Delaying 5G Spectrum Auction – A $13 Trillion Mistake

Posted: Feb 06, 2020 9:09 AM
Delaying 5G Spectrum Auction – A $13 Trillion Mistake

Source: AP Photo/Mark Schiefelbein

The race to 5G, the next generation of telecommunications technology applications, is one of the world’s most important ongoing business stories. It’s expected that by 2035 that portion of the telecom community will be responsible for more than $13 trillion in global economic output. This means the nation getting the best technology to market the quickest will enjoy an incredible competitive advantage.

That’s going to matter economically but also in the area of national security. More and more the U.S. military depends on cyberspace technology to give our warfighters the advantage they need to prevail. If it were not for what’s been so far, for example, it would not have been possible to take out the Irani terrorist IRGC Gen. Qasem Soleimani with a drone strike. But more than that, everything from banking to healthcare to food production will be governed by activities conducted via the Internet.

To do what needs to be done for America to be first to a complete 5G network requires the management of many moving parts. The hardware that makes things happen and the software that controls are only part of the equation. As is the case with Wi-Fi in every other respect, without enough clean spectrum to make things happen the U.S. is going nowhere.

Right now the best available plot along the spectrum for 5G development – and it's important to keep in mind the amount of spectrum is finite – is the midrange C-Band currently allocated to a group of satellite companies that have not utilized it to its full potential. The folks who think they can do something with it want it and, all things being equal, they should get it.

What stands in the way is the fact the allocation of spectrum is governed by the Federal Communications Commission. Its chairman, Ajit Pai, has been a real hero up to now in the ongoing battle to keep the government from doing something stupid to slow the continued development of the Internet, the technologies associated with it, and the economic growth it generates from which we all benefit.

What happens to the C-Band is not an incidental thing nor are the figures involved anything close to the rounding error some people have made them out to be. There are billions, even trillions in future economic growth at stake and Chairman Pai has the responsibility for threading the needle and keeping everyone happy so the issue of controls that portion of the spectrum doesn’t end up in court for years, perhaps even a decade, while the Chinese take control of the global telecommunications sphere.

Congress, as should be expected, is trying to weigh in on the issue. A proposal put forward by GOP Sens. Roger Wicker of Mississippi and John Thune of South Dakota would allow the FCC to hold a public auction before the end of 2020 of rights to use the C-Band for 5G technology and establishes a solid framework distributing auction proceeds between the government and the parties that currently have the rights to the space.

That makes sense. The companies who’ve made improvements to the spectrum technology and made investments need to be compensated for their efforts even if the work they did involve a communal asset overseen by the government. Others in Congress are trying to achieve the same thing, only in what relative terms must be considered as “on the cheap.”

The leading proposal among those comes from Louisiana GOP Sen. John Kennedy. Ironically called The SMART Act (because it’s anything but) it would delay the auction, thereby letting the Chinese take a great leap forward on 5G that probably lets them win the race.

Kennedy’s bill allocates just $5 billion to reimburse the satellite companies for relocating to another part of the spectrum and provides no more than $1 billion in revenues from the auction as an incentive to cooperate rather than sue.

What Kennedy’s proposing the way of compensation is ludicrous. Even he admits the spectrum could bring as much as $60 billion at auction while others seeing it bringing in even more. Offering $5 or $6 billion to companies that invested $50 billion over 40 years to build out businesses on the C-Band, where they’re now providing content to 120 million U.S. households is an insult.

Some argue the effort to ensure the satellite companies are well compensated for their time and investments stinks of crony capitalism, a term that’s unfortunately being misapplied by folks trying to move political opinions held by supporters of President Donald Trump. The SMART Act undermines rather than protects U.S. technology innovation and investment by signaling to private companies their efforts in the government-regulated space are not safe from future federal confiscation if the political winds change.

We want the private sector to lead America to 5G dominance. Washington can’t move fast enough to get the job done before the Chinese or any of the other competitors out there beat us to it. We’re relying on entrepreneurs to put us back on the Moon, a project so big and so expensive that at one time only the government could do it. It’s the same for the next generation of Internet applications, something President Trump and Chairman Pai should take to heart as they decide the best course of action to take. In the end, the FCC should be encouraging the promotion of normal market interests, especially on an issue where, as is the case here, the outcome will determine whether the United States remains a global economic leader.

Peter Roff is a senior fellow at Frontiers of Freedom and a former U.S. News and World Report contributing editor who appears regularly as a commentator on the One America News network.

He can be reached by email at Follow him on Twitter @PeterRoff.