With 5G, It Doesn't Matter Who Gets There First

Patriotism may not always be the last refuge of a scoundrel, but a faux patriotism aimed at providing a national security excuse for mercantilism is becoming the latest tool of choice of nationalism. A report by members of the National Security Council advocating nationalization of 5G development and ownership is a good example.

The report, which leaked last week, advocates a government-controlled 5G network aimed at keeping out the Chinese - an unprecedented takeover of a significant chunk of the telecommunications network. But would that actually hinder development of an efficient 5G network that would provide better connections, improved cable and Internet service for rural areas, and improvements in the internet of things, such as cars and vending machines?

This is not the first time the Administration has trotted out “national security” as a cover to protect national economic interests. Tariffs on steel and aluminum were introduced based on supposed concerns about the national security implications of free enterprise in those fields. In fact, the United States
produces far more than enough steel and aluminum to meet its national security and defense needs. Moreover, steel and aluminum imports primarily come from friendly countries such as Canada and other NATO partners. The same national security concerns are being raised to justify nationalization of 5G.

Clearly, there is more basis for national security concern in this area. Using network equipment from a foreign adversary would give them the potential opportunity to build a “back door” that could slip a Trojan horse into the telecommunications network.

However, user devices would constantly need to switch to other connections that aren’t part of the proposed network, to provide indoor connectivity, knocking down the argument for a national 5G fortress. The network would presumably have to connect to the Internet, rending protection of it moot.

It is hard to believe that the proposal for a government-run buildout of 5G does not stem from economic concerns. The NSC document that recommended it cited nationalization’s importance “politically (and) economically” as well as militarily.

Not surprisingly, the proposal for a nationalized 5G system has raised concerns by people on both sides of the political aisle. FCC Chairman Ajit Pat, a Trump appointee, raised opposition to a “costly and counter-productive distraction” from the effort to ensure the United States’ place at the leading edge of 5G. The chairman of the House Energy and Commerce Committee, Greg Walden, has gone so far as to say “we’re not Venezuela” about the nationalistic and populist nature of the proposal. He is joined in his opposition by House and Senate members from both parties.

Clearly, the drive for government control of 5G is at least partly an excuse for Washington involvement to help ensure the United States wins “the race” with China to be first to deploy a 5G network. But we must ask ourselves: Is it really important, or even beneficial, for the United States to build a 5G network before China? Japan was the first country to offer 3G, but that hasn’t impeded Apple and other U.S companies from using it to dominate the smart phone and app markets.

The benefits of 5G are clear. But does it matter which country gets there first? Would China be able to scoop up all three million jobs that 5G is likely to generate? The United States would still be well-positioned to derive economic benefit and other advantages the new technology offers.

How well a country fares with 5G depends less on getting there first, and more on taking advantage of what it has to offer - being able to marshal the skilled and entrepreneurial people and the financial capital to maximize its potential.

Any national security argument for nationalized 5G should be taken with a grain of salt. As Democratic strategist James Carville would probably say: “It’s the economy, stupid.”