Should Governments Nationalize 5G Networks?

Should Governments Nationalize 5G Networks?

5G is going to be the critical infrastructure layer for the next cycle of innovation and economic growth. Mobility and access to broadband network is at the center of an explosive growth we are experiencing around the globe. From advanced markets like Finland and the US to emerging economies of Indonesia and South Africa, 5G is going to play a significant role in giving nations a competitive advantage on creating new industries, new jobs, and new streams of revenue. Countries which are able to get there first will inevitably have an edge.

But, how should one go about doing it? Should we let the markets work on their own? After all, they have worked well for most countries over the last three decades. Or can governments take ownership of accelerating the deployment. There is no dispute over 5G’s role in the economy, but execution of a plan is different proposition.

Last week, Axios broke the news about the NSC plan to nationalize 5G. The industry reaction to the plan pretty much sums its viability in a market like the US. The plan is detached from reality. While it might make sense to nationalize 5G in a small emerging market where it is hard for the operators to justify the investments before they have recouped their 4G capex and opex.

Nationalizing 5G in the US market just doesn’t make any sense. First, the markets are already on their way to deploying 5G as soon as this year. Second, 5G is not one-dimensional, it has to be deployed across multiple bands and for inordinate amount of use cases. Government just can’t possibly think of the various scenarios and industry requirements. Any collaborative effort is going to be counterproductive and won’t even get off the ground. US will have a hard time finding allies for such a plan as major operators in other countries are already planning their roadmaps with their vendor partners. Contracts are being signed and policies are being formulated. The current plan is not only too late to the game, it is just not practical and will actually have a completely opposite effect than intended.

Three years ago, I had a chance to present my thoughts to the Obama White House on how governments can get involved in the accelerating 5G in the US. The Office of Science and Technology was seeking external input on how should the government think about giving an impetus to a faster deployment cycle. Government can play a very important role in clearing up the hurdles and managing the competition the market which will spur investment and innovation. The basic building blocks of an effective 5G national network are backhaul and spectrum. Counties that have fiber laid out to the edges will create the most powerful mobile networks. 5G will increase the data consumption 100-fold, the traffic has to be carried back to the core. 5G will require 20-50x more radio cells on the front-end. 5G will require more harmonization of spectrum at various bands to provide the most flexibility to the operators. Finally, 5G will need flexible business models to keep the incumbents on their toes.

Governments can help by continuously working on clearing the spectrum for immediate use (and not allow hoarding at all). Siting continues to be a challenge and will get worse due to small-cell led 5G architectural needs. Government should lead the effort on streamlining the approval process. Fiber, whether it is land-based or wireless-initiated will form the backbone of 5G. Government should create incentives for quicker investments in the space. Additional policies are required to make fiber available to new entrants at market rates to create competition.

Finally, the biggest contribution that the government can make is on how it manages competition. The current regulatory structures to understand markets and competition are woefully outdated. We need a new Federal Digital Commission (FDC) to formulate the forward-thinking policies for the digital future, an entity that is responsible for carrying the nation into the next 50 years of economic growth and is not tied to the regulatory regimes of the last 100 years.

5G will play an important role in the evolution of the Connected Intelligence Era and it is important that governments play their roles effectively. It is an important and a worthy goal for any administration to provide its ecosystem and its citizen an edge in the global economy, but it needs to be done in concert with the market. Taking ownership of a national resource when the ecosystem is performing on all cylinders will not only do irreversible harm, it will stunt the progress that has made US the leading market for 4G.


Chetan Sharma is the CEO of a strategy consulting firm that advises operators, governments, regulators, and Internet players on 5G and has written 14 books and over 150 papers (including 7 on 5G) on mobile technology and the industry.