CSIS Reiterates Importance of Spectrum to National Security

Recently published commentary from the Center for Strategic & International Studies (CSIS) makes familiar points regarding America's pressing need for additional, globally harmonized commercial spectrum – but also places the continuing spectrum-allocation impasse in a broader, geopolitical context characterized by serious national security and intelligence implications.

"Spectrum Allocations and Twenty-First-Century National Security," by James Andrew Lewis, echoes arguments raised by another CSIS scholar, Clete Johnson, that I summarized in an October 2024 post to the FSF Blog. Namely, that Congress must act quickly to renew the FCC's spectrum auction authority and work with the Department of Defense and other federal agencies to ensure that the same bands used in other parts of the world are made available for commercial use in the U.S.

The concern, according to Mr. Lewis, is China:

The United States is in a global competition with China over markets, rule setting, and technological leadership…. To remain competitive, the United States will need to adjust how it has allocated radio spectrum to emphasize commercial innovation. The government-centric spectrum allocations of the last century will need to change if we are not to fall behind. 

Specifically, U.S. policymakers must appreciate that, going forward, technological innovation by the commercial, rather than the government, sector is the key to national security in the twenty-first century: "[c]ommercial technologies underpin modern military strength." And that to facilitate that technological innovation, domestic commercial interests must have access to the same spectrum bands used in the rest of the world:

If the United States does not use a harmonized spectrum, it shrinks the economies of scale that trusted vendors need to compete with Huawei…. In simple terms, people will build devices to use specific spectrum bands for commercial purposes designated by the WRC. Essentially, if the United States does not use spectrum allocated everywhere else for commercial purposes, it will be handicapped in any competition.

In other words, U.S. policymakers must move beyond the antiquated notion that government control of certain bands, in and of itself, enhances our national security – and instead recognize that military might today hinges in large part upon America's ability to dictate the technological standards for mobile networks used worldwide. Commercial access to globally harmonized spectrum bands is critical to achieving that objective.

Mr. Lewis concludes with a warning: "[t]he timing for action is short, perhaps a year or two since a failure to act puts the United States at the cusp of a great strategic blunder that will let an ambitious China build the network that forms the backbone of the global economy."

MEDIA ADVISORY: The FCC Should Be Commended for Holding ORAN Forum

Regarding the FCC's forum today regarding ORAN (open radio access networks), the following statement may be attributed to Free State Foundation President Randolph May: 

The FCC should be commended for holding the forum today exploring ORAN, what it means, and what it may portend for the future. Even discounting the usual hype accompanying new technological advances and business models, ORAN, properly understood, holds the promise to promote increased marketplace competition and innovation, and, at the same time, promote U.S. national security by increasing supply chain diversity. ORAN could be a case in which technological advances associated with 5G, artificial intelligence, and virtualization, and changing business models, advance freedom in both the economic and geopolitical spheres. But this should be done largely in a context of private sector decision-making with minimal direct government intervention and mandates.

Attorney General Barr Presses for U.S. Action Now on 5G

On February 6, Attorney General William Barr delivered the keynote address at the Justice Department's "China Initiative Conference" in Washington D.C. Attorney General Barr primarily addressed the technological and economic challenges posed to the U.S. by China in the areas of intellectual property theft and 5G dominance. His address is worth reading or viewing in full. (For C-SPAN, AG Barr's address begins about 1 hour and 26 minutes into the stream and his remarks on 5G begin at about 1 hour and 38 minutes in.)

