TR Daily Kudlow, Pai Stress Support for Privately-Built 5G Networks
Thursday, April 4, 2019

Kudlow, Pai Stress Support for Privately-Built 5G Networks

National Economic Council Director Larry Kudlow today emphasized the importance of relying on “free market principles” to build 5G networks in the U.S. and hailed the progress that companies have already accomplished.

In remarks this afternoon at the CTIA 5G Summit, Mr. Kudlow cited an Analysys Mason report issued this week by CTIA that concluded that the U.S. ranks first globally in 5G deployments (TR Daily, April 2). The report said that the U.S. will have nearly double the number of 5G deployments by the end of this year than the second-ranked country – 92 compared with 48 in South Korea and 16 in the United Kingdom.

“The idea that somehow the USA is losing” on 5G to China “and we should all be pessimistic is just not true. We are doing very well,” Mr. Kudlow said.

He repeatedly mentioned the 92-deployment figure cited in the report. “That’s a very big number. We thought that number was in the 20s,” he said.

“I think it shows that we should stay on the free enterprise track. I don’t want the government to run this,” Mr. Kudlow said, while acknowledging that “there will be a national security piece, without question” that will be of interest to the government.

“I also want to note how well we did on 4G,” he said. “We will apply the exact same free-enterprise principles for 5G. That is our policy. And we will continue the process of auctioning off spectrum and then letting the private companies run with it. They are going to do the build-outs.”

“Basically, we’re winning. Basically, we have a tremendous start,” he said, complaining that the media’s portrayal of 5G deployment in the U.S. “is so negative.” He said an Oval Office meeting yesterday involved a discussion of advanced wireless networks.

Mr. Kudlow also said that President Trump “wants to get into the rural areas and the farm areas,” and he said the administration wants to work to streamline permitting in rural areas.

He also asked the industry to help on the setting of standards around the globe. The setting of standards is a “national security” issue for the U.S., he said.

“We want you to help us generate the best standards that are compatible with the American industry and the companies around the world that we use,” Mr. Kudlow said. “I don’t want certain countries to run away with a lot of standards-setting. … We want to make sure that the door’s open for American companies and their related suppliers.”

There are concerns among some that China is hoping to dominate the standards-setting process.

Today’s remarks by Mr. Kudlow echoed a speech he gave at a White House 5G Summit last September, at which he said that it was important to rely on “the free enterprise, free market economy” to grow the economy (TR Daily, Sept. 28, 2018).

Those remarks came after early last year when FCC Commissioners, members of Congress from both parties, industry players and their allies, public interest advocates, and others blasted a Trump administration proposal for the U.S. government to build a nationwide 5G network that is secure against hackers and ensures that the U.S. effectively competes against China in the Internet of things ecosystem (TR Daily, Jan. 29, 2018). The proposal was included in slides and a memo leaked to the news media.

More recently, Kayleigh McEnany, national press secretary for Mr. Trump’s 2020 campaign, touted the benefit of a national wholesale 5G network (TR Daily, March 4).

“A 5G wholesale market would drive down costs and provide access to millions of Americans who are currently underserved,” she said. “This is in line with President Trump’s agenda to benefit all Americans, regardless of geography.” However, in a statement reported by multiple media outlets, Ms. McEnany later backed off the earlier statement.

Trump campaign manager Brad Parscale has often expressed support in tweets for a nationwide wholesale 5G network.

Also, former House Speaker Newt Gingrich, who has advised Mr. Trump informally for years, recently wrote a column advocating the creation of an open access, nationwide wholesale network.

In his remarks today, Mr. Kudlow did not mention what had been an expected Trump executive order that could lead to a ban on the sale by Chinese vendors of telecom equipment for U.S. commercial wireless networks (TR Daily, Feb. 8). The executive order would tee up a rulemaking that would decide which vendors would be banned from selling their equipment to U.S. wireless carriers, an industry source has told TR Daily.

Later at today’s event, CTIA President and Chief Executive Officer Meredith Attwell Baker asked FCC Chairman Ajit Pai for his view on proposals for the federal government to build a nationwide 5G network or to nationalize such an offering.

