Let the Private Sector and Free Market Build the Nationwide Communications Network

If you were one of the nearly 400,000 people who descended upon Austin in the last two weeks to be part of the South by Southwest festivities, you were probably not alone in uploading an Instagram story of your favorite band or posting to social media about presidential candidates making appearances. But, imagine if you were able to upload those posts even faster or download a movie showcased at SXSW in a matter of seconds? That technology is becoming a reality in the form of 5G, which is the fifth generation of wireless technology. Wireless communications has come a long way from the first generation which only enabled phone calls to 5G which will connect billions of devices.

Just a few miles away from SXSW, AT&T and Samsung partnered to establish an “Innovation Zone” to test how 5G affects manufacturing. The foundation that will be used for the nationwide 5G networks of tomorrow is already being built not just on the coasts but in America’s heartland. Carriers, including Verizon, have rolled out equipment to both homes and mobile devices in Indianapolis in the last year. The private sector is leading and driving forward this new game-changing technology but regulatory proposals and red tape could interfere.

Why 5G is important?

5G technology will be part of a larger national strategy to connect all Americans that includes traditional fiber as well as satellite internet. At the same time, in terms of wireless technologies, 5G has the potential to make emerging technologies like autonomous vehicles, telehealth, and more efficient manufacturing a reality. From a big picture perspective, 5G also has the ability to enable up to $12.3 trillion worth of goods and services in 2035. This emerging mobile technology has the potential over the next decade to create $500 billion in GDP growth powered by $275 billion in investment which could lead to nearly 3 million newly created jobs.

Degradation of the free market could interfere with the 5G revolution

While the private sector is swiftly innovating and working to build out cutting edge communications technology, various recent policy proposals and regulatory impediments could hinder 5G deployment and plague other types of communications development as well.

For example, as noted by FCC Commissioner Brendan Carr, there have been calls to create a nationalized 5G network with heavy government administration. Such an approach would run counter to the successful private-sector-led innovations that enabled America to lead in the development of 4G. Let’s take for example the issue of municipal broadband in which cities and counties develop their own jurisdictional-wide broadband networks. History has shown that these large-scale government-run projects generally are a bad investment and are frequently sold to private companies at a loss. Nearly half of all states have banned this approach. A nationalized 5G network would amount to municipal broadband on steroids.

Similarly, another failed option that has been proposed is imposing public utility-style regulation on broadband. Unfortunately, the FCC experimented with applying the rotary-phone 1934 Communications Act to the already vibrant broadband sector from 2015 to 2017. Many of the powers given by this bygone law to the FCC such as rate and privacy regulation created uncertainty in the market. During public-utility style regulation broadband, investment dropped for the first time outside the context of a recession.

Finally, on the state level, many localities continue to charge exorbitant fees to permit and site communications equipment. For example, some localities will charge a wireless carrier thousands of dollars to attach a small wireless cell to a pole. Why is this problematic? 5G will rely on small cells, unlike traditional large cell towers, to provide high-speeds and coverage. The permitting fees, if left unchecked, can add up and become cost prohibitive for carriers to deploy. The wireless industry isn’t the only one facing this impediment. Cable operators who wish to add broadband to their existing cable in some cases are effectively double-charged permitting fees even though the additional deployment doesn’t add any significant cost to the locality.

What policies would help deploy advanced communications?

• Partnerships: Policymakers should work to develop public-private partnerships as opposed to developing state-run and top-down regulatory approaches that create innovation-hindering mandates. Cities such as Sacramento provide a great example of how to bring together stakeholders to streamline development of new citywide technology programs.
• Smart funding: Approximately 24 million Americans lack access to broadband connectivity, many of them in rural areas where there is little or no return on investment to deploy fiber or a wireless network. Congress should provide targeted funding to connect these unserved communities. The passage of the farm bill last year, which added $350,000,000 in rural broadband funding, was a much-needed step in the right direction as it provided reforms to focus funds in areas truly needing service and not overbuild where broadband currently exists.
• Regulatory relief: Partnerships and funding alone will not work if regulatory red tape holds up buildout. Commissioner Carr led efforts at the FCC to prohibit localities from charging overly-burdensome permitting fees and streamline federal siting regulations. These measures should be supported especially as they face legal challenges from municipalities seeking to extract revenue from carriers. Congress should permanently codify regulatory relief and extend it to cable operators as well.