In his address, AG Barr stressed the importance of making spectrum resources available for 5G services in the U.S. He specifically identified C-Band and L-Band spectrum as critically important for rapid deployment of 5G. From AG Barr's prepared remarks: 

The FCC has been working hard to get the C-band spectrum out into the market through an auction.  It is critical to get this done within the next few months.  Even then, the U.S. will need 400,000 base stations to cover the nation.  This could take a decade or more to build out. Recently, there have been interesting proposals to jump-start U.S.  5G by also making available L-band spectrum for use in tandem with the C-band.  By using the L-band for uplink, we could dramatically reduce the number of base stations required to complete national coverage.  It has been suggested that this could cut the time for U.S. 5G deployment from a decade to 18 months, and save approximately $80 million.  While some technical issues about using the L-band are being debated, it is imperative that the FCC resolves this question. The bottom line is that we have to move decisively to auction the C-band spectrum, and bring to resolution the issues over L-band.  Our economic future is at stake.  We have to bear in mind that, given the narrow window we face, the risk of losing the 5G struggle with China should vastly outweigh all other considerations.

Free State Foundation scholars have also advocated prompt action by the FCC to put C-Band and L-Band spectrum into commercial use. On February 6, FSF President Randolph May issued a statement regarding the FCC's proposed order to transition incumbent users in the C-band and clear for auction 280 MHz in that band. And my December 19, 2019 blog post, "FCC Should Green Light Wireless Services in L-Band Spectrum," urged prompt FCC decision on Ligado Networks' modified applications to deploy a satellite-terrestrial hybrid mobile network for commercial services in unused L-band spectrum.  

Importantly, AG Barr's keynote address also called attention to the pressing issue of 5G equipment suppliers and the need to have a market-ready alternative to Chinese 5G equipment suppliers. His call that the U.S. and its closest allies need to consider ways to put our large market and financial muscle behind viable competitors – insofar as it is carried out by by private American and allied companies – merits serious consideration. 

Ericsson Report Touts Consumer Realities About the 5G

Ericsson has released a report titled "5G Consumer Potential: Busting the Myths Around the Value of 5G for Consumers." Based on research that included over 35,000 online interviews worldwide, 6 focus groups, and 22 expert interviews, the report counters myths about 5G mobile network technologies with information indicating strong consumer awareness, interest, and expectations regarding 5G performance capabilities, future uses, and value. 

Research Report: U.S. Tied with China in Global 5G Readiness

Research firm Analysys Mason just released its report "Global Race to 5G – Update." Analysys Mason observes that in 2018 the FCC adopted important reforms and the U.S. improved its 5G readiness. Its report concludes that the U.S. is now tied with China for the top position in global 5G readiness. Also, the report finds: "[T]here is still more to be done to ensure that the US retains its leading position, and we have found that a key short-term goal for the US to maintain its leading position is improving the availability of mid- band spectrum." Mid-band spectrum is identified as being critically important for 5G services. Thus, increased availability of mid-band spectrum is a key near-term public policy goal for the U.S. to maintain its leading position. To get an up-to-date grasp on the status of the global race to 5G, read Analsys Mason's insightful report.

Representative Eshoo's New Bill Would Slow 5G Deployment

On January 15, 2019, Representative Anna Eshoo (D-CA) introduced the "Accelerating Wireless Broadband Development by Empowering Local Communities Act of 2019" (H.R. 530), which would overturn FCC rules that preempt local government regulations on the deployment of 5G infrastructure.

As I illustrated in a September 2018 infographic, the FCC's Wireless Infrastructure Order facilitated 5G deployment by reducing unnecessary regulatory barriers and limiting unjustified fees imposed by local governments. One study by CMA Strategy found that the FCC’s Order will increase broadband infrastructure investment by $2.4 billion and deploy next-generation access to an additional 1.8 million homes and business, of which 97% will be concentrated in rural and suburban areas.

By overturning the FCC's Order, Representative Eshoo's bill would enable local governments to levy excessive fees and lengthy regulatory processes on broadband providers, slowing the deployment of 5G technology and delaying the creation of 5G’s massive economic benefits.

