The Trump administration is considering building a national 5G network in the next three years, according to a report from Axios. Citing a PowerPoint presentation and a memo that was leaked to Axios by a senior official at the National Security Council, the administration wants to build the 5G network because it fears that China has achieved a dominant position in the manufacture and operation of network infrastructure. As part of the proposal, current U.S. operators like AT&T and Verizon would then pay for access on the network.

A second option, or alternative plan, according to Axios, would be for wireless providers to build their own 5G networks (as they are currently doing). However, the memo said that this would take longer and cost more.

The White House, however, is denying the Axios report. Multiple White House officials told Recode, that the document as published is dated. They also stressed it had merely been floated by a staff member and was not a reflection of some imminent, major policy announcement — and probably might never be.

The Axios report contained few details on exactly how the government would build this network and what spectrum would be used for it. Nor did it say how the government would pay for the network.

The proposal comes as a surprise to the wireless industry, which is in the midst of defining 5G standards and building 5G networks. Meredith Atwell Baker, CEO of CTIA, the Wireless Association that represents the majority of U.S. operators, said in a statement that the government should pursues the free market policies that enabled the U.S. wireless industry to win the race to 4G.

Verizon declined to comment on the report, but AT&T issued this statement: “We can’t comment on something we haven’t seen. But, thanks to multi-billion dollar investments made by American companies, the work to launch 5G service in the United States is already well down the road. Industry standards have been set, trials have been underway since 2016, and later this year AT&T is set to be the first to launch mobile 5G service in 12 U.S. locations. We have no doubt that America will lead the 5G revolution.”

And the Axios report prompted a scathing comment from Ajit Pai, the chairman of the FCC who was appointed by President Trump in January 2017: “I’ve seen lead balloons tried in D.C. before but this is like a balloon made out of a Ford Pinto. If accurate, the Axios story suggests options that may be under consideration by the Administration that are nonsensical and do not recognize the current marketplace. Instead, U.S. commercial wireless companies are the envy of the world and are already rushing ahead to lead in 5G. I plan to do everything in my power to provide the necessary resources, including allocating additional spectrum and preempting barriers to deployment, to allow this private sector success to continue.”

China Fear

What appears to have prompted the Trump administration’s proposal is a fear that China is a growing threat to the U.S. security. According to the Axios report, there is one PowerPoint slide that details China’s leadership in artificial intelligence (AI) as being a reason this 5G network is necessary. At the recent CES 2018 conference in Las Vegas, Chinese firm Baidu’s President and COO Qi Lu described Baidu’s vision for using AI to accelerate innovation in many different industries, particularly automotive. He said 5G will be the underlying technology to make that possible. He also said that China plans to be on the forefront of launching 5G networks.

And the U.S. government has long been concerned about U.S. operators doing business with Chinese firms like ZTE and Huawei.  In fact earlier this month, U.S. Congressman Mike Conaway (R-Texas) introduced a bill that specifically names ZTE and Huawei as companies the U.S. should not do business with because of fear that they pose a threat to national security. The H.R. 4747 bill entitled “The Defending U.S. Government Communications Act” prohibits the government from purchasing or leasing telecommunications equipment and/or services from Huawei and ZTE.

Potential Winners    

But not everyone is dismayed by the Trump administration’s proposal. Tower companies like Crown Castle and American Tower would see increased demand for towers and cell sites. And  fiber firms like Zayo Communications and CenturyLink would benefit from increased backhaul traffic over their fiber networks.

Likewise equipment firms like Ericsson and Nokia would likely benefit as this would be another nationwide network that would need antennas, base stations, and other gear.

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