The writer, the former chief executive and chairman of Google, is co-founder of Schmidt Futures
In a world where computing technology is key to innovation and competitiveness, strong digital infrastructure is paramount to economic vitality and national security. Investing in 5G mobile telecommunications networks should be an urgent priority of the US and its allies — particularly as the main geostrategic rival, China, is already far ahead.
Last month’s spectrum auction by the US Federal Communications Commission, which raised a record-breaking $81bn, is being celebrated as a win for 5G. In fact it is a digital setback that America and its allies can ill-afford.
Auction 107 issued 280MHz in the valuable “C-Band” spectrum — the ideal frequencies for 5G — to mobile telecommunications companies for network development. But it imposed no meaningful requirement to build necessary network infrastructure. The massive sums winners paid for the spectrum will reduce their financial capacity to actually use it. Instead, it will probably result in disinvestment and downsizing.
At the same time, $81bn is merely a trifle on a government scale, equivalent to less than a month of US debt issuance and the money is unlikely to be spent on the 5G network the country needs.
The outcomes are predictable: Americans will face higher prices and weaker digital services — yesterday’s internet tomorrow. That is what happened when European telecoms companies paid over the odds during the 3G auctions of the early 2000s. Europe is still recovering from its lost digital decade.
At stake are not just internet speeds but preserving prosperity. Today’s leading technology companies are American because US companies built the core components of high-speed data infrastructure in the 4G LTE era, which meant their software was positioned to succeed.
That is not the case for 5G. Only 24 per cent of Europeans had access to a 5G network last autumn. US 5G is more marketing than a true step change in data speeds. In contrast, China will soon have a national network with speeds of 1 gigabit a second. With China’s head start, the next generation of technology giants — and the products and services they build — are not going to be European or American but Chinese.
My research team estimates that a gigabit C-band network covering 80 per cent of Americans will require 1m new cell sites and cost $70bn to build. Without it there will be no 5G, and no base on which to build 6G. America’s digital economy will become an also-ran.
We need aggressive, innovative strategies to prompt rapid infrastructure buildout. It will show the world that there are viable alternatives to Chinese digital hegemony. Here are three ways to do it: Congress should use the proceeds of Auction 107 for a special data infrastructure fund to provide direct aid to states that build physical 5G infrastructure. The money could be allocated to promote rapid and equitable buildout. The foregone revenue would be recouped by the documented economic boost brought by higher data speeds.
If the US auctions more spectrum, insist on getting infrastructure. A true 5G network will require more than this auction’s 280MHz of spectrum. Japan, China, South Korea, the UK and Canada will assign an average of 660MHz of mid-band spectrum each for 5G by 2023. Future auctions must set stringent build requirements, with penalties for underperformance.
Pursue alternatives to auctions. The defence department has proposed sharing government-controlled spectrum with commercial providers if they build infrastructure quickly.
Auction 107 has put what could be the penultimate nail in the coffin of US global technology leadership. Policymakers must pursue all available means to bolster digital infrastructure rather than focusing on filling government coffers.