White House sets up committee to assess foreign participation in US telco

President Donald Trump issued an executive order to establish a new committee to provide recommendations to FCC  regarding foreign applications for telecom licences in the US.

The formally titled “Executive Order on Establishing the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector” was issued by the president on Saturday, with a primary objective to ‘assist the FCC in its public interest review of national security and law enforcement concerns that may be raised by foreign participation in the United States telecommunications services sector’.

The committee will be chaired by the Attorney General (William Barr as the current job holder) and members will include the Secretary of Defense, the Secretary of Homeland Security, and heads of other executive departments or agencies, and Assistants to the President which the President sees appropriate. Advisors to the committee will include a dozen secretaries and heads of relevant departments and agencies, for example the State Department, Treasury, Commerce, National Intelligence, Office of Science and Technology Policy, as well as the President’s assistants for National Security Affairs and Economic Policy.

The committee’s working relation with the FCC will go two-ways. The FCC can refer applications for licences or transfers of licences to the committee for review. The committee will ‘review applications and licenses for risks to national security and law enforcement interests posed by such applications or licenses’, and will be authorised to collect information on applicants needed for the reviews. Based on such risk reviews, the committee shall recommend to the FCC whether it should dismiss or deny applications, set condition on or modify the granting of licences, or even revoke licenses already granted.

“I applaud the President for formalizing Team Telecom review and establishing a process that will allow the Executive Branch to provide its expert input to the FCC in a timely manner,” said FCC Commissioner Ajit Pai. “Now that this Executive Order has been issued, the FCC will move forward to conclude our own pending rulemaking on reform of the foreign ownership review process.”

Citing the FCC’s decision to reject an application from China Mobile to offer international telephony service last year, Pai said “this FCC will not hesitate to act to protect our networks from foreign threats. At the same time, we welcome beneficial investment in our networks and believe that this Executive Order will allow us to process such applications more quickly.”

Some of America’s biggest telecom companies are of foreign ownership. The newly formed New T-Mobile, the merger between T-Mobile and Sprint, is a subsidiary of Deutsche Telekom, with the German parent company being the biggest share-holder (43% of total share), and its second largest shareholder is Japan-based Softbank (23%). Vodafone used to own 45% of Verizon Wireless until 2014. But these naturally fall under the “beneficial investment” category. It will be applications like the one filed by China Mobile that will get most of the committee’s attention.

FCC orders inventory audits ahead of Chinese purge

The FCC has begun surveying the US telco landscape to understand how deeply embedded Huawei and ZTE equipment is in the nation’s networks ahead of a ‘rip and replace’ project.

Thanks to the National Defense Authorization Act (NDAA), which was signed into law in August 2018, Huawei and ZTE have been banned from any meaningful work in the US. It is not an outright ban, but the wording of the Act has effectively made it impossible for the duo to sell equipment to US telcos. Following the establishment of this Act, the FCC also adopted rules which dictated Universal Service Funds could not be used to fund networks and purchases with equipment from vendors deemed to pose a national security threat.

Now the work has begun to identify and remove the equipment which is already in existing networks. Data must be submitted to the FCC on or before April 22.

“Huawei and ZTE have been initially designated as threats to national security,” said FCC Chairman Ajit Pai. “Given that those designations may become final this spring, we are moving forward quickly to identify where equipment and services from these suppliers are embedded in our communications networks and, where they do have a foothold, to be in a position to help remove them.

“Today we’ve begun to collect the data we will need to protect our networks and protect the American people.”

What should be worth noting it that while exposure to Chinese equipment in the US networks is very low, this is a symbolic gesture emanating from the White House. The US is attempting to eradicate every presence of Huawei and ZTE from the connectivity landscape. It is a political move which makes a point in the conflict between the White House and Beijing, irrelevant if it is likely to cost the US Government millions.

Huawei has been fighting the NDAA and the block of funds for rural service providers who want to use Huawei equipment on the grounds it is an unconstitutional use of power, designed to target a single company which has not been prosecuted in the courts. While a judge in Texas upheld Government actions in recent weeks, Huawei will not be the only company disappointed by the outcome.

