Guess Who Wants to Run the 5G Network?


You know what's better than 8-minute abs? Seven! Seven-minute abs.

It's a memorable scene from "There's Something About Mary," and it goes to the finer point of getting more for less.

When it comes to cellular phone speed, there's one thing better than 4G. No, man, not 4G LTE. 5G. 5G, man.

The 5G network is coming soon.

The only thing is, when you go to your carrier’s local store to get the new device equipped for 5G connectivity, you may find out that the future is being brought to you by bureaucrats in Washington, D.C.

Bummer. ... There's nothing that says "speed" like Washington bureaucracy.

But there it is: the latest craze in Washington is the idea of a nationalized 5G network.

The concept's not totally new — several European countries already have these kinds of networks established. But it would be a step backward for consumers, akin to six-minute abs, for Washington to establish the next generation of mobile data communications.

Why? The biggest drawback comes largely from the removal of incentives. If Verizon is lagging behind T-Mobile and service quality starts to decline, some of Verizon’s customers could make a switch to T-Mobile. Naturally, this incentivizes Verizon to change in the right direction.

However, if Washington creates the 5G network, it distorts all the incentives and inevitably shuts down competition in the 5G marketplace. Nobody will be able to invest like Washington, but Washington will only invest when it's in its interest.

Bronwyn Howell, scholar of communications technology, explains how this monopoly on technology slows down progress.

Without competition, the network built tends to be a gold-plated playpen for engineers, allowing them to experiment with the latest technology and charge consumers for the privilege, even though consumers may not place the same value on the bells and whistles.

The real problem, however, comes in the long run, because the regulatory model used to keep the stack of dominoes upright tends to delay the deployment of the next generation of technology and makes it almost certain that government subsidies will be required to get it built. Consumers get cheap prices, but in exchange for forgoing the benefits that come from the deployment of an even better technology (i.e., 6G) in the future.

What does it mean if Washington decides to manage the next generation of mobile communications? It naturally will lessen consumer choice.

Telecom companies have already invested billions of dollars into developing 5G networks. It won't be long before the next generation of mobile networks will be here. But if Washington decides to become the 800-lb gorilla in the telecom room, consumers will end up foraging for the bananas to feed it.

That’s not the kind of beast that fosters development or promotes innovation. And it certainly doesn't make for the fittest marketplace.