RAY BAUM Would be Proud

By Gregory J. Vogt, Visiting Fellow, Free State Foundation

Ray Baum would be proud. The Repack Airwaves Yielding Better Access for Users of Modern Services Act (RAY BAUM’s Act of 2018), H.R. 4986, has been passed by the Senate and the House and signed by the President. RAY BAUM’s Act, which honors long time communications expert Ray Baum, who most recently served as House Energy and Commerce Committee Staff Director prior to his death, includes slightly modified provisions of the MOBILE NOW Act that previously passed the Senate. Given the enormous consumer welfare benefits that will come from future 5G wireless deployment, RAY BAUM’s Act mandates near term dedicated and unlicensed spectrum and wireless siting infrastructure streamlining that will significantly aid in 5G deployment.

Among other things, RAY BAUM’s Act:

• Mandates that at least 255 MHz of mid-band spectrum be allocated for wireless mobile and fixed broadband use no later than December 31, 2022, in line with the Obama Administration’s 2010 500 MHz allocation goal;

• Requires the FCC to establish service rules for the 42 GHz band within two years of enactment;

• Requires government to conduct a feasibility study for commercial/government sharing of spectrum between 3.1 and 3.5 GHz and between 3.7 and 4.2 GHz;

• Facilitates speedy deployment of communications infrastructure on federal property or federal-aid supported state transportation projects;

• Requires NTIA to report recommendations to Congress that would provide incentives to federal agencies to relinquish or share the spectrum they use;

• Requires NTIA to study bidirectional sharing that would permit government to gain flexible access to commercial spectrum on a shared basis;

• Requires the Commission, in consultation with NTIA, to develop a national plan for promotion of unlicensed spectrum;

• Requires the FCC to adopt rules permitting unlicensed mobile use of spectrum in guard bands; and

• Requires the FCC to conduct a rulemaking to increase advanced telecommunications service in rural area and make spectrum available to covered small carriers.

The Act is laudable because it will add significant mid- and high-band spectrum usable to deploy 5G service in the future in a timely fashion. The Act reinvigorates the search for reallocable spectrum, an effort that lagged in the Obama Administration. The legislation also is important because it places timelines on the reallocation of possible new mobile spectrum, ensuring there is a spectrum pipeline to meet future demand.

The Act recognizes the importance to the American and global economies of speedy deployment of 5G services. Sufficient available spectrum is needed to maintain U.S. leadership in deployment of advanced wireless technology. As Randolph May and I detailed here, mobile broadband produces significant increases in annual consumer welfare, and contributes significantly to jobs, tax revenues, and U.S GDP, including the revenues associated with export of wireless know-how and products worldwide that produce tangible benefits retained in the U.S. 5G technology can deliver mobile broadband at considerably greater speed, increase capacity for billions of new Internet of Things (IoT) devices, and reduce latency, or the time it takes for Internet messages to be received and responded to. More spectrum is necessary to fulfill exploding consumer demand for wireless capacity.

The Act is lukewarm in its ability to motivate government to give up inefficiently used spectrum. Although the required NTIA study is useful, the government must urgently review incentives to increase the reallocation of spectrum for private use. Many interesting proposals have already been made, which I evaluated favorably here. MOBILE NOW’s bidirectional sharing proposal may have some impact on convincing an agency to give up some of its exclusive right to spectrum, but I have my doubts given endemic government hand-wringing and potential operational problems of such an approach. Providing a more material incentive, such as allowing an agency to share in auction proceeds like the broadcaster incentive auction, assign opportunity cost values to government spectrum, and using other good management techniques, would better encourage government to use spectrum efficiently.

The spectrum provisions are somewhat different than the original Senate version of MOBILE NOW because the FCC already had allocated a number of the millimeter wave bands for mobile and fixed wireless use originally addressed by the Senate. For instance, the FCC’s Spectrum Frontiers proceeding already moves the spectrum pipeline forward with high-band spectrum. The FCC has also been exploring modification of the 3.5 GHz rules that can make the spectrum more useful to mobile broadband carriers. The Commission has already opened an inquiry examining reallocation of spectrum between 3.9 GHz and 24 GHz, which may be useful in implementing some provisions of RAY BAUM’s Act.

