TR Daily ‘No Decision’ on Government-Built 5G Network ‘Yet,’ Ross Says
Wednesday, March 14, 2018

‘No Decision’ on Government-Built 5G Network ‘Yet,’ Ross Says

Five Cabinet secretaries today defended the Trump administration’s infrastructure proposal and related positions from Democratic senators who criticized the delay on action and the lack of federal funding, as well as from concerns from both sides of the aisle on broadband deployment data. Senators also expressed their concerns that aluminum and steel tariffs could lead to a trade war that would harm family farmers and that the White House is considering “nationalizing” 5G networks.

During the Senate Commerce, Science, and Transportation Committee’s hearing on the infrastructure proposal, Sen. Ted Cruz (R., Texas) noted that he had joined fellow committee member Catherine Cortez Masto (D., Nev.) recently in a letter to White House officials about the “leaked memo on nationalizing 5G” (TR Daily, Jan. 29). “Should the United States be nationalizing 5G?” he asked Commerce Secretary Wilbur Ross.

Mr. Ross said that “no decision has been made on the memo as yet, and I don’t want to get out ahead of the president on it.”

The leaked proposal called for a nationwide 5G government-built network in the 3.7-4.2 gigahertz band to be constructed over three years that would be secure against hackers and ensure that the U.S. effectively competes against China in the Internet of things ecosystem.

During today’s hearing, Sen. Cruz emphasized that his position “and the position of many in Congress” is that nationalizing 5G networks would be “a bad mistake.”

Mr. Ross responded, “I don’t want to sound as if I’m advocating it. I just don’t want to get out ahead of the president on it.”

President Trump announced the infrastructure proposal that was the subject of today’s hearing in his State of the Union address (TR Daily, Jan. 31), and the White House asked Congress two weeks later to draft legislation to implement the $200 billion federal infrastructure investment program (TR Daily, Feb. 12). Under the administration proposal, half the money would go to a competitive grant fund that would be overseen by the Department of Transportation, Army Corps of Engineers, and Environmental Protection Agency.

Other agencies, such as the Rural Utilities Service, FCC, and the National Telecommunications and Information Administration, which have a history of funding broadband projects, would have to “petition” to be able to distribute any of the funding in the $100 billion competitive grant fund, which is the largest pot of money in the overall infrastructure proposal.

The bulk of the second largest program within the overall proposal would be distributed as block grants to the states for distribution by the governors.

The Trump administration expects to leverage the $200 billion in federal funding to encourage state, local, tribal, and private sector spending for a total of $1.5 trillion in infrastructure investment.

In his opening remarks at today’s hearing, committee Chairman John Thune (R., S.D.) emphasized this this is “not just another highway bill. We will consider other needs, such as broadband and water infrastructure.”

“Both sides can come together on this, and it can happen this year,” he added.

Committee ranking minority member Bill Nelson (D., Fla.) suggested rolling back in part the tax cuts enacted in December to increase the federal funding to pay for infrastructure projects like the 911 system “that’s desperately in need of upgrading.”

In a floor statement today, Senate Majority Leader Mitch McConnell (R., Ky.) took note of the Commerce Committee hearing. “I’m grateful for the Trump Administration’s commitment to this issue. And I hope this week’s hearings, along with the ongoing work of our colleagues on Environment and Public Works, Appropriations and other committees, keep building momentum. Bipartisan results are achievable this year, starting with billions in added funding for infrastructure improvement in the budget agreement, and extending to the work of many committees in the months ahead.”

In her testimony, Transportation Secretary Elaine Chao emphasized that “we cannot address [infrastructure needs] of this magnitude with federal money alone.” She suggested pension funds that “have a demand for conservative investment opportunities” as a possible source of funding to supplement federal dollars.

In his testimony, Secretary Ross spoke of the need for a faster permitting process for projects that seek to use federal lands or buildings. “The department is assessing how to bring broadband to rural areas in support of advanced manufacturing, telehealth, and e-commerce,” he added.

Labor Secretary Alexander Acosta spoke of extending Pell grants from degree programs to certificate programs, which could include technical certifications, and of “reforming the Perkins Career and Technical Education Program to ensure more students have access to high-quality technical education to develop the skills required in today’s economy,” which he said would “help create a pipeline of skilled Americans.”

In his written testimony, Agriculture Secretary Sonny Perdue said, “Atop the infrastructure priority list for rural American citizens, businesses, and farms is the expansion of rural broadband for e-connectivity to the next ‘interstate highway system’ of global commerce. The Agriculture and Rural Prosperity Task Force recognized ‘e-connectivity’ or reliable and affordable broadband as the key to productivity in the 21st Century. It is fundamental for economic growth throughout the U.S., providing access to capital, expanding markets, training Americans for the jobs of the 21st Century economy, enabling innovation, and ensuring quality of life.”

He added, “Just like the interstate opened the way for faster transportation, broadband connectivity is the new interstate that will connect all the towns and cities across the nation. While Interstate highways may have bypassed many small towns decades ago, we want to be sure that the new digital highway does not bypass any of those small towns this time. Every rural community should have an ‘on ramp’ to the digital superhighway that carries 21st Century commerce.”

