With its bet on 5G, the US builds Betamax while China builds VHS
OPINION: When US President Donald Trump unveiled his administration's plan for "winning the race" to 5G last week, he neglected to mention that the United States is building its network using a technology that's inferior to what the rest of the planet will likely adopt. It's akin to building a Betamax system in a VHS world.
"We cannot allow any other country to out-compete the United States in this powerful industry of the future," Trump said last week, noting 5G's crucial role in the United States' economic prosperity and national security.
Trump's "private sector-driven and private-sector led" approach is a rejection of a nationalised 5G system run by government. The administration announced US$20 billion (NZ$30 billion) in subsidies to companies for laying fibre-optic cable across the country, as well as the largest auction of wireless spectrum ever.
"By next year, the United States is on pace to have more 5G spectrum than any other country in the world," Trump bragged.
Only in passing was it mentioned that Trump's plan commits the United States to build out 5G infrastructure on a high-band spectrum swath known as "mmWave" (between 24 and 300 gigahertz), which is inferior in range and penetration capability to the "sub-6" (below 6 gigahertz) spectrum being used for 5G by most other countries, especially China.
"So we are winning a race that no one else is running to build a 5G ecosystem that no one else will use," is how one administration official put it to me.
Trump's announcement represents a huge political win for wireless carriers AT&T and Verizon; White House officials including National Economic Council Director Larry Kudlow and Federal Communications Commission Chairman Ajit Pai; and others who favour this faster approach. Right now, the sub-6 spectrum inside the United States is reserved exclusively for Pentagon use, and figuring how to share it would be a lengthy and costly process.
The losers were companies poised to capitalise on sub-6 spectrum sharing, such as Rivada, which is supported by Peter Thiel and represented by Karl Rove. Trump's re-election campaign manager, Brad Parscale, and Trump ally Newt Gingrich have also been vocal supporters of sharing the Pentagon's spectrum, though they both deny having any financial interest in it.
"For the last four months I've been in a knock-down, drag-out fight in the White House and the Defense Department," Gingrich said at a Committee for Present Danger: China event on April 10. "In order to go to 5G in America, you have to have an amount of [spectrum] capability from the Defense Department."
The Pentagon naturally doesn't want to share its spectrum, but, ultimately, it may not have a choice. Most of its operations are in countries that are moving toward sub-6 systems, and many will build them with cheaper Chinese technology.
"As sub-6 becomes the global standard, it is likely that China, the current leader in that space, will lead the charge," states a report issued this month by the Defense Innovation Board, whose membership includes tech executives from Google and other firms. "This would create security risks for [Defense Department] operations overseas that rely on networks with Chinese components in the supply chain."
What happens when US forces in Europe or Asia find sub-6 bandwidth in those countries jammed up with driverless cars and Huawei cellphones? The military will have to share its spectrum abroad one way or the other, so it might as well figure out how to do that now.
There are industrial implications, as well. By relying on mmWave, the United States will need to build more 5G cell towers closer together. That means lots of jobs but worse service for consumers, especially in rural areas. Moreover, US companies building out this domestic system may not be able to compete in international markets operating on the sub-6 model.
That means foreign companies - especially from China - could dominate 5G business worldwide. That would allow others to set international standards, and could turn the United States into an island of relatively bad 5G service surrounded by a sea of better technology.
Spectrum is not the only factor in international 5G competition. The United States is still dominant in software and systems integration. US companies are also leading producers of many crucial components - for now. But there are zero US companies that produce core telecommunications equipment. There are two from Europe and two from China.
In Japan, everyone knows the term "Galapagos Syndrome," a reference to the country's isolation from the world's mobile-phone market. During the 1990s, Japan developed advanced mobile phones ahead of many other countries. But because Japanese technical standards weren't adopted by anyone else, the rest of the world leapfrogged their early progress and left them way behind. For 5G, the United States must not become isolated.
Trump has made his decision, but a responsible parallel policy would be to move forward with research of sub-6 spectrum sharing. That way, we at least have the option to go to VHS if the Betamax system fails. Winning the race for 5G won't mean much if we are running in the wrong direction.
The Washington Post