The Chinese vendor has continuously argued that it aids smaller telcos across the US and some certainly spoke out in support. MobileNation CEO Michael Beehn said Huawei was the only company cost-effective enough to serve its small footprint of 20,000 customers, while Viaero Wireless CEO Frank DiReco said he had worked with other more expensive vendors in the past, though deployments were never successful.

These are all moot points now however, as the FCC has officially taken the first steps in the quest to purge Chinese equipment every dark and small corner of the US connectivity landscape.

Texas Judge rules for White House over Huawei

Huawei has faced a setback in its pursuit of legitimacy in the US. as a Texas District Court ruled against its lawsuit directed towards the National Defense Authorization Act (NDAA).

Judge Amos Mazzant of the US District Court in East Texas ruled that section 889 of the NDAA was valid and legal. Huawei had argued the clause, which effectively banned it and ZTE from working with any company receiving federal funding, was unconstitutional on the grounds it presumed guilt without a fair trial.

While a Huawei victory was hardly going to make an impression with the single-minded White House policy makers, this is a victory for the Government, seemingly validating its decision.

“Contracting with the federal government is a privilege, not a constitutionally guaranteed right – at least not as far as this court is aware,” Judge Mazzant said in the ruling, first reported by Reuters.

This is an interesting nuance which has been put forward by Judge Mazzant. Huawei has argued the clause banning service providers from spending federal money on Chinese equipment is unconstitutional, though Judge Mazzant has stated that the Government should have the right to control how its money is allocated and spent. The Act does not prevent Huawei from doing business in the US entirely, which keeps the Government on the right side of the line.

The lawsuit, which was filed in March 2019, stated that Congress was acting in violation of the US Constitution as it was denying the firm the right to bid on both Government and private sector contracts. Huawei suggested the Act was a Bill of Attainder, as it presumed guilt without trial. Under Article I Section 9 in federal law, and in state law under Article I Section 10, US Constitution forbids such actions.

For the US, this could add some momentum to the already existing propaganda campaign against China and seemingly all companies from China. This ruling could add buoyancy to the Simple Resolution which has recently been passed in the House of Representatives.

The resolution, which can be used to influence administrative actions and foreign policy, stated that the House of Representatives believed all Chinese countries were effectively under Government control, state-owned or private. Such a broad-brush approach to condemnation is a very dangerous and small-minded approach to take, though the anti-China rhetoric could be offered a new lease of live…

White House outlines 10 principles for AI development

Despite the Trump administration stating it would never meddle in artificial intelligence, the White House has outlined 10 commandments for agencies to create rules and regulations.

President Trump has previously promised the White House would not implement a national AI strategy to dictate how the technology is implemented. This was counteracted with the creation of the American AI Initiative, announced in August, though now the U-turn is complete with the emergence of this draft document.

The presence of such guidelines is not necessarily a bad thing for industry or the US Government, it simply depends on the attitudes of the agencies. Some technophobes could use the principles to erect such high-barriers to entry it becomes a redundant exercise, while on the other side of the coin, it could accelerate the introduction of AI in public services.

“The deployment of AI holds the promise to improve safety, fairness, welfare, transparency, and other social goals, and America’s maintenance of its status as a global leader in AI development is vital to preserving our economic and national security,” the document states.

“The importance of developing and deploying AI requires a regulatory approach that fosters innovation, growth, and engenders trust, while protecting core American values, through both regulatory and nonregulatory actions and reducing unnecessary barriers to the development and deployment of AI.”

The objective for the White House Office of Science and Technology Policy (OSTP) is to ensure engagement with and education of the general public, prevent overreach or overregulation and promote AI which is safe and of benefit to all.

Ultimately, the White House is attempting to guide the agencies towards creating a framework so some sort of element of control is created. As with many of these memorandums, the wording is concise enough to keep the various agencies in-line, but there is enough wiggle-room for the nuances of different industries.

The ten principles are as follows:

  1. Public trust in AI
  2. Public participation
  3. Scientific integrity and information quality
  4. Risk assessment and management
  5. Benefits and costs
  6. Flexibility
  7. Fairness and non-discrimination
  8. Disclosure and transparency
  9. Safety and security
  10. Interagency coordination

Although these principles are perfectly sensible for the pursuit of AI which benefits business and society, it is another example of world becoming increasingly regionalised.

