The global race to a 5G network is on. This new wireless broadband technology will offer an exponential speed increase over 4G. It has the capability to deliver services such as remote surgery and self-driving cars with near perfect reliability. But a new report shows that the U.S. is lagging behind China and South Korea in developing 5G networks.
The U.S. is the global leader in 4G mobile wireless networks, technologies, apps, and services, and we’ve reaped the benefits: When 4G mobile broadband was first deployed, a new economy took off, adding $100 billion to the nation’s GDP. The windfall from 5G is projected to be even greater: the rollout of a 5G network should three million new jobs and contribute $1.2 trillion to the U.S. economy.
To date, America’s lead in communications networks was ensured by bipartisan federal policy promoting private sector investment. Since 1996, cable and telecom companies have invested a staggering $1.6 trillion in the U.S. economy — more than any other sector.
But global competition is tougher in 5G, and U.S. leadership is not assured. The Chinese government is aiming to help their country’s device, app, and service developers by being the first to deploy 5G. This would allow Chinese developers the distribution to a national market from the very beginning. China has already replaced the U.S. as the world’s largest mobile app market, unseating the U.S. in downloads and revenue in 2016.
American companies want to invest in the spectrum-enabled economy, but the federal government’s sub-optimal spectrum policy constrains the supply of spectrum and leaves billions of dollars of private investment on the sidelines.
At the ready are U.S. firms Verizon, AT&T, Charter Communications, and Ligado Networks, which have pledged $275 billion through 2024 to make 5G a reality. T-Mobile and Sprint have also pledged $40 billion in the next three years pending merger approval. But these investments will only pay off if the government makes the spectrum-- the frequencies across which communication signals travel–available for 5G.
Sadly, the U.S. is years behind on spectrum policy, which historically had been conducted to satisfy the 60 or so federal agencies that possess two-thirds of our nation’s prime spectrum resources, free of charge. But not all spectrum frequencies are equal, which matters when you’re building a 5G network. The private sector, which actually pays for the right to use the airwaves, is left with a paltry 16% percent of the spectrum best suited for mobile broadband. The rest is left largely unused in the hands of government agencies.
While commercial auctions have been an unequivocal success, bringing some $100 billion to US government coffers and unleashing the wireless economy, spectrum allocation is still politicized and cumbersome. Even spectrum made available today takes years to come online because of the bureaucratic machine. In this global race, we have to move faster.
The current FCC should be applauded for recognizing the importance of 5G and efforts to get more spectrum in the pipeline. In the meantime, we should get the government agencies to share their unused prime spectrum resources. The Obama administration tried to catalyze more spectrum use by encouraging agencies to share their unused spectrum, improve the efficiency of what they use, and implement technology upgrades to resolve frequency interference issues which emerge from time to time.
The costs of not doing this is tremendous. Consider Ligado Networks, which invested nearly $7 billion to deploy its licensed spectrum to advance our nation’s digital infrastructure, but has been stuck trying to resolve issues with neighboring federal spectrum holders for years. Nevertheless, Ligado has made agreements with the GPS industry and the Federal Aviation Administration and will pay for equipment upgrades for government devices. But a handful of government actors still seem unwilling to share and cooperate. As a result, some 40MHz of mid-band spectrum is idle along with billions of dollars that the company wants to invest to build out its network. The lost revenue to U.S. economy of this suboptimal policy is between $100 million and $2 billion per month, according to former FCC Commissioner and economist Harold Furthgott-Roth.
The good news is this administration can succeed where the previous failed. Ligado has taken steps to ensure compatibility as a good spectrum neighbor. Technology has evolved, and federal decision-makers should as well. If we want the advanced technologies that will grow our economy, we need to allow investment. It’s not enough to talk about building tomorrow’s 5G infrastructure: the federal government needs to do its part so that the innovators and investors can get the job done.