The Pai FCC also is rejecting the unwise market-killing restrictions of the kind that encumbered some auctions held during the Wheeler FCC administration so that auctions will more closely resemble competitive markets. Unencumbered auctions yield more benefits for America’s consumers and taxpayers.

The Act’s wireless infrastructure provisions also will aid 5G deployment. Requiring the federal government to address siting proposals in a timely fashion and standardizing site contracts will improve 5G deployment. Together with other infrastructure proposals that either have been or are in the process of being adopted by the FCC, government at all levels will be expected to facilitate approval of infrastructure proposals pursuant to national spectrum deployment policy priorities.

Amidst the noise of the political milieu, it is heartening to see that Congress generally made wise bipartisan choices benefiting American consumers. RAY BAUM’s Act, which the President has now signed, places a firm stake in the ground in favor of prompt 5G deployment. 

5G Will Be a Technological Leap Forward for Consumers

A March 2018 policy paper by Nokia highlights the benefits of 5G networks to consumers and describes 5G’s role as an enabler of the Internet of Things:

• “5G will offer an expected peak data rate higher than 2 Gbit/s initially and ultimately as high as 10-20 Gbit/s compared to the 300 Mbit/s LTE can offer today, combined with virtually zero latency, meaning that the radio interface will not be the bottleneck even for the most challenging use cases.”
• “5G will support applications and industries of the future such as innovative health care services, self-driving cars and the next generation of industry automation.
• “5G supports the huge growth of machine-to-machine type communication, also called Internet of Things (IoT), through flexibility, low costs and low consumption of energy. At the same time, 5G will be reliable and quick enough for mission-critical wireless control and automation tasks such as self-driving cars.”
• “5G will lower costs and the consumption of energy. Energy efficiency is an integral part of the design paradigm of 5G.”

The policy paper also includes spectrum management, universal service, taxation, and other recommendations for Congress, the FCC, and NTIA to consider in an effort to promote 5G deployment.

Commissioner Carr’s Proposal Would Create At Least $1.56 Billion in 5G Investment

A new report by Accenture Strategy found that regulations imposed by the National Historic Preservation Act and the National Environmental Policy Act (NHPA/NEPA) cost 5G wireless providers nearly $36 million in 2017 and consumed 29% of all related deployment costs, on average. With small cell deployment expected to grow significantly in coming years, the report finds that wireless providers will incur $2.43 billion in NHPA/NEPA regulatory costs from 2018 to 2026. Therefore, if the costs of NHPA/NEPA regulations were cut by two-thirds, 5G wireless providers throughout the U.S. would have an additional $1.56 billion to invest in small cell deployment.

FCC Commissioner Brendan Carr recently announced a new proposal that would cut NHPA/NEPA regulatory costs by 80%. If adopted, 5G wireless providers would have even more cost savings to allocate towards additional small cell deployment.

Local Governments Should Promote 5G Smart Cities, Not Municipal Broadband

Despite the dismal record of financial performance by municipal broadband systems, some municipalities are moving forward with plans to build new government-run systems. Some proponents of municipal broadband point to a new report from Harvard’s Berkman Klein Center claiming that municipal systems are the “value leaders in America” because they supposedly offer service at lower prices than those from private providers.

Last month, FSF Senior Fellow Ted Bolema and I published a Perspectives from FSF Scholars entitled “A Critical Assessment of Harvard’s ‘Community-Owned Fiber Networks: Value Leaders in America’ Study,” in which we pointed out many problems with the Harvard study. But even setting aside the problems with the dubious methodology and questionable interpretation of the data from the Harvard study, municipalities that believe their residents do not have sufficient access to broadband have better options than government-run broadband. Instead of promoting municipal broadband projects, local governments should seek to streamline the implementation of 5G “smart cities,” which will provide vastly superior net economic benefits to consumers, businesses, and residents.

