5G technology is about to sweep the world – We can't imitate the Chinese and abandon marketplace principles

One of the most important 5G manufacturers is Huawei, a Chinese company.  Chinese wireless carriers have already deployed Huawei 5G equipment in much of China.  By many measures, China is ahead of other countries, including the United States, in advancing 5G technology.

Former House Speaker Newt Gingrich has often proposed shrinking government and expanding the role of private innovation. He is now proposing, to encourage 5G development, that the federal government should control some bands of spectrum and regulate 5G through a “public-private partnership.”

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Writing in Newsweek, he said, “Decisive action building a public-private partnership in the near term demands that we make shared spectrum available for a carrier-neutral, wholesale-only, nationwide 5G network to be built in the next two to three years across the entire country.”

Rather than controlling spectrum for 5G, the federal government should transfer available spectrum to the Federal Communications Commission to be auctioned off to private businesses, who will use it to develop 5G. The FCC can set the terms of the licenses, such that the spectrum can only be used for 5G.

The glacial pace of transferring commercially useful spectrum to the private sector in the United States is slowing the industry's build out of 5G.

As with almost every other consumer-loved product, most wireless technologies have come from private competition. A consumer’s best friend is a competitive firm seeking business. All prior wireless technologies have been developed almost entirely by competitive private firms around the world, each working for a better way of providing wireless services to eager consumers.

Thus far, 5G is looking different because the Chinese government has made leadership in 5G a strategic national objective, and has used substantial resources to support new 5G technologies.

In a purely competitive world, advances by Huawei would benefit all consumers, including Americans. But Huawei is not another competitive firm.  Huawei has been subsidized by the Chinese government, receiving support other global competitors do not. These subsidies may violate World Trade Organization rules.

Worse, Huawei equipment appears to be used by the Chinese government in part to spy on its own people, and the equipment may be used for ill purposes in other countries as well.

We should not abandon marketplace principles and imitate Chinese central planning combined with a government-controlled 5G network in the hopes that it will succeed better than a private network.

For security concerns, Huawei equipment has effectively been banned from much of the American market, but many countries around the world welcome the Chinese-government-subsidized equipment.

The choice for the advancement of new technologies is stark: is it the Chinese model to have government central planning organize new technologies such as 5G possibly for nefarious purposes; or is it the historical American model of private competition which has so effectively deployed prior wireless technologies and countless other consumer products?

The right approach is private ownership of all elements of the wireless service, ranging from networks to spectrum to consumer handsets to software applications. Mr. Gingrich proposes instead a “public-private partnership” in which spectrum would apparently be government-owned and in which there would be one highly-regulated network.

The vast majority of consumer products and services, not just wireless services, have the indelible stamp of private rather than government development.  There is a good reason: government technological initiatives rarely work well.

Consider telecommunications.  For much of the 19th and 20th centuries, telegraph and later telephone services were owned and operated by government agencies.  Outside the United States and a few other market-oriented countries, service was slow, getting a phone line meant knowing someone important, and innovation was something that happened in other industries.

In the 1980s and 1990s, wireless telecommunications services were offered by private companies.  This has led to the greatest democratization of information in human history.  The vast majority of the world’s population who wants a phone has a wireless phone.

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With a phone, you can communicate at low cost with practically anyone in the world. Communications has become the prerogative of the common person, not the exclusive domain of the financially fortunate. Private competitive enterprise, not government central planning, has led to one of the greatest leaps forward in the social well-being of humanity.

We should not abandon marketplace principles and imitate Chinese central planning combined with a government-controlled 5G network in the hopes that it will succeed better than a private network. Rather, we should continue with the method that has worked so well in the past: the rule of law and competitive markets.

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