What to Make of the Proposal to Nationalize the 5G Network

The White House says it’s no longer considering the plan. It’s still tells us something about technology in 2018.

FCC Chairman Ajit Pai was not a fan.
FCC Chairman Ajit Pai was not a fan.
Alex Wong/Getty Images

The White House National Security Council presented plans to senior administration officials that would nationalize part of the nation’s 5G mobile network to make it more competitive against China and ensure its safety from cyberattacks, Axios reported Sunday based on documents it had obtained. The move would allow for unprecedented federal control of a traditionally private wireless sector dominated by telecom titans such as Verizon and T-Mobile.

However, White House officials subsequently told Recode that the documents are dated and that the proposal was merely floated by a staff member. They clarified that there are no plans to build a federal 5G network and that the proposal did not make a lot of headway in other areas of the administration.

Even though Recode’s reporting indicates that the White House isn’t going to nationalize 5G anytime soon, if ever, it’s still noteworthy that some officials in the administration were weighing the proposal. And however long a shot it is, Recode’s sources did not seem to definitively rule out this plan as an option in the future.

The concerns and questions raised in the documents give us a look into the anxieties that some Trump officials harbor about Chinese technology and whether America can keep up.

What is 5G?

5G refers to the fifth-generation mobile network that will vastly improve the way we transmit data. Current estimates predict that it will 10 times faster than our current 4G LTE standard and give almost anyone access to virtually unlimited data. 5G will also be essential for proposed smart cities in which the technologies that underlie our lives—think self-driving cars, home appliances, the electrical grid, traffic lights, health equipment, air quality monitors, and pretty much anything else—are all connected online. Accenture predicts that big players in the telecom industry will invest around $275 billion over the next seven years to rollout the network.

According to the PowerPoint and memo that Axios obtained, there were two plans for the 5G infrastructure. The first is the most radical, calling for the government to fund and build a single network for a portion of the 5G airwaves by the end of Trump’s first term; the memo likens this plan to “the 21st century equivalent of the Eisenhower National Highway System.” The second, which is more expensive but would cause “less commercial disruption,” would involve wireless providers building their own competing networks. However, a source familiar with the security council’s thinking told Axios that the worry is this second, laissez-faire-oriented option would not adequately shield the nation from bad actors in China and elsewhere.

What’s China got to do with it? 

Fears about China tiptoeing into our mobile networks appeared to come to a head just this month when AT&T reneged on a deal to sell smartphones made by Huawei, a telecom giant that has ties to the country’s communist government. AT&T walked away after Congress sent a letter to the Federal Communications Commission (FCC) in December expressing concern about Huawei doing business with American telecommunications companies. The letter suggested that Huawei could potentially serving as cyberespionage tool for the Communist government, especially if American officials started using its phones.

The security council’s memo specifically mentions Huawei as a formidable player that could help China to become the global leader in 5G deployment, thus allowing the country to rival the U.S. in areas such as A.I. and telecommunications influence abroad. The Chinese government has given Huawei a $100 billion credit line and a large portion of its mobile infrastructure market to help it become a global 5G powerhouse.

Who would have opposed nationalized 5G?   

Despite these concerns, the White House would face resistance from the FCC and the telecom industry if it attempted to follow through with the plan to build a federal infrastructure. The FCC is responsible for setting up rules that will facilitate the development of the 5G network.

Before the White House clarified its stance, FCC chairman Ajit Pai released a statement Monday  that read in part, “I oppose 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.” His fellow Republican FCC commissioner, Michael O’Rielly, raised similar objections.

It’s unsurprising that Pai would be ideologically opposed to this nationalization scheme. He has repeatedly touted free market principles as justification for ending Obama-era net neutrality regulations. Pai has been friendly to the telecom industry during his tenure—he notably served as associate general counsel for Verizon from 2001 to 2003, a company whose trade group, CTIA, has also expressed misgivings about the proposal.

The initial reaction to the news—prior to the White House’s clarification—may have been overblown. But the documents for this proposal are still telling. There are clearly fears in at least some corners of the administration about China’s telecommunication prowess, and its general role as a cyber antagonist and technological competitor to the U.S.