“My position on this is pretty simple,” Mr. Pai replied. “I oppose any proposal for the government to build, own, or operate [a] next-generation wireless network.” Instead, he said, the government should “create the building blocks for 5G innovation and then let the private sector take the lead.”

Citing the views of Messrs. Kudlow and Pai, Ms. Baker said she hopes “that we can close the books once and for all on this wrong-headed idea.”

Mr. Pai also said he is pleased with the progress the FCC has made with its 5G FAST Plan, which was introduced in conjunction with the White House’s 5G Summit last fall.

“We feel very positive about where we are,” Mr. Pai said, saying that the FCC has been “extremely aggressive by anyone’s expectations.” He cited millimeter-wave band auctions that have been held, are underway, or are planned; plans to free up spectrum in the 2.5 gigahertz and 3.7 GHz bands; and steps to make available spectrum in the 6 GHz band and above 95 GHz.

He did not give any details on when the FCC might act in its 2.5 GHz and 3.7 GHz band proceedings.

“The supply of spectrum is not going to be a problem when it comes to the 5G future,” Mr. Pai declared.

He also noted actions to streamline the siting of small cells.

“You’ve done a great job. We’re very grateful,” Ms. Baker said. “We really have to be ready for a counterpunch from our global rivals.”

In opening remarks at today’s event. Ms. Baker touted the Analysys Mason report, particularly its conclusion that the U.S. is now tied with China in 5G readiness, compared with third place last year, and the number of 5G deployments that the U.S. is expected to have at the end of this year.

“What a difference a year makes,” she said. “This is great news, but we can’t celebrate yet,” she said. “To win, we need a lot of good years.”

She praised the FCC for streamlining its small cell siting rules and moving ahead to auction millimeter-wave band spectrum. But she noted that CTIA wants the Trump administration, in its national spectrum strategy, to require a five-year auction schedule.

According to the Analysis Group, freeing up priority spectrum bands during the next five years would add $391 billion to the U.S. economy and create 1.8 million new jobs, Ms. Baker noted.

Ms. Baker also said that the “biggest deficiency” on the spectrum front is the mid-band. By 2020, other countries plan to make four times more licensed, mid-band spectrum available than the U.S. does, according to the Analysys Mason report.

“The C band represents the best opportunity to close the gap with our global rivals,” Ms. Baker said.

In other remarks at today’s event, industry representatives said that while the U.S. has taken a number of steps to lead the 5G race, it must continue acting or find itself behind China and other countries. They said the FCC should continue to release more spectrum – especially mid-band frequencies – and should take more steps to streamline the siting of small cells. They also praised the Trump administration for its national spectrum strategy.

“We are up against formidable competition,” said T-Mobile US, Inc., Chief Technology Officer Neville Ray, citing the “Chinese machine.” “They may be slow getting out of the blocks, but they are going to run a very fast race,” he added.

Sprint Corp. President and CEO Michel Combes emphasized that China has low-, mid-, and high-band spectrum available to carriers and called “mind-blowing” the pace at which infrastructure is being deployed in that country. “We have to accelerate our efforts,” he added.

Messrs. Ray and Combes touted what they said would be the benefits of T-Mobile being allowed to acquire Sprint.

Nokia North America CTO Mike Murphy said the U.S. has moved more quickly recently on the 5G front than other countries.

5G services will be deployed more quickly than 4G has been, according to Qualcomm, Inc., President Cristiano Amon. He said 20 operators globally have 5G announced deployments. He cited 5G use cases in the energy, manufacturing, automotive, industrial, computing, smart cities, health care, and retail sectors.

Tim Baxter, president and CEO of Samsung Electronics North America, said the U.S. wireless industry needs to do a better job of explaining to localities that small cells are not like traditional macro towers. He also said there is a need to educate the public. A survey showed that 80% of people are aware of 5G, but few were aware of its benefits, Mr. Baxter said. “We’ve got a lot of work to do in that space,” he said.

Ronan Dunne, president of Verizon Communications, Inc.’s Consumer Group, stressed the importance of ensuring the privacy of consumer data. “We have to build trust,” he said. —Paul Kirby, [email protected]

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