At CES, LG discussed the standardisation framework which it has in place for the development of AI within its own ecosystem, while numerous other players have either launched their own approaches or backed another. Governments and bureaucracies are fuelling their own programmes as another layer, paving the way for fragmentation.

Although this sounds negative, it is encouraging to see governments engage industry during the early years of development. It does appear lessons have been learned.

Traditionally, governments and regulators stay at arm’s length from an embryonic technology. The industry is often given the freedom of self-regulation to accelerate development, though this often results in government intervention down the line to limit the negative impact of industry’s flamboyance. You only have to look at recent privacy scandals for evidence of what can happen when the government gives too much slack on the leash.

An increase of bureaucracy might well slow the introduction of AI in the public sector slightly, but it is also much more likely to create a segment which is sustainable, beneficial, healthy and transparent.

US starts huffing and puffing over Huawei again

The US Government is on the Huawei offensive once again, throwing another warning to the UK and suggesting the industry should open-source 5G technology to counter the threat.

The security argument is one which the US feels might hit home, despite European counterparts erring on the side of evidence. It seems quite remarkable to us that the US Government feels by saying the same thing, only a bit louder each time, that there might be success, though we do not have the political savvy which flows freely through the halls of the White House.

“They are just going to steal wholesale state secrets, whether they are the UK’s nuclear secrets or secrets from MI6 or MI5,” Robert O’Brien, US National Security Adviser, told the Financial Times.

The US does have some leverage over the UK, this is an economy on the other side of a very lucrative trade deal after all, but it doesn’t seem to address the basic demands of the European Governments. Time and time again, European administrations have said they will take an evidence-based approach, and while some sceptics may call this political rhetoric, the fact Huawei is yet to be banned suggests there is some truth to the claim.

This approach to the Huawei-conundrum seems to be a lot more personal however, seemingly targeting the fears of a delicately balanced electorate to force the hand of popularity-craving public figures.

“If you get all the information on a person and then you get their genome, and you marry those two things up, and you have an authoritarian state wielding that information, that is an incredible amount of power,” said O’Brien. “Why the UK would sign up for such a programme is astonishing.

“German citizens just are not ready to sign up for their state to become a vassal of Beijing, and the first step on that path is allowing Chinese 5G into Germany.”

Huawei does seem to be winning the backing of the European bloc. There are of course dependency issues which will perhaps be more of a defining factor than anything else, but the Chinese vendor is doing something very different to the US propagandists; it is working with the nations to come to a solution.

The UK, Germany, Spain, Italy and countless other nations will find it very difficult to ban Huawei. Competition is needed to drive down the cost of deployment, due to the scale of the telcos, while the rip-and-replace of 4G technologies would be an incredible cost. The US has neither of these problems; there are effectively only four MNOs serving 300 million people and Huawei does not have any equipment in the network to cause backwards compatibility concerns.

But while the US is simply shouting across the Atlantic, commanding those it sees as inferior nations to its will, Huawei is working with the telcos to create a solution. In March, it opened a cybersecurity centre in Brussels to allow customers to validate security credentials and this month it christened the 5G Innovation and Experience Centre in London.

This is a firm which understands the concerns over its products and has boots on the ground to manufacture new products which are more suitable for the world of tomorrow. It is proactively managing the concerns instead of simply huffing and puffing from the other side of the world. Is there any wonder why the US is being largely ignored?

Interestingly enough, this is not the only proclamation which has made its way out of the White House and across the Atlantic.

Speaking with the freedoms attributed to those with little thought to the concept of irony, the Pentagon’s Lisa Porter is proposing 5G technologies should be open-sourced.

“The beauty of our country is that we allow that marketplace to decide the winners,” said Porter. “The market will decide. If someone is dragging their feet, that’s up to them to decide, but then the market will decide from there who wins.”

There was of course no mention of the isolationist or protectionist policies which have been rolled-out by the White House over the last few years.

