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US’s flawed approach to 5G threatens its digital future

In a world where computer technology is the key to innovation and competitiveness, a strong digital infrastructure is essential for economic vitality and national security. Investing in 5G mobile telecommunications networks should be an urgent priority for the United States and its allies – especially 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 $ 81 billion, is being celebrated as a victory for 5G. In fact, it’s a digital setback that America and its allies can hardly afford.

Auction 107 sent 280 MHz in the valuable “C band” spectrum – the ideal frequencies for 5G – to mobile carriers for network development. But he did not impose any significant requirements to build the necessary network infrastructure. The massive sums paid by the winners for spectrum will reduce their financial capacity to actually use it. Instead, it will likely lead to divestment and downsizing.

At the same time, $ 81 billion is just a trifle government-wide, which equates to less than a month of issuing US debt and the money is unlikely to be spent on the network. 5G that the country needs.

The results are predictable: Americans will face higher prices and weaker digital services – yesterday’s internet tomorrow. This is what happened when European telecommunications companies paid the odds in 3G auctions in the early 2000s. Europe is still recovering from its lost digital decade.

The stake is not only the speed of the Internet, but also the preservation of prosperity. The leading tech companies today are American because American companies built the basic components of high-speed data infrastructure in the 4G LTE age, which means their software was positioned to succeed.

This is not the case for 5G. Only 24% of Europeans had access to a 5G network last fall. 5G in the United States is more marketing than a real radical change in the speed of data. On the other hand, China will soon have a national network with speeds of 1 gigabit per second. One step ahead of China, the next generation of tech giants – and the products and services they build – won’t be European or American, but Chinese.

My research team estimates that a gigabit C-band network covering 80% of Americans will require 1 million new cell sites and cost $ 70 billion to build. Without it, there will be no 5G, nor a foundation on which to build 6G. America’s digital economy will become an equally run society.

We need aggressive and innovative strategies to accelerate infrastructure development. It will show the world that there are viable alternatives to China’s digital hegemony. Here are three ways to do it: Congress should use the proceeds from auction 107 for a special fund for data infrastructure to provide direct aid to states building physical 5G infrastructure. The money could be allocated to promote quick and fair construction. Lost revenue would be recouped by the documented economic boost brought about by higher data speeds.

If the United States is auctioning more spectrum, insist on getting infrastructure. A true 5G network will require more than the 280 MHz of spectrum in this auction. Japan, China, South Korea, UK and Canada will allocate an average of 660 MHz of mid-band spectrum each for 5G by 2023. Future auctions are to set strict construction requirements, with penalties for underperformance.

Look for alternatives to auctions. The Defense Ministry has offered to share government-controlled spectrum with commercial providers if they quickly build infrastructure.

Auction 107 put what may be the penultimate nail in the coffin of US global technology leadership. Policymakers should seek all available means to strengthen digital infrastructure rather than focusing on filling government coffers.

The article is authored by Eric Schmidt, Former Chairman/CEO at Google and Alphabet at Google, and has first been published in Financial Times

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