Auction Notice Expected to Get 5-0 Vote; CTIA Warns US is Falling Behind on 5G

On the eve of the FCC vote on an NPRM on the security of U.S. communications networks, CTIA warned in a report Monday that the U.S. has fallen behind China in the race to 5G. Commissioners also will vote Tuesday on a public notice on the first auctions of millimeter-wave spectrum for 5G. The auction notice appears likely to get a 5-0 vote, industry and agency officials said Monday.

“China holds a narrow lead in overall 5G readiness ahead of South Korea and the United States,” said the CTIA report, by Analysys Mason. “China’s narrow lead is due to a combination of both proactive government policies and industry momentum.” But the U.S. maintains a high ranking as a “global leader in preparing to deploy 5G commercially, with significant investments in these next-generation networks,” the report said.

Major Chinese providers have all committed to launch dates for 5G “and the government has committed to at least 100 MHz of mid-band spectrum and 2,000 MHz of high-band spectrum for each wireless provider,” the report said. “Countries around the world are moving quickly to make spectrum available for 5G. This year alone, the U.K., Spain, and Italy are all holding 5G spectrum auctions.” At the end of 2018, the U.S. is expected to rank sixth out of 10 major countries in mid-band, in the 3-24 GHz, and the mid-band is “a critical band for 5G,” the report said. “The U.S. joins Russia and Canada as the only countries currently without announced plans to allocate mid-band spectrum on an exclusive basis to mobile by the end of 2020.”

A second report supported by CTIA, by Recon Analytics, said the price of not being first to 5G could be high. “Winning the race to 4G boosted America’s GDP” by almost $100 billion and “spurred an 84 percent increase in wireless-related jobs,” that report said. “Losing wireless leadership had long-term negative effects on Japan and Europe, contributing to job losses and the contraction of their domestic wireless industries.”

“The United States will not get a second chance to win the global 5G race,” said CTIA President Meredith Baker in a news release. “Today’s research highlights the importance of policymaker action in 2018 to reform local zoning rules and unlock access to mid-band spectrum as part of a broader spectrum pipeline plan.”

“The global competitive aspects of the U.S. getting its act together regarding 5G deployment cannot be emphasized too much,” former FCC Commissioner Robert McDowell, now at Mobile Future, told us. “If America doesn’t maintain its leadership in the wireless space, our economy would likely start falling behind Europe and Asia. So it’s imperative that US policymakers get this one right. There’s no room for error.”

The national security NPRM proposes to bar use of money in any USF program to buy equipment or services from companies that “pose a national security threat” to U.S. communications networks or the communications supply chain. It's expected to be approved 5-0 Tuesday (see 1804110032).

Thomas Duesterberg, senior fellow at the Hudson Institute, said questions continue about Chinese equipment makers, particularly ZTE. “It is surely significant that today the British government issued a warning for domestic firms to avoid ZTE equipment due to national security concerns, and the U.S. Department of Commerce accused ZTE of failing to honor an earlier agreement to sanction its officials who had been involved in circumventing international sanctions in selling equipment to North Korea and Iran,” he said.

The Analysys Mason report should be a “wake-up call” for U.S. policymakers, said Information Technology and Innovation Foundation Broadband Director Doug Brake. On the NPRM, “without knowing more than the going theory that Chinese firms would have a hard time saying ‘no’ to the government, it is hard to know what the right course of action is on letting Chinese equipment into the U.S. market,” he said. “It’s important to give process and clarity behind any decisions. These actions should be in coordination with a broader strategy on China, ideally coordinated with like-minded allies, rather than narrow tactics too easily dismissed by China as protectionism.”

Pai and Sen. Tom Cotton, R-Ark., said in a Fox News opinion piece Monday the FCC should address national security risks posed by companies “beholden to foreign governments that don’t share our values.” They mention Chinese suppliers Huawei and ZTE. “We believe it’s time for more concerted federal action,” they wrote. “Among other things, that means making sure that our government doesn’t make the problem worse by spending the American people’s money on products and services from any company that poses a national security threat to our communications networks.”

Industry group 5G Americas also released a paper Monday on the need for more licensed spectrum for 5G. “Licensed spectrum has been the raw material used to provide mobile and nomadic wireless services and fuel the smartphone revolution,” said Chris Pearson, president of 5G Americas. “Now with the evolution to 5G technology, far greater spectrum resources need to be identified and allocated in the U.S.”

The FCC is jumping ahead by scheduling auctions of high-frequency spectrum, but “leadership in the … bands may erode through delays in adopting auction rules, and indeed in holding the auctions themselves,” 5G Americas warned. “Adopting service rules is only a first step in making spectrum operational.”