In open-sourcing 5G technologies, a tsunami of technology companies could get in on the act. This of course would be incredibly beneficial for the telcos who’s procurement processes could potentially be buoyed by a race to the bottom as numerous off-the-shelf alternatives appear on the market.

This has been deemed a means to counter the threat of Huawei, ripping away the valuable advantage of years’ worth of R&D. But at the same time, it would destroy the proposition for European vendors, Nokia and Ericsson for example, as well as US technology powerhouses, Cisco and Oracle.

Perhaps the Christmas break is coming at an excellent time. There will be several Huawei announcements made in the New Year and plenty of opportunity for political ping pong. We suspect January will be a very busy month for Huawei’s PR team.

Sources: White House holds off Huawei reprieve after China counter-punch

US suppliers are still staring into the abyss as reports emerge the US Government has halted its special-permissions programme to work with Huawei due to Chinese retaliation.

According to Bloomberg, applications for special-licenses to continue supplying Huawei with US components, products and services are currently on hold, as the US Government ponders the latest counter-move from the Chinese Government; a halt to purchases of US agricultural equipment.

Just as there was a moment to celebrate, dozens of US firms are now allegedly back to square one.

The licenses themselves have proved to be popular, with Commerce Secretary Wilbur Ross suggesting his department had received 50 applications, as of last week. This is not to say 50 companies will be given permission, the US Government has hinted the majority will be turned down, though it is back to purgatory the suppliers go.

Entry onto the Entity List has caused a significant headache for numerous parties around the world. Not only do the US suppliers have to figure out where they are going to recapture lost revenues, but potential customers in other markets have to assess the quality and resilience of the products following a disruption to the supply-chain.

Last month, Ross announced the Commerce Department would start accepting applications for licenses to receive permission to trade with Huawei. That said, no advice was offered on the criteria said applications would be measured against, aside from an ill-defined reference to national security.

What is also worth noting is the mentality of those considering the applications. Refusal would be front of mind, unless the application was compelling enough.

However, this has all been turned upside-down.

We might have been expecting retaliation from Chinese Government, though few would have assumed the White House would snap the olive branch extended to US suppliers who are losing a major customer. This is allegedly what is happening today.

This tit-for-tat trade battle has now entered the realms of finger pointing. Trump has suggested he would loosen controls on Huawei if China increased purchases of US agricultural equipment. China has stopped purchases because the noose is still firm grasped, but the US is not willing to let go because China has not ramped up its purchases.

It’s a Mexican stand-off with private companies, in both countries, feeling the pain of government posturing and flexing, as egos are massaged by enablers and yes-men looking to gain favour with short-sighted and morally-bankrupt politicians.

Looking at the collateral damage, numerous US technology companies saw share price decline following the rumours. Skyworks Solutions, where 10% of revenues are attributable to Huawei, recently reported quarterly earnings with a $127 million hole in the spreadsheets. Total revenues were 16% down in comparison to the same period of 2018, prior to the Huawei headache.

Interestingly enough, there are several companies who have publicly stated they have applied for licences. Micron and Xilinx, two US semiconductor companies, have said the license is key as their role in the supply chain can be replaced by a foreign alternative.

If the rhetoric of the trade-war is to help US companies in the long-run, the very opposite is being done with these two organisations; once they are out of the supply chain, it will be very difficult to get back in. Most likely the only way will be to renegotiate contracts at less favourable rates to convince Huawei to ditch newly found alternatives.

Google is another which will pray for the end of the trade-war and ban on supplying Huawei due to the emergence of Harmony OS, the Chinese vendors in-house OS which could be applied to smartphones and smart devices. The emergence of another contender in the OS segment could lead to Google losing real-estate on millions (if not billions) of devices for its products such as Google Play, Chrome and Google Maps.

Right now, it is difficult to see this trade-war as anything more than a battle of egos. It was supposed to counter nefarious activities of the Chinese Government, creating a platform for US companies to thrive. However, with alternatives being sought and created, the temporary damage could turn permanent very quickly.

US suppliers do not want to permanently lose a lucrative position in the supply chain of one of the worlds’ fastest growing technology companies, though that is the reality some will have to face.

Another Trump tweet paints an uncomfortable picture for Google

Twitter is the battlefield and an iPhone his weapon; the hawkish President Trump has seemingly declared war on the hipsters and IT geeks of Google.

