FCC's 5G masterstroke little more than big biz cash giveaway – expert
One-size-fits-all pricing in America will expand, not narrow, digital divide
The latest effort by the Federal Communications Commission (FCC) to expand 5G networks across the United States is little more than a cash giveaway to large telcos and will grow, rather than close, the digital divide.
That's the opinion of telco expert, author of the United States' National Broadband Plan, and a man credited as having done more than any other to "advance broadband expansion and competition", Blair Levin.
The FCC is due to vote on a plan that would cap the fees that state and local governments can charge for the deployment of 5G cells across the nation – something that large cable companies have been eagerly pushing for and which the current FCC leadership says will remove a critical barrier to the introduction of the next-generation network.
The FCC claims that its plan will save $2bn in costs and will in turn lead to $2.5bn in investment, most of it in rural areas. The problem with that, Levin says, is that it's bullshit.
"The principal impact of the FCC’s action is to facilitate a large transfer of wealth from the public to private enterprises - and leave American communities and states no better positioned to bridge digital gaps between urban and rural or between rich and poor," he warns in a blog post.
The one-size-fits-all proposal will simply put money into the pockets of huge corporations, providing greater profits but little incentive to rollout 5G networks in areas whether it is less profitable, or even unprofitable, he says.
Companies like AT&T and Verizon are going to rollout 5G cells in large metropolitan areas regardless – and will make a profit even if those cities charge significantly more than the proposed federal limit. At the same time, the fixed cell-deployment costs will not suddenly make rural rollouts a profitable venture. And so, as has happened for decades, the telcos simply won't invest there.
"While the FCC may ignore reality, the carriers and Wall Street understand that increasing profitability in Market A will not make Market B more attractive for investment. Market B will still an area that is unprofitable or otherwise unattractive for investment," Levin points out, adding, "only in Washington do otherwise intelligent people believe that lower costs automatically lead to commensurate capital investment."
What the FCC should have done, Levin all but shouts from the rooftops, is placed some requirements on Big Cable to rollout out to rural areas in return for making more money in metropolitan areas.
But that's not what the plan does. Instead, it takes the same approach as the recent tax cuts voted pushed through Congress – gives more money to large corporations and simply assumes that that money will be used to benefit citizens rather than be paid out in dividends or used for stock-buybacks and debt reduction.
The other problem with the imposed federal solution put forward by the FCC, Levin points out, is that it assumes both that large telcos are unable to use their significant power to strike a good deal with local and state government, and that local governments are only going to consider how much money they can squeeze out of large corporations when making critical decisions about the future of their cities' interconnectivity. Neither is remotely true, he notes, calling the whole philosophy behind it "absurd."
In addition, its approach – which was developed through a flawed process where the FCC stacked a key advisory group with telco representatives and which was subsequently denounced by local government representatives - is likely to create significant opposition and lawsuits. The cost of that legal action has been simply ignored by the FCC, Levin complains.
"The FCC is disingenuous in ignoring the cost of its action. In addition, the FCC action will likely lead to litigation over, among other things, jurisdiction and the meaning of such terms as 'cost‐based,' that will delay, rather than accelerate, next-generation broadband deployment."
And at the end of all of that, he points out, the entire proposal – which will create ill-will and reduce the income of local governments – is but a drop in the ocean and doesn’t address the main problems facing true national broadband rollout.
The program will account for just 1 per cent of the cost of such a network, Levin calculates, noting that Intel recently warned that Trump Administration's trade war with China is almost certain to cost US businesses in the broadband space multiple times what the telcos will save.
In short, it's terrible policy. Which is exactly what happens when you only listen to one voice in the room and have a leadership that instinctively views anything that financially benefits their former employer (FCC chair Ajit Pai was a lawyer for Verizon) as a good thing.
Meanwhile, while Big Cable continues to persuade the federal government that it must doing everything in its power to help them rollout 5G as cheaply as possible, te industry itself has started fighting over their slice of the new pie.
Fresh from announcing the first phonecall over 5G (yes, the technology still doesn't actually work yet), AT&T's CTO Andre Fuetsch started attacking competitor Verizon over its version of 5G, calling it "homegrown" and "proprietary."
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Speaking at the Mobile World Congress Americas show in Los Angeles – where all the telcos are competing with one another over their 5G amazingness – Fuetsch attacked Verizon's claim to have the best version of 5G, something it is calling Verizon 5G Ultra Wideband.
But Fuetsch pointed out that this approach uses Verizon's own version of the 5G standard, rather than the actual 3GPP 5G spec. "At AT&T we're all about 5G mobile, standards-based," he told reporters. "They [Verizon] seem to be fixated on 5G fixed and non-standards-based. We think that’s pretty significant and a differentiator."
The argument – which is, to be fair, a good one – is that sticking with the common standard will allow for seamless connections between different equipment and networks.
Of course, not to be outdone, Verizon also has a snippy response telling RCR Wireless News: "AT&T says they’re 'testing 5G fixed.' Sounds like they’re not being successful."
"Meanwhile, we are signing up customers in LA, Houston, Indianapolis and Sacramento, and start installing customer equipment – and turning up service – in October. We’ve said we’d be first in 5G. And we are. First in the US, first on the globe. By using our proprietary 5G technology (which as AT&T’s CTO knows, is 5G), we drive the entire global ecosystem forward… We’re able to walk and chew gum at the same time."
You see, just the sort of struggling companies that need a federal handout. ®