeting.  The documents argue that America needs a centralized nationwide 5G network within three years. There’ll be a fierce debate inside the Trump administration, and an outcry from the industry over the next 6-8 months over how such a network is going to be built and paid for.  

For those unfamiliar with 5G, Quora has a useful discussion on “How is 5G different from 4G and when will it be launched?”

The document’s author presents two options:

• The U.S. government pays for and builds the single network — which would be an unprecedented nationalization of a historically private infrastructure.
• An alternative plan where wireless providers build their own 5G networks that compete with one another — though the document says the downside is it could take longer and cost more. It argues that one of the “pros” of that plan is that it would cause “less commercial disruption” to the wireless industry than the government building a network.

Another expert who discussed the plan with Axios said the second option isn’t really feasible because a single, centralized network is what is needed to protect against cyberattacks from the Chinese or other foreign powers.

The source said the internal White House debate will be over whether the U.S. government owns and builds the network or whether the carriers bind together in a consortium to build the network, an idea that would require them to put aside their business models to serve the country’s greater good.

Option 1 would lead to federal control of a part of the economy that today is largely controlled by private wireless providers; here it is worth noting that Telecom companies are among some of the most hated US corporations because they benefit from the current oligopoly enshrined by the status quo. Furthermore, if Verizon and its competitors introduce new tiered plans in violation of net neutrality, this dissatisfaction will only worsen, making a government nationalization feasible.

In the memo, the Trump administration likens it to “the 21st century equivalent of the Eisenhower National Highway System” and says it would create a “new paradigm” for the wireless industry by the end of Trump’s current term.

Aside from its various other staggering implications, 5G nationalization would still leave many other elements of the market free to private competition.

According to the presentation, the US must build superfast 5G wireless technology quickly because “China has achieved a dominant position in the manufacture and operation of network infrastructure,”and “China is the dominant malicious actor in the Information Domain.”

To illustrate the current state of U.S. wireless networks – perhaps as an aid to the attention-deficient administration- the PowerPoint uses a picture of a medieval walled city, compared to a future represented by a photo of lower Manhattan.

According to the leaked memo, the best way for the government to achieve its goal, is to build a network itself. It would then rent access to carriers like AT&T, Verizon and T-Mobile. (A source familiar with the document’s drafting told Axios this is an “old” draft and a newer version is neutral about whether the U.S. government should build and own it.)

This would be preferable for two reasons:

It’s a marked shift from the current system where those companies each build their own systems with their own equipment, and with airwaves leased from the federal government.

Nationwide standard: the federal government would also, according to the memo, be able to use the banner of national security to create a federal process for installing the wireless equipment, preventing states and cities from having their own rules for where the equipment could go.

The memo argues that a strong 5G network is needed in order to create a secure pathway for emerging technologies like self-driving cars and virtual reality — and to combat Chinese threats to America’s economic and cyber security. A PowerPoint slide says the play is the digital counter to China’s One Belt One Road Initiative meant to spread its influence beyond its borders. The documents also fret about China’s dominance of Artificial Intelligence, and use that as part of the rationale for this unprecedented proposal.

There’s even a suggestion that America’s work on a secure 5G network could be exported to emerging markets to protect democratic allies against China.

“Eventually,” the memo says, “this effort could help inoculate developing countries against Chinese neo-colonial behavior.”

US Telecoms are already working on building 5G networks, with AT&T, Verizon and T-Mobile, for example, investing heavily in this area. The process for setting 5G standards is well underway. Korea has been at the forefront of testing, as have Japan and others. It’s not clear a national strategy would yield a 5G network faster or by the memo’s 3-year goal.

The memo says China is slowly winning the AI “algorithm battles,” and that “not building the network puts us at a permanent disadvantage to China in the information domain.” There is a real debate to be had over China and AI, but it’s unclear what at all that has to do with a mobile network.

5G is expected to run at 10-20 gigabytes per second, which, as ForexLive points out, is blazing fast, further making the argument that nationalizing it would be a necessity to secure self-driving cars from being hacked.

5G is expected to run at 10-20 GB per second. That's insanely fast. There's an argument it needs to be secure because of self-driving cars. pic.twitter.com/e7OqGdiRz2

— ForexLive (@ForexLive) January 28, 2018

Full document below (pdf source).

https://www.zerohedge.com/news/2018-01-28/white-house-planning-nationalize-5g