Once again, with little evidence, Trump has declared war on a technology company. This time however, the Commander in Chief has directed his venom towards a domestic enemy of the Oval Office. Thanks to the seemingly unfounded accusations of tech entrepreneur Peter Thiel, the President now has the idea Google is under the influence of the Chinese Government.

Speaking at a conference, Thiel used his keynote speech to launch an attack at the internet giant. Theil posed three questions to the audience; firstly, how many foreign intelligence agencies have infiltrated Google’s AI work. Secondly, whether Google’s management team believes it has been infiltrated by China. And finally, why it was working with the Chinese Government and not the US Government.

To be clear, aside from Thiel’s accusations, there is little evidence of such grand conspiracy theories.

That said, the burden of truth is not a consideration which is greatly appreciated by the current administration. Throughout the entire Huawei saga, no evidence of collusion with the Chinese Government has been presented to the general public, and it seems it hasn’t been presented to allied Governments either. Numerous nations have refused the call to ban Huawei without suitable evidence, and the resistance continues today.

Bearing this in mind, the Googlers should have something to worry about. Trump has demonstrated he can make life awkward for those who get his wrong side.

For the moment, there are no details of what an investigation would entail or whether the threat of treason is genuine. Another trend which we have witnessed over the last 29 months is the huffing and puffing nature of the President. This might be nothing more than a bicep flex against a company deemed to be a domestic enemy.

Trump has had a difficult relationship with Google over the last few years, with the President and many of his supporters suggesting conservative voices are being supressed on the digital highway. Perhaps we should not be surprised Trump has targeted another mainstay of Silicon Valley.

One has to question how many fronts the Trump war campaign can fight simultaneously; the enemies of the White House are starting to add up.

Industry quietly lobbies against Trump’s anti-globalisation agenda

Slowing down the progress made by Huawei on the global stage might be a win for the White House, but US firms are not seeing the benefits as some are reportedly lobbying against the infamous ban.

In a televised interview this morning, Huawei Founder Ren Zhengfei suggested sales forecasts will be negatively hit by the firms debut onto the US ‘Entity List’, taking two years to get back onto the 2018 trajectory. For the White House, this might be vindication of its aggressive anti-Huawei agenda, but not everyone is happy about how events are unfolding.

According to Reuters, US semiconductor firms are quietly lobbying the US Department of Commerce in an attempt to limit the negative impact of the ban. Let’s no forget that while the White House might seem against globalisation trends right now, the success of these firms is largely based on the idea of free-trade and capitalising on the rapid evolution of international markets.

The issue which these firms face is one of commercial loss and gain. Huawei is one of the industry’s biggest consumers of semiconductor products, with the firm rumoured to spend roughly $20 billion a year on such products. When you look at the impact on some firms, you can see why the semiconductor industry is getting a bit twitchy.

Last week, Broadcom lowered its sales forecast for the year by $2 billion, pointing towards one of its customers being caught up in an international trade-war. Although Broadcom has not explicitly stated how much of the total revenues are attributable to Huawei, firms are only compelled to do so when it is more than 10% of the total, the numbers would suggest it is not far off that percentage.

And Broadcom is not alone on relying on Huawei as a customer. Qorvo depends on Huawei for 11% of its total revenues, while Lumentum has said Huawei accounted for 18% of all shipments during the last quarter. As a result, Lumentum’s sales forecast is now $30-35 million less for the year. Xilinx is another chipmaker which has been impacted by the ban on selling components to Huawei, and there are others as well including Intel and Qualcomm.

As a result, numerous lobbying efforts are reportedly being held behind closed doors to mitigate the impact. This might be exemptions or the creation of loopholes, but the friendly-fire is quite notable in this segment.

What is worth noting is that there are other lobby efforts going on also. Google is rumoured to be in active conversations, suggesting its operating system Android should be exempt from the ban on the grounds of national security. Google is arguing that should it be banned from working with Huawei, it would not be able to provide timely security updates which could make the devices vulnerable to hacking and data breaches.

However, there is a commercial angle to all of these arguments which might gain more traction in the minds of the government puppeteers.

