Opinion

Newt’s 5G Hijinx Highlights the Importance of Market-driven Approach

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Posted: Apr 02, 2020 10:37 AM
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Newt’s 5G Hijinx Highlights the Importance of Market-driven Approach

Source: AP Photo/Carolyn Kaster, File

For over a year now, former Speaker of the House Newt Gingrich has been on a mission to nationalize the United States’ emerging 5G market, advocating for the government to act as a wholesaler of spectrum to internet service providers. Citing national security concerns, Gingrich has written that our country’s “laissez-faire tendencies and preferences are being used to defeat us” as China rapidly expands its Huawei 5G network across the world. 

Yet, a Daily Caller News Foundation investigation released last week reports that the former Speaker’s advocacy may be more self-interested than simple concern for the privacy of his fellow Americans because of a close association with the telecommunications giant Rivada Networks. As America’s wireless industry starts to spread its wings, consumers should be skeptical of radical calls like Gingrich’s to turn away from market principles.

Emails obtained by the Caller reveal that “Gingrich reached out to an FCC official about Rivada in November 2019, after Rivada CEO Declan Ganley sent Gingrich an email complaining about a former FCC staffer who had been sharply critical of Rivada.” Gingrich had previously claimed that he has “nothing” to do with the company, despite the fact that Rivada has pushed for the same national 5G plan according to Politico last March:

"Rivada, which counts Trump ally Thiel among its investors, is lobbying for the administration to take wireless spectrum from the Defense Department and use a third-party operator — ideally Rivada — to make those airwaves available to users who need it on a rolling wholesale basis, much like in the electricity market."

Rivada is well-known in Washington as a company that likes to collect political power players, counting Karl Rove as an adviser and former Govs. Jeb Bush and Martin O’Malley as board members in the present or recent past. Gingrich’s association with the company is little surprise, considering his regular criticism of Rivada rival AT&T, even going so far as to praise Huawei.

Fortunately, the Trump administration has not fallen for the bait, deferring to the FCC’s more market-based approach of auctioning spectrum for the wireless industry to take the lead in the race for 5G. So far, it’s working. T-Mobile’s 5G network now covers 200 million people, with demand rapidly growing, and Samsung recently announced that it sold 6.7 million 5G smartphones in 2019.

That’s not to say that there aren’t legitimate national security concerns when it comes to 5G. China’s notorious blurred line between state-supported companies like Huawei and the Communist Party make it all the more important for the U.S. to develop a strong 5G industry. However, the Trump administration has already taken strong action against the Chinese manufacturer, having announced a ban last year on U.S. firms using its technology that is set to go into effect in May.

More importantly, the U.S. wireless industry has been more competitive against China than Newt’s fearmongering would suggest. According to a 2019 report from the research firm Analysys Mason, the U.S. “is tied for first with China in global 5G readiness.” The FCC, for its part, has completed several spectrum auctions since 2018, with the last round netting $4.7 billion in sales and another scheduled for December.

The market-based approach of spectrum auctions has been a huge asset for the tech industry since it was first introduced in 1994, facilitating the growth of the internet as we know it today. Naysayers like Newt Gingrich who want to suddenly change this winning formula should be looked at with a skeptical eye. More often than not, there’s more interests at play than the virtue-signaling cries about national security would have you believe.