The Harvard study purports to find that in 23 out of 27 municipalities with community-provided broadband the government providers offered lower prices for entry-level broadband packages than the private providers. In our paper, we explain how the Harvard study’s data and methodology creates a heavy bias in favor of municipal providers.

But even if a municipal system can offer lower prices to those who subscribe to its broadband service, that does not make it a better value for its community than private broadband. Most municipal providers use taxpayer funds to subsidize the price of broadband below a profitable level, oftentimes generating massive long-term debt. That may make the price of the service attractive to potential subscribers, but the community, including the residents who do not subscribe to the municipal network, still must pay for the subsidies and the debt used to finance the project.

We point out that there are nine municipal projects that were analyzed in both the Harvard study and a University of Pennsylvania study that analyzes the financial viability of municipal broadband projects. Of those nine overlapping municipal broadband projects, at the end of 2014 four of them were cash flow negative and four of them were not on pace to be paid off within the lifetime of a broadband network, which is generally between 30 and 40 years. For example, the municipal provider in Lafayette, LA, LUS Fiber, provides the greatest cost “savings” over the first four years of service, according to the Harvard study. But Lafayette residents are on the hook for over $36 million in debt that is unlikely to be repaid with the current level of cash flows. The table below shows that municipal networks with the greatest cost “savings” also generate burdensome long-term public debt.

Results from Markets Found in Both Studies

Municipal Network	Cost “Savings” Over Four Years According to Harvard Study	Net Present Value of Municipal Broadband Project	Years until Project Turns Positive
Lafayette, LA	$600.00	-$36,086,333	Never
Morristown, TN	$324.12	-$4,281,017	Never
Clarksville, TN	$138.75	-$7,442,513	Never
Monticello, MN	$122.74	-$25,508,327	Never
Pulaski, TN	$237.24	$97,948	490
Brookings, SD	$163.13	$290,521	349
Chattanooga, TN	$107.25	$2,062,787	412
Tullahoma, TN	$19.22	$846,549	108
Bristol, TN	$79.22	$4,168,048	34

The Harvard study also does not consider all of the dynamic changes in the broadband market. For example, more people than ever are turning to mobile broadband as a substitute for fixed broadband. The future of mobile broadband is 5G wireless technology, and with at least 10 times faster speeds than 4G, 5G will make mobile broadband even more competitive with other broadband technologies. Throughout U.S. cities, mobile broadband providers are deploying small cell infrastructure for 5G wireless technology, which can target municipal areas in the same way that wireline municipal broadband does, but potentially at a much lower cost.

When 5G wireless technology is deployed, “smart cities” will be able to enjoy more efficient and effective use of local government services such as energy, utilities, transportation, and public safety, saving the cities millions of dollars. For example, smart lighting automatically will dim public street lights when no pedestrians or vehicles are present. Public transportation will be able to reduce wait times by optimizing bus and train schedules with commuter smartphones. High-speed video surveillance will allow first responders to assess crime scenes and dangerous situations before arriving.

As I discussed in a January 2017 blog, 5G wireless technology is projected to create $275 billion in investment, 3 million jobs, and $500 billion in gross domestic product throughout the United States, which should be much more attractive to local governments than the financial instability often created by municipal broadband projects. These projected net economic benefits of 5G enabled “smart cities” outweigh the net economic costs of many municipal broadband networks.

Instead of imposing long-term debt on residents by promoting municipal broadband projects, local governments should promote 5G small cell deployment. By reducing pole attachment fees, allowing the use of public rights-of-ways, and accelerating approval processes, states and municipalities can streamline the deployment of 5G technology in local areas. Not only will this relieve residents from the tax burden imposed by a municipal network, but it will help implement a next-generation network which will provide at least the same consumer benefits as municipal broadband with less financial risk to local governments.