At Google, the firm has a dominant position in the OS market. Huawei’s alternative OS might not be able to dislodge this position, but it does have a significant domestic market to drive user adoption. If a suitable alternative to Android emerges from the Chinese telco flagbearer, it would not be unimaginable to see mass adoption in the Chinese market. Once it has domestic domination, it would not be unusual to see international expansion to the China-friendly nations. This would potentially erode Google’s influence on the world.

In the semiconductor space, the risk is of the emergence of a homegrown Chinese-semiconductor industry.

This is not to say China does not already have a presence in the semiconductor space but forcing Huawei away from the US could be the catalyst the slumbering sector needs. Companies like Shenzhen Fastprint Circuit Technologies and Jiangsu Changjiang Electronics Technologies have been making financial gains in recent months, both in terms of revenues and share price, while Huawei’s HiSilicon has also been ramping up.

The US is dominant in the semiconductor market and will probably continue to be. There is a gap in competence for core technologies in the Chinese segments to eclipse this position, though the risk is erosion of profits. The more competitors there are on the market, the lesser the market share for US firms. This assumption might well be exaggerated when you consider the preference of Chinese firms for a homegrown supply chain.

For the semiconductor industry, this should be seen as a red-flag. The Semiconductor Industry Association (SIA) has already suggested the industry is in a bit of a slump at the moment, with sales for April down 14.6% year-on-year. The SIA does have international members, though its biggest role is to represent the interests of US manufacturers. The last thing these firms need right now is more bad news when the market is already dampening.

The result of this friendly-fire is conversations behind closed-doors. The Trump administration is seemingly trying to dilute the influence of China on the rest of the world, though it appears to be having the same impact on some US firms. We’ve said this before, but the result of this trade-war seems to be nothing by a net-loss globally right now; no-one is winning, and it seems to be a matter of damage limitation.

What the White House should be wary of is whether this anti-China agenda is starting to look like a personal vendetta for the President. If there is notable damage to US firms as well as Chinese, the White House must question whether the current strategy is the most effective.

Is ‘Make America Great Again’ is the motto of the White House, it would be useful for the rest of us to understand how much friendly-fire will be tolerated in the quest to destroy the Silk Road.

US officials ask for delay to Huawei ban on competition grounds – report

Deputy Director of the Office of Management and Budget Russell Vought has requested the ban on Huawei technologies be delayed by two years, sounding very similar to Huawei’s own argument.

In a letter to the White House, Vought is arguing the ban should be delayed in certain areas to ensure national security considerations and objectives can be suitably met in the new procurement landscape. Vought is currently on the clock, as rules signed into law last year are to be officially introduced in 2020. These laws would place a ban on any government funds being used to purchase Huawei products, services or components.

The issue which is currently being faced is in the procurement functions. Vought is suggesting the ban has been rushed in and would significantly reduce the number of vendors available for government agencies to work with. Interestingly enough, this is remarkably similar to the argument Huawei has been using to counter the ban. Of course, this reference would certainly not be made by the White House.

Plenty of arguments have been put forward by the under-fire Chinese firm, most recently there has been a challenge to the constitutional legitimacy of the rules, though the competition claim is one which was made back in October 2018.

At the time, Huawei suggested that banning its technologies and services in the US could hand control of the global 5G economy over to China. In a filing to the FCC, Huawei suggested the price and speed of infrastructure deployment would be impacted as competition would be reduced. This is quite a reasonable point to make as this segment of the telecom’s world is incredibly short on tier-one suppliers, or at least those which can match the quality of equipment provided and the support services which follow.

The letter from Vought is not making the exact same point, but the principle is very similar. Too many contractors rely on Huawei in their own supply chain, therefore banning Huawei would prevent any government agencies from working with these vendors. This would decrease competition for valuable contracts, potentially pushing up the price while lowering the quality of service offered.

Although the US has made its stance against China and Huawei very clear, the White House has shown on numerous occasions it is willing to be flexible with its own principles if it suits its own agenda. President Donald Trump attempted to reverse the ban on ZTE last year, once it had achieved its aims, only to face opposition in the House.

