A hundred years ago, it was hard to imagine that domestic electricity could be good for anything beyond powering a few light bulbs in the front hall. That is, until refrigerators, washer-dryers, air-conditioners, and other high-capacity uses for electrical connections became popular and widely available.
Today, fiberoptic connections present a similar conundrum. A giant middle class of consumers and producers will eventually be supported by the new businesses and new ways of thriving that very high-capacity networking will make possible. This infrastructure would be a boon everywhere, especially in remote locations, where it will enable things like advanced health care, high-quality, low-cost education, constantly modulated energy use, and the ability to work where you live.
p class=”paywall”>The problem is that policymakers in the US see high-capacity communications as luxury goods, to be provided only where there is both demand and a high-margin business case. As a result, both urban and rural areas in most of America are suffering from a digital divide, while China, South Korea, and northern European countries take fiber policy much more seriously. China’s investment makes the issue especially urgent; the country is moving quickly on autonomous cars, clean energy, and artificial intelligence on a huge scale. We’re facing a chicken-and-egg dilemma: Without fiber running to homes and businesses, we won’t be the place where these new ways of making a living have their start. Which means we won’t be the purveyor to the world of the new services and products that will be powered by fiber.
That is, unless Americans thrust aside their short-sightedness and get comfortable with national initiatives. In the US, “industrial policy” is the equivalent of a swear word, particularly in the telecommunications realm. That’s why Air Force Brig. Gen. Robert Spalding, who was until recently the National Security Council senior director for strategic planning, is no longer a White House staffer. As part of his job, he had floated a draft presentation suggesting that China’s potential 5G dominance required a domestic response: A US-controlled 5G network, with access to it leased to private carriers. (5G hasn’t been defined yet, as I’ve explained in the past.)
Predictably, after many meetings with industry, the presentation leaked; also predictably, as of last week, Spalding is working elsewhere in the federal government.
The Trump administration now says it never had any plans like those described in the draft, and the whole issue morphed into a mostly useless soundbite battle between the straw man of “nationalization” (another expletive in America) and the fiction of fervent private-market competition in US wireless. After the plan was leaked, current FCC chairman Ajit Pai thundered that “the market, not government, is best positioned to drive innovation and investment,” and the wireless industry’s trade association’s leader, Meredith Atwell Baker, echoed that idea, saying, “The government should pursue the free market policies that enabled the US wireless industry to win the race to 4G.”
Yet two interwoven truths have been completely missing from the discussion. First, you can’t have advanced 5G wireless without fiber optic lines everywhere, which the US doesn’t have. China, meanwhile, is upgrading the entire country: Every day, China moves closer to its goal of having 200 million new fiber optic connections to homes and businesses — at a time when the US has somewhere between 11 and 14 million such connections. China’s Ministry of Industry recently released a five-year plan calling for its domestic manufacturers to step up their production of high-end optical communications systems, so that the country’s reliance on Western and Japanese companies could diminish.
What all this means is that China, and not the US, will be the sandbox for new applications that require very-high-capacity network connections.
Second, in the past we have always relied on and incentivized private companies to build basic shared networked communications infrastructure in this country, subject to public obligations that the corporations serve everyone at reasonable prices. The bugaboo of “nationalization” is beside the point: right now, we don’t have a shred of the framework required to lead the world in competitively-priced information transport. As a result, the private companies can do whatever they want; left to their own devices, they will upgrade their networks (and charge us a lot) only where it makes economic sense to do so. This rational behavior on their part has left us with the worst of both worlds: little competition and few upgrades to fiber.
China is being very bossy, and far bossier than we can stomach, but we have something to learn from them. We should be driving forward upgrades to fiber optic networks running right to to homes and businesses, by lowering the barriers to fund shared fiber networks everywhere. We could be facilitating increased use of bonds, local financing, and tax breaks, and reducing the risks of investments and the costs of capital by issuing government guarantees, all aimed at attracting private investment in the shared fiber optic lines needed for 5G to function.
The resulting basic networks could be shared by a multitude of private companies, for 5G purposes and wired connections as well. The resulting competition would drive down prices charged to the rest of us. The networks would be overseen or owned outright, where appropriate, by government. That’s not “nationalization.” It’s common sense—in the same way that government responsibility for an extensive system of roads is common sense. It’s an unleashing of the private market through harnessing private and public investment in the service of competitive, ubiquitous network coverage.
Why? Because the basic, physical network directly connected to homes and businesses, and opened to competitors on a neutral, low-priced basis, has a decades-long lifespan and will prompt vibrant competition for retail customers in many parts of the country. Open access networks controlled by the government are safe longterm investments for both debt and equity purposes—meaning that the cost of the capital needed to build them can be much lower. The deep pool of capital we have in the US could give our country a major advantage.
This kind of planning would be industrial policy US-style: it would galvanize our network manufacturing sector into action, drive the creation of high-capacity uses for the new networks, and put us on the map again as an innovative nation. Think electrical appliances and new human thriving made possible by electricity, and swap in the word “information” for “power.”
Right now, a host of localities in the US are thinking along just these lines. San Francisco just launched an RFQ for companies to implement citywide fiber; Seattle has plans to do the same. Other scrappy cities are already well down this road. Local government is on the path to figuring this out.
China’s growing dominance prompted the creation of the leaked White House presentation. Now it’s up to a future federal administration to Americanize the “industrial policy” China is carrying out. Without, of course, using those words.
The Future of 5G
Photograph by WIRED/Stephen Swintek/Getty Images
social experiment by Livio Acerbo #greengroundit #wired https://www.wired.com/story/america-needs-more-fiber