No one can accuse the Trump administration of being boring, even when it comes to telecom. According to leaked documents, there is a proposal going around the White House to build a federally owned 5G telecommunications system — the next version of a mobile broadband network — or perhaps even to nationalize the 5G networks that private telecom companies are now building. (5G is the “fifth generation” wireless protocol, which promises to be faster and more secure than its predecessor, 4G, but requires new antennas and cell towers.)
The White House proposal, which at the moment is just an idea, appears driven by concerns about security threats related to China’s development of 5G networks. But the strongest case for building a national network is different. Done right, a national 5G network could save a lot of Americans a lot of money and revive competition in what has become an entrenched oligopoly. Done wrong, on the other hand, it could look like something out of Hugo Chávez’s disastrous economic playbook.
Americans spend an extraordinary amount of money on bandwidth. The cable industry is the worst offender: Since cable providers have little effective competition, cable bills have grown at many times the rate of inflation and can easily reach thousands of dollars per year. Mobile phone service is not exactly a bargain, either. And with plans to connect cars, toasters and pets to the internet, broadband bills may continue to soar.
These bills, collectively, function like a private tax on the whole economy. Could a public 5G network cut that tax?
A national 5G network would be a kind of 21st-century Tennessee Valley Authority. The government would build or lease towers across the country, prioritizing underserved areas, and set up a public utility that sold bandwidth at cost. This cheap bandwidth would be made available for resale by anyone who wanted to provide home broadband or wireless, thus creating a new business model for small local resellers.
The new competition might save people money in a few ways. First, it could create price competition for the four national carriers (Verizon, AT&T, T-Mobile and Sprint). More important, it could do the same for cable broadband, whose providers face minimal competition in most areas. And it might give small telecom businesses a new lease on life. As a result, prices could be cheaper and jobs could be created.