Viewpoint: US 5G gamble pays dividends while other countries procrastinate

In 2016 the FCC took a very bold step: it decided the best way to achieve global 5G leadership was to allow existing licensees to deploy the new technology in three key target bands: 28 GHz, 37 GHz and 39 GHz.

These were licences for fixed services – point to point or point to multipoint – and the FCC decided they could also be used for mobile services i.e. 5G.

Governments and regulators need to make space for any promising technology where existing users can be protected

The regulator realised this could be a windfall to the existing licensees, but felt this was justified by the need to stimulate innovation by deploying services quickly.*

They were right about the windfall: in less than a year Verizon had paid $3 billion for Straight Path, a company of nine employees which owned huge numbers of existing 28 GHz and 39 GHz licences.

They were also right that this would lead to speedy deployment: Verizon is promising to offer fixed 5G home broadband services in four US cities by the end of this year, with mobile services available next year.

So why haven’t other countries done the same?

5G may or may not be a commercial success – but let’s leave that aside for a moment.

Governments and regulators need to make space for any promising technology where existing users can be protected and 5G fits into this category. Sometimes these new technologies succeed, like GSM and Wi-Fi, and sometimes they fail, like UWB and WiMax. The important thing is to create the environment where success is possible.

Geographic or linear licences?

The US was lucky because its existing 28 GHz and 39 GHz licences were for geographical areas, making it easier to convert then to mobile and allow the holders to co-ordinate any interference.

In the rest of the world there are a fair proportion of geographic licences in potential 5G mmWave bands. But there are also mmWave fixed licences only for services between two map co-ordinates.

On the other hand it is often the case that a small number of companies own many of these linear links in a geographical area. Fixed 5G services – and probably mobile ones too – could be accommodated in many circumstances by requiring operators to co-ordinate among themselves.

So why aren’t other countries following the US and giving existing mmWave licence holders the same opportunity to forge ahead with 5G?

Unjust enrichment

Unlike the US, most countries are opposed to giving windfall gains to private companies: they think governments should get the benefit. The US was happy to forgo direct payments to the government, instead exploiting the market’s money-making drive to spur the rapid deployment of services. This also created a more efficient use of spectrum in bands which Straight Path had failed to deploy services.

Why shouldn’t existing mmWave licence holders# in the rest of the world be able to deploy 5G? We wouldn’t stop a turnip farmer who struck oil from trying to exploit their good luck. The farmer and any investors would gain a windfall benefit, but so would the economy, with increased tax receipts, new jobs and cheaper petrol.

Or maybe, the farmer drills the well and there isn’t enough oil to make it profitable. At least we created the environment where that could be established: we need to do the same thing with 5G.

And if it doesnt work, we can always go back to turnips….

References

* See FCC Report and Order July 14 2016, Point 42
# mmWave licences in potential 5G bands are now included in PolicyTracker’s Spectrum Database