Report: Trump administration contemplates nationalizing 5G mobile data network

According to documents obtained by Axios, officials within the Trump administration are proposing the nationalization of the forthcoming 5G mobile data network in order to protect it against foreign hacking.

What's the story?

Mobile providers (including AT&T and Verizon) have begun construction and implementation of a new, higher-speed 5G mobile data network that they plan to roll out to U.S. customers in some markets in 2018.

The Axios documents, which consist of a PowerPoint deck and a memo, were reportedly drafted by a "senior National Security Council official" and include plans to nationalize this network as part of the administration's efforts to combat hacking, in particular from China. The document argues that government control over this network will be necessary "within the next three years" and discusses two alternate plans to achieve this goal.

The first alternative outlined in the document calls for the government to outright build and pay for the creation of the 5G network, and then lease the network to private companies like AT&T, Verizon, et al.

The second alternative calls for the wireless providers to band together to build a single network. The memo clearly favors the first option, which it likens to the creation of the "Eisenhower National Highway System."

Will this really happen?

It's unclear at this time how seriously this proposal is being debated within the administration. It remains entirely possible that President Donald Trump will reject the proposal outright in favor of continuing the private model that currently prevails for 4G LTE mobile data networks.

Officials for prominent mobile data providers like Verizon and AT&T were surprised by the Axios report and did not offer comment, except to note that they were planning to move forward and roll out their 5G data networks this year.

If this happens, how will it affect your mobile data service?

That is also unclear. Free market advocates would argue that competition in terms of reliability and speed between cellular data providers has vastly improved mobile data service and in fact led to the innovations that generated the 5G network.

If the government nationalizes the entire network, companies will no longer have the incentive (or, indeed, the ability) to compete on the basis of speed or reliability, since they will all be leasing bandwidth on the exact same network with the same equipment. It is not difficult to imagine that the end result of nationalizing the 5G mobile data network will stifle innovation and lead to stagnation of the mobile data network.

Federal Communications Chairman Ajit Pai, who has been the target of furious criticism from liberals for his role in the FCC's decision to drop net neutrality rules, agrees.

In a statement released Monday morning, Pai said, "The main lesson to draw from the wireless sector’s development over the past three decades — including American leadership in 4G — is that the market, not government, is best positioned to drive innovation and investment."

On the other hand, the memo argues, the threat to data security posed by countries like China makes the game worth the candle. However, the memo's central assumption — that the government could per se offer better wireless security than could private companies — is itself an untested proposition.