It would appear the national security argument can once again be ignored if there is too much pain is experienced by federal agencies. There seems to be little concern of the impact to private industry, see the complaints from rural telcos or those organizations where Huawei is an important customer, with these companies little more than pawns ready for sacrifice.

Perhaps we should be surprised at the consistency of hypocrisy coming out of the White House, but such are the lowly levels standards are currently being set, we are not.

FCC and Oval Office locking horns over 5G

The FCC originally looked like a diligent foot-soldier for the President, but with the nationalised 5G infrastructure argument seemingly emerging again, heads are set to butt.

Reports have been emerging in various corners that the White House is revisiting plans to develop a nationalised 5G network, a plan originally raised in January 2018 to keep the US at the front of the technology arms race. The plan was shot-down back then, and the FCC has already raised set the tone of resistance through social media over the last week or so.

Following the President’s twitter rant last month, which saw the Commander-in-Chief bemoan progress being made by the telcos, FCC chiefs set their position out quite firmly.

In the case of FCC Chairman Ajit Pai, a retweeted message from 2018 reiterates a point which was made when the plans were first suggested; hands-off from the government is the best stance. This seems to be one of the only positions the Democrat and Republican representatives on the board of the FCC seem to agree on; the telcos should build the US 5G network, not the government.

Although the White House has not released any official statement confirming its favour of a nationalised 5G infrastructure, the defensive position entrenched by Pai and Commissioner Jessica Rosenworcel suggest there have been conversations which neither like. These tweets could be viewed as in-direct opposition, with the pair attempting to get ahead of the game.

According to Politico, this isn’t the only conflict which is emerging either. The Trump 2020 re-election campaign team have been pushing the benefits of a government-owned, wholesale infrastructure, while the current Trump political administration are keen to avoid the topic. While the disagreement is hearsay and reports for the moment, it would not surprise us if the Trump campaign led with such a promise.

This sort of political manoeuvre fits perfectly into the Trump playbook from his first election campaign. It hits pain-points for US citizens in the politically less-attractive states, the very people Trump was able to mobilise in 2016. However, attacking the digital divide in rural communities is not a new trick, Hilary Clinton used this tactic in 2016 also, but a nationalised 5G infrastructure will appeal to those who feel ignored by corporates. Trump has shown he can communicate effectively to those who believe they are under-represented by mainstream politics, and this angle could prove to be an effective tool.

The idea which seems to have been raised here is to create a wholesale network in partnership with a private third-party. The government would fund the deployment of the network, while the third-party would manage the operations and wholesale business, creating a system which would operate like the electricity market, with parties ‘purchasing connectivity’ on a rolling basis.

Theoretically, this position sounds wonderful. The arguments for nationalisation are often very compelling, and it could be justified as an effective way to spend tax-payers money. However, nationalised businesses and infrastructure have been shown to be ineffective time and time again. The government is not equipped to manage such projects in the long-run and not savvy enough to compete against private entities when they emerge. It might sound very appealing to voters who are stuck in the chasm of the digital divide, but it will not help the US in the global technology arms race.

As Brenden Carr, a Republican FCC Commissioner, notes above, private industry is the best way to secure a leadership position in 5G. This is a lesson which has been learned numerous times over the years in the US; when you leave private industry alone, simply creating a legislative and regulatory framework to encourage growth, much can be gained. In the technology world, this is perfectly evident with the success of Silicon Valley.

The dominance of the US on the technology stage is being widely challenged, though it seems the ego of the Trump party is getting in the way of logic. First to market does not necessarily mean the best, but this seems to be the angle which the President’s team is taking.

The big question is what impact this will have on the future for the Republican party. Should these rumours of a nationalised network evolve into reality, a split may well appear in the rank and file. The Republican FCC representatives are clearly not happy about this position, and neither are the science and technology advisors in the White House. However, you can’t argue that such a campaign promise would be very attractive to those who currently reside on the wrong side of the digital divide.

Here is what the Trump 2020 electoral campaign team will have to assess; is the long-term detriment of communications infrastructure a fair trade-off for the lure of ‘Middle America’ votes in the 2020 election? We suspect they won’t be looking much further beyond 2024.