In the 5G Race, the Trump Administration Goes Wobbly On Free Markets
Mobile World Congress recently convened in Barcelona, the world’s largest exhibition of mobile technology. We’ve come a long way since the first exhibition, and are now knocking on the door of the rollout of fifth generation (5G) technology. Looming large over the conference was the race between the U.S. and China to be the global leaders in 5G, and to be the first to bring it to market.
Given the actions and rhetoric of those on the U.S. side, though, it would seem they want to let the Chinese telecommunications giant, Huawei, win the race. American policymakers have emphasized security concerns, and pushed for big government solutions. This only signals to the Chinese that we have conceded their alleged centrally planned economic model as more efficient. Sadly missing in this discussion is the free market.
Recent reports indicate that advisors in the Trump administration are suggesting the creation of a nationalized 5G network. The U.S. fostered the growth of the Internet through a light touch regulatory framework. American companies won the race to roll out 4G technology, and the government allowed the market to do the work. What greater sign of submission could the U.S. show in the late stages of the 5G race than to abandon this winning framework in favor of the nationalization model that the Chinese, and other non-market economies have utilized for years?
The largest companies in the world, like Amazon, Google, Microsoft, and Apple are all American tech companies. The “laissez faire tendencies” that faux free marketeers like former House Speaker Newt Gingrich like to deride are the same ones that allowed these companies to thrive and create immense wealth for the United States. Policymakers should cheerlead these tendencies, not scorn them.
There have been numerous instances of local governments trying to operate their own “municipal broadband” networks. In most cases these networks end up mired in insolvency, or create exorbitant costs for local taxpayers. Government-run networks do not serve as inspiration for innovators around the world. It is our private sector that drives growth and innovation.
U.S. lawmakers are also citing security concerns. They are seeking to lure international investment away from China by saying Huawei will lead to the Chinese government spying on their devices. Any casual observer of public policy knows that big government initiatives are almost always precipitated by the invocation of some sort of national security threat. The fact that the U.S. is choosing this line of argument, instead of pointing to the endless potential of our free market in contrast to the Chinese command and control model is evidence of just that.
Huawei shot back with an effective response. At the Barcelona conference, Guo Ping, the chairman of Huawei said that anyone with concerns about government spying on their devices “can go ask Edward Snowden.” He is referring, of course, to the National Security Agency (NSA) whistleblower who revealed massive government spying on American citizens without warrants.
Unfortunately, this is a completely valid point. The U.S. has not updated the Electronic Communications Privacy Act (ECPA) in decades. Tech privacy is still being governed by a legal framework passed during the Reagan administration. The tech sector has evolved far beyond the point where such a framework is acceptable. Naturally, government operatives are using the language to say it does not apply to today’s technology and the privacy of modern devices remains in doubt in the U.S.
Section 215 of the Foreign Intelligence Surveillance Act (FISA) has also lacked any significant reforms since Snowden pointed out the abuses. It is due for reauthorization this year. Policymakers need to enact reform, or even refuse to reauthorize the program altogether to ensure a better privacy framework for American businesses, and the American people.
With such uncertainty about the privacy and security of new tech devices, investors may see the U.S. as an investment that is just as risky as China. If the U.S. wants to have any moral high ground on this issue, it needs to end the hypocrisy surrounding Huawei’s privacy concerns and instead fix the ones within our own borders. This will provide needed certainty for investors, and deprive Huawei of rhetorical ammunition to use against the U.S. and its tech sector.
There are other affirmative steps the U.S. government can take to empower our private sector to create jobs and develop the world’s first and the world’s best 5G technology. It can approve mergers like the one between T-Mobile and Sprint. This would give them more spectrum assets and tower location to build out a wider network to deliver 5G to the American people, and with more resources to develop innovative ways to do so.
The government also needs to further deregulate the tech sector, so companies can create plans and policies that enable them to be most effective in building out 5G. This includes liberating bands of broadband spectrum currently being hoarded by the federal government. The U.S can certainly beat China in the race to 5G deployment, which would create massive GDP growth and investment. However, the U.S. cannot beat China by becoming it and using the force of the government to stifle the market.
