Trump puts kibosh on nationalized 5G network rumors

President Donald Trump said the US government won't build a nationalized wholesale 5G network, but it's promising more spectrum and a new fund to ensure the country's dominance in the next-generation wireless technology. 

"In the United States, our approach is private sector-driven and private sector-led," he said at a press conference Friday announcing his administration's plans to advance 5G deployment.

"As you probably heard, we had another alternative of doing it that would be through government investment and leading through the government," he continued. "We don't want to do that because it won't be nearly as good, nearly as fast."

The notion of the government's potential involvement in building the network surfaced in January 2018 when White House plans for the idea leaked out. Several officials, including FCC Chairman Ajit Pai, who was appointed chairman by Trump, and Trump economic advisor Larry Kudlow, have opposed the idea. But others, such as former Republican Speaker of the House Newt Gingrich and Trump's 2020 campaign manager Brad Parscale, have reportedly favored more government involvement.

CTIA, the wireless industry's lobbying group, said it was about time the speculation around a government-funded 5G network was put to rest.

"Today's statement by the president puts an end -- once and for all -- to any misguided notions of nationalizing spectrum resources or government-mandated wholesale 5G markets," CTIA president and CEO Meredith Attwell Baker said in a statement. "We agree with the administration and the FCC that bringing next-generation wireless networks to more Americans is critical."

Watch this: We tested Verizon's new 5G network

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Big 5G ambitions

Trump made the comments during a press conference at the White House, where he was joined by Pai to announce new wireless spectrum auctions for 5G and plans to spend $20.4 billion over 10 years on rural broadband.

Trump said it's important that the US lead in this new technology.

"We cannot allow any other country to out-compete the United States in this powerful industry of the future," he said. "The race to 5G is a race America must win ... It's a race that we will win."

As part of the plan, the FCC will auction off three segments of millimeter-wave spectrum -- which can offer insane data speeds but has limited range -- for commercial use. The auction is scheduled for December, Pai told reporters on a conference call ahead of the White House event. He said the FCC plans to auction off 3,400 MHz of spectrum in three different high-frequency bands.

"This will be the largest spectrum auction in American history," he said.

Pai went on to say that this auction, along with others planned, are putting the US on a good path.

"The US is well positioned to take a lead in 5G," he said.

The FCC also announced the Rural Digital Opportunity Fund. The agency plans to reallocate  $20.4 billion from its Universal Service Fund over the next 10 years to subsidize eligible companies to build out broadband infrastructure in underserved areas. The money will be allocated to internet service providers that can provide a minimum of 25 megabit per second downloads in areas that are currently in need of connectivity, Pai said.  

He added that the new infrastructure will also help bring 5G to these rural areas.

"There are a number of startups that are working on millimeter wave technology to bring 5G to rural America," he said on the call.

The FCC already spends on average about $4 billion a year to subsidize rural broadband deployments and yet 19 million Americans, most of whom live in hard to reach places, still lack high speed internet access. This new injection of funding is expected to connect about 4 million more Americans to rural broadband, according to the FCC.

The race to 5G is on

5G, which refers to the fifth generation of cellular technology, is the next big thing in wireless technology and it's been hailed as the foundation for other big trends like self-driving cars and streaming virtual reality.

The White House's announcement comes as US carriers have been locked in a race to move to 5G. Last year, Verizon started a limited 5G home broadband service and launched its mobile 5G service this year. AT&T's 5G network went live in select cities in December and it has steadily rolled out additional deployments this year. Sprint and T-Mobile are also expected to begin rollouts this year.  Other countries, like China, Korea and Japan are also racing to deploy 5G, creating a new kind of technological arms race.

Trump pointed out that by the end of the year, US carriers will have 5G up and running in 92 markets, while South Korea has plans for 5G in 48 cities.

"But we must not rest," he said. "The race is far from over.  American companies must lead the world in cellular technology. 5G networks must be secure; they must be strong."

The FCC has already taken steps to make more spectrum available to wireless carriers deploying the technology. In January, it concluded its first auction of high frequency millimeter spectrum in the 28GHz band.  The auction raised a total of more than $702 million in gross bids. A total of 2,965 28GHz licenses were won. It's still auctioning off spectrum in the 24GHz band.

Auctions for 37GHz, 39GHz and 49GHz spectrum bands will also be held later this year.

In addition to the spectrum auction announced Friday, Pai told reporters the agency is also working to free up so-called midband spectrum that's also crucial to the build out of 5G networks.

"Rest assured that we are making a priority of [making available] all bands for 5G," he said.

The industry applauded the Trump administration and the FCC for their efforts.

"Today's announcements will keep the US on track to lead the world in 5G deployment and reap the benefits of next generation wireless networks, unleashing a wave of economic growth and innovation," Jonathan Adelstein, president and CEO of the Wireless Infrastructure Association said in a statement.

Steven Berry, the head of the Competitive Carrier Association, which represents smaller wireless providers in rural parts of the country, thanked the administration for its focus on 5G particularly in rural areas.

"Auctioning additional spectrum and providing certainty regarding deployment policies will support industry efforts to bring the latest wireless services to urban and rural areas alike," he said.

The White House and 5G

5G has been on the mind of White House officials for some time. In October, the administration announced it was developing a plan to "position the United States to lead in next generation wireless networks for years to come."

Under this plan, the Secretary of Commerce was tasked with working across agencies to ensure that there is sufficient spectrum to ferry wireless data. Getting more spectrum in the hands of carriers -- particularly rural carriers -- was seen as a critical component of the strategy.

But in spite of the White House's efforts to push for more spectrum for 5G and to align other policies to encourage 5G deployment, Trump's tariffs on Chinese goods and pressure on European allies to rip out and ban 5G equipment from Chinese equipment maker Huawei over security concerns, have also threatened the speedy roll out of the technology, according to critics.

"So far, this Administration's interventions on 5G have done more harm than good," said Jessica Rosenworcel, one of two Democrats serving on the FCC. "From imposing tariffs on 5G equipment to alienating allies on 5G security to falling behind the rest of the world on critical mid-band spectrum, the White House has yet to offer a workable plan for US leadership."

Big questions remain on rural broadband funding

Rosenworcel is also critical of the $20 billion in funding that the White House and FCC announced Friday. The FCC hasn't offered much detail on the $20 billion fund, except to say that it will be allocated as part of a reverse auction to ensure resources are distributed to carriers in areas with the most need. But Rosenworcel said at a press conference following the FCC's monthly meeting that she is skeptical the fund will make much of a difference, given that the money is likely coming from an existing fund that is already doling out subsidies to rural broadband carriers.

"It looks to me like they are dressing up an old program in new Trump-era clothes and suggesting that somehow the problem will be solved," she said.

Harold Fed with the consumer watchdog group Public Knowledge is also skeptical. He said the funding plan raised many questions about where the money will come from and whether Congress will be asked to allocate additional funds.

He urged Congress to press Pai on the details.

"Chairman Pai and the Trump Administration have an unfortunate history of promising big things for rural broadband with great fanfare, but have either failed to deliver, or simply taken credit for programs developed by the Obama Administration," he said in a statement. "Hopefully, this will not be the case again."

Originally published April 12, 5:41 a.m. PT.
Update 6:01 a.m. PT: Adds more details on White House's 5G push; 7:05 a.m.: Adds information from conference with FCC Chairman Ajit Pai; 7:55 a.m.: Adds background on 5G, comments from Pai and comments from Rosenworcel. 3:42 p.m.: Adds comments from Trump and reactions from industry and consumer groups.