Do We Really Want to Copy China’s 5G Strategy?

By Joel Thayer, originally published in the Washington Examiner, February 22, 2021 01:07 PM

In light of the Senate Armed Services Committee hearing with Eric Schmidt on Tuesday, it may be worth revisiting his views on 5G.

Schmidt believes that China is winning or has already won the 5G race. If true, shouldn’t the United States adopt the Chinese approach to 5G and nationalize its network to compete? The Department of Defense and the former Google CEO would have you believe so. Recently, the Pentagon put out a request for information seeking input as to how it can take that action. Two problems. First, there is little evidence demonstrating that the U.S. is actually trailing China in 5G. And even so, there’s even less justification for nationalizing our networks.

Although China and the U.S.’s 5G strategies both involve blending their 4G/LTE networks with their nascent 5G networks, the U.S. has allowed industry to lead the way where China’s plan relies heavily on its state-centralized power to build its network. The one place where China may pose a competitive threat is in the spectrum. This is because China can more easily clear incumbents from spectrum bands for 5G due to its heavier regulatory control and disregard when it comes to private property rights.

Another difference is that China has much more local zoning control over deployment. Its reliance on state control measures allows for quicker infrastructure deployment but with almost no public input or consideration. If the U.S. wanted to emulate China’s approach, then Schmidt is essentially advocating that the U.S. allow the Federal Communications Commission to clear bands by ignoring incumbents’ property rights in those bands.

But is China actually beating the U.S. in 5G?

In terms of broadband speeds, we are blowing China out of the water. China has an average internet speed of just 105.2 Mbps, while the U.S. has an average of 124.1 Mbps. China is deploying far more infrastructure than the U.S., but basing China’s success in 5G purely on the amount of infrastructure may be misguided. Due to its expedited deployment, China’s 5G infrastructure is almost incompatible with its 4G/LTE networks. Whereas in the U.S., privately owned carriers have a slower deployment strategy to ensure that their 5G networks can efficiently interoperate with their 4G/LTE networks, yielding better service. China’s aggressive 5G policy is a concern, but we shouldn’t assume that it is in the lead.

The fact is that the Pentagon sits on prime midband spectrum necessary for 5G deployment.

The Pentagon knows that U.S. commercial 5G networks severely lack midband spectrum. This makes its request for information very enticing to the industry. But it comes at a hefty price: Every carrier must go through the Defense Department to access this extremely valuable resource, i.e., the spectrum that makes their networks operate nationally. Hence, carriers must choose either to have a functioning 5G network by working with the Pentagon or not have a 5G network at all. This makes 5G functionally the Defense Department’s. Even with the FCC and significant efforts to open up more spectrum bands for 5G, federal agencies such as the Pentagon inhibit new spectrum allocations by hoarding them. If the Pentagon truly cared about winning the race to 5G, it would make its spectrum available to the industry. But it doesn’t.

The companies that really win here are those with a financial incentive to collect data. The Pentagon’s nationalizing of 5G could be an advantageous proposal for them because the companies with which the Defense Department contracts will have a singular national pipeline to all data that crosses the Pentagon-operated 5G network. This is probably why Schmidt has been in favor of the Pentagon’s request for information. After all, he has significant financial interests in Google that make billions of dollars selling consumer data.

Currently, competition stands in the way of any entity collecting consumer data to this degree. That’s a good thing because it makes it more difficult for either the government or companies to conduct surveillance into our everyday lives. Using China as a boogeyman to nationalize 5G is not a good enough justification.

Joel Thayer is an attorney with Phillips Lytle LLP and a member of the firm’s telecommunications and data security and privacy practice teams. Prior to joining Phillips Lytle, he served as policy counsel for ACT | The App Association, where he advised the association and its members on legal and regulatory issues concerning spectrum, broadband deployment, data privacy, and antitrust matters. Prior to ACT, he also held positions on Capitol Hill, as well as at the FCC and FTC. The views expressed here are his own and do not reflect those of Phillips Lytle LLP or the firm’s clients.