Economy & Business

Nationalizing 5G Is Not the Way to Beat China

A staff member shows the new Huawei Mate X smartphone with 5G network provided by China Unicom and Huawei in Beijing, China, March 1, 2019. (Jason Lee/REUTERS)
Free markets are.

The United States and China are competing for global leadership in 5G — the transformative new Internet technology that will soon power everything from critical infrastructure to artificial intelligence to household appliances. At stake is $500 billion in GDP and a first-mover advantage that could provide the winner with a decade of economic dominance.

Even more, the race to 5G is a competition between our two systems of government — the central planning and industrial policies of China versus America’s free markets.

Yet reports surfaced last week that advisers to the administration are calling for the U.S. to embrace China-style nationalization as our path to 5G. That’s like looking to Cuba as inspiration for reforming the U.S. health-care system. The U.S. won the race to 4G and secured billions of dollars in growth for the U.S. economy by relying on America’s exceptional free-market values. We must double down on that winning playbook instead of copying China’s, and that is what we at the Federal Communications Commission have been doing for the past two years.

5G has outsized importance because it blends the capabilities of our current wired and wireless networks. 5G networks will react ten times more quickly, data speeds will be 20 times faster, and the number of connected devices will increase by a factor of 1,000. Today, wireless companies are using 5G to provide an alternative to cable for in-home broadband. Soon, many cutting-edge innovations — from the Internet of Things to autonomous vehicles to health-care applications — won’t work or won’t work well without a 5G connection.

China is keenly aware of the economic opportunity 5G can enable and the cost of falling behind. The U.S. was the first to 4G and is unrivaled in 4G speeds and investment. Winning the race to 4G added $100 billion to our GDP, grew wireless jobs by 84 percent, and fostered the $950 billion app economy. It’s no coincidence that the largest companies in the world — Amazon, Microsoft, Apple, and Google — are all tech, all American, and all riding on our mobile broadband networks.

China views 5G as an opportunity to flip the script. It wants to leapfrog the U.S. to become the world’s most dominant player in the tech and innovation space. And China is dedicating immense government resources to achieve that goal. It is the digital part of China’s Belt and Road Initiative, which seeks to extend Chinese political power and influence around the globe.

It’s no surprise that China is leaning on command-and-control policy. But it is surprising to see that competition from the Chinese government has prompted erstwhile defenders of free markets to insist that the U.S. respond in kind. Newt Gingrich, writing in Newsweek, blamed America’s “laissez-faire tendencies” for its supposedly falling behind in 5G. The former House speaker argued for the government to choose one company to build a single, wholesale network. Last year, a National Security Council staffer reportedly floated an even more straightforward plan to nationalize 5G.

There’s no doubt that Beijing can direct state-owned companies to install the hundreds of thousands of new cell sites and other infrastructure needed for 5G seemingly overnight. Some people find the Chinese model of command and control attractive. I don’t.

And more to the point, fighting China with China-like policies would fail. The 4G networks in the U.S. are the envy of the world. What’s not? Our government-run infrastructure projects, such as our crumbling roads and bridges and failed high-speed-rail projects. Don’t expect anything better from a government-run 5G network. In fact, many European countries have taken a government-directed approach to broadband, and the result has been network investment at half the level we see in the U.S.

The U.S. has a free-market plan to secure our 5G leadership. It’s built on smart infrastructure policies, putting more spectrum into the commercial marketplace, and allowing our private sector to invest and compete. We’ve been executing this plan for two years. At the FCC, we’ve already cut over $3.6 billion in government red tape. And our plan is working.

By getting government out of the way, we now have the largest commercial deployment of 5G in the world, the digital divide in the U.S. has been cut by 25 percent, Internet speeds are up 40 percent, and a report out last month shows that in 2022 the U.S. will have more than two times the 5G connections as Asia as a percentage of total mobile connections.

Now is not the time to turn our back on U.S. values or on the progress we’ve made in the last two years.


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