Secretary Perdue continued, “One of many beneficiaries of broadband e-connectivity will be farms. Precision agriculture technologies are growing in popularity for their ability to improve farm management decisions, for increasing production and reducing input costs. Modern farming technologies include precision planting, fertilizing, spraying, and irrigation. USDA researchers have estimated that the cost savings from use of these precision agriculture technologies in corn production ranged between $13 and $25 per acre. In addition to ‘smart farms,’ smart forest, smart factories, and smart transportation will also be an economic game-changer for rural economies — all requiring full deployment e-connectivity to high-speed internet, far beyond what is available in rural America today.

“As we invest in rural infrastructure, a key part of modernization should include the best cybersecurity possible — for our water utilities, power utilities, and broadband. Protections from such threats are important throughout all our networks, for our entire Nation’s security,” he said.

Energy Secretary Rick Perry also testified.

Sen. Thune asked the panel, “Is it fair to interpret your presence is indication of the administration’s willingness to work with Congress on bipartisan basis?” The secretaries responded with strong affirmatives ranging from “absolutely” to “for sure” and “I don’t think we get it done any other way.”

In response to a question from the chairman about changes in the permitting process, Secretary Chao assured him that “we all want to protect the environment” and that “we’re not going to compromise on environmental protections.” Instead, changes will focus on eliminating duplicative processes and allowing for simultaneous, rather than sequential, reviews by separate agencies.

Chairman Thune asked Secretary Perdue what the Agriculture Department will do to ensure that its RUS programs don’t finance broadband overbuilds, as Sen. Thune suggested occurred during the previous administration.

“I don’t think there’s any doubt in [the truth of] your allegations,” Mr. Perdue said. He said the department needs to get “good data” about where broadband currently exists.

Sen. Nelson asked whether the administrative proposal will increase state and local tax burdens by reducing the typical 80% federal share of jointly funded projects to 20%.

Secretary Chao said that there are other sources of funding than taxes and tolls. “We are agnostic as to the source of [non-federal] funding,” she said, suggesting “private activity bonds” as one possibility.

“A private activity bond is the taxpayer subsidizing to [enable] a lower interest rate. That’s only going to get you so far,” Mr. Nelson said.

Sen. Jerry Moran (R, Kan.) asked about broadband mapping. “How do we get this right?” he said.

Secretary Ross said, “There’s intimate collaboration between NTIA [the National Telecommunications and Information Administration] and the FCC. … We’re working very hard to ensure dollars are well spent … in creating accurate mapping.”

Sen. Moran emphasized, “I would ask you to pay particular attention to the accuracy of mapping.”

Secretary Ross responded by suggesting that the First Responder Network Authority (FirstNet) “will supply some of the needs that can support rural broadband. … The other great new thing are these constellations of low-orbit satellites.”

Sen. Moran also urged Secretary Perdue to ensure that RUS programs are not funding the overbuilding of broadband networks.

Sen. Gary Peters (D., Mich.) said, “We’re really good at identifying the problem,” but not at making progress toward solving it. As for funding, “I haven’t heard anybody talking about it other than that we want local governments to pay for it,” he said, adding that the only suggestion he has heard as an alternative to tolls is, “Let’s just go into debt more.”

Sen. Tammy Duckworth (D., Ill.) said that the administration’s recent budget proposal cut more from previously existing infrastructure programs than the infrastructure proposal would provide.

Sen. Maggie Hassan (D., N.H.) raised the issue of inaccurate broadband mapping data. “It appears that the FCC has just accepted the statements of two of the largest cellular carriers about where there is broadband,” she said.

Sen. Mike Lee (R., Utah) raised concerns that the president’s recent decision to impose aluminum and steel tariffs could raise the cost of components used in manufacturing. He said that a manufacturer in his state had told him that he “doubts he’ll be able to keep manufacturing … in the United States.”

Sen. Lee asked, “Will this escalate into a full-blown trade war” that could lead to tariffs imposed by other countries on U.S. agricultural exports?

“We’re not responsible for their reaction,” Secretary Perdue said.

Sen. Jon Tester (D., Mont.) said that every agricultural entity in his states is concerned about the tariffs.

Sen. Cortez Masto asked, “How do you know it will stimulate $1.5 trillion? Do you have modeling or analysis?” She asked all of the panelists to submit any modeling or analysis that they have done to her office.

She also asked what the administration means when it talks about wanting a “bipartisan” infrastructure bill. “Are you talking about coming to Congress and working with us?”

Secretary Chao said, “The proposal was submitted. … We’d prefer it be done on a bipartisan basis.”

Sen. Tammy Baldwin (D., Wis.) asked, “Is it true that this document makes no explicit reference to Buy America?” Although the witnesses referred to other directives outside the proposal and to what is “implicit” in the proposal, none of them pointed to any explicit statement in the proposal. —Lynn Stanton, [email protected]


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