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Will the U.S. Government Pay for 5G?

Written by Monica Savaglia
Posted January 30, 2018

On June 29, 1956, the Interstate Highway System was authorized by the Federal-Aid Highway Act of 1956.

This revolutionized travel in America.

The Dwight D. Eisenhower National System of Interstate and Defense Highways is a network of controlled-access highways. As of 2013, it has a total length of 47,856 miles. It's massive.

The system was named after President Dwight D. Eisenhower, who rallied and supported the formation of these highways.

He wanted to construct a national network of highways. He was heavily inspired by his time spent as a young Army officer crossing the country in the 1919 Army Convoy on the Lincoln Highway, the first road across America.

Eisenhower was also inspired by his appreciation of the Reichsautobahn system, Germany’s first federal controlled-access highway. It was implemented as a crucial component to the nation’s defense system.

Eisenhower knew this kind of system was a smart idea. It could be very beneficial to the military. It would allow for ground transport for military supplies and troop deployments if there was ever an emergency or foreign invasion.

Much like President Dwight D. Eisenhower, President Trump and his administration will be rallying for a new kind of network…

The Demand for a New Kind of Network

This new network is an infrastructure that is crucial to our society: 5G wireless.

What is 5G? Basically, it’s the fifth generation of wireless technology.

In the early 1990s, there was the first generation (1G) of wireless phone technology. 1G allowed mobile users to make voice calls.

Then 2G was born, allowing for text messages between two cellular devices.

3G let users make calls, send texts, and search the web from a smartphone.

4G became even smarter. It gave us the ability to make calls, send texts, browse the internet, and both download and upload video files quickly and pretty easily.

Now, we’re at 4G LTE (Long-Term Evolution). LTE delivers 4G at the highest possible speeds. Ideally, 4G LTE allows for a short High-Definition (HD) movie to be downloaded onto a mobile device in around an hour.

Unfortunately, with 4G LTE, there are some downfalls, a major one of which is that buildings, microwaves, or other Wi-Fi signals can interfere with the connection. And this is why 5G will be the solution we need.

We’re spoiled. Well, I know I am, at least in terms of having a reliable wireless connection.

I’m used to having the option to download an HD movie or stream episodes of my favorite TV show on my smartphone if I want to. Without the option, I feel a little lost and don’t know how else to occupy my time while waiting.

5G will use small cell technology to improve the wireless network we desperately rely on.

Marcelo Claure, CEO of Sprint, explained small cell technology:

Unlike today’s networks that are built using large towers scattered every few miles, 5G requires the massive deployment of small cell technology to enable the network to handle the exponential growth of data transmissions.

In a neighborhood block for example, there may be dozens of small, unobtrusive shoe-box sized cells mounted on street lights, buildings, and other public infrastructure.

The next generation of wireless technology will give us a faster and more reliable connection. We won’t be dependent on large signal towers throughout the country. Instead, small cell technology will be more discreet and less of an eyesore.

The Next Generation of Wireless

It was obvious that our wireless network would need a new generation. There are a lot more devices and technologies that are connected to Wi-Fi than just our smartphones. We've reached the next level, and we need a wireless network that will comply with our future.

According to most predictions, there will be about 20.8 billion devices connected to the internet by 2020. The capacity and speed to use those devices effectively needs to get a lot stronger.

Once it was obvious that the wireless network needed an upgrade, wireless providers in the U.S. were taking it upon themselves to begin the planning process and make the upgrade happen. 

They decided they'd build their own 5G networks. This meant all wireless providers would continue to compete with each other.

But what they didn't realize was how expensive and time consuming it was going to be. There's no way each wireless provider could have the money and energy to create their own 5G network, which makes sense as to why there has been more talk about 5G than action. 

The first specification for 5G was completed late last year. This was considered to be a big step toward commercializing the technology. The need for more data and faster connectivity isn't slowing down anytime soon. The demand for a 5G network is huge.

Will the U.S. Government Pay for 5G?

Well, 5G might be getting the push it needs. And that push is coming from the U.S. government.

On Sunday, Axios reported that the Trump administration is considering a plan on how it could begin building a national 5G network. 

The plan is for the U.S. government to build and pay for a 5G network and then rent access to private carriers. It could also let private wireless providers build competing networks, but at that point the government isn't really involved.

Why the sudden push for 5G from the government?

A big reason is that the Trump administration believes China "has achieved a dominant position in that manufacture and operation of network infrastructure" and is "the dominant malicious actor in the Information Domain."

The U.S. needs a 5G network — and we need it soon. There are more devices and platforms that are using massive amounts of data. And we need to have that data secured and running without interruptions.

A senior administration official said the issue of a 5G network has been debated and discussed at low levels and that we can expect it to be presented to the president in about six to eight months from now.

All the details are being ironed out. All in all, the administration wants to build a secure 5G network. That means it will need to work with the industry to figure out the best way to do that.

The administration told Reuters:

We want to build a network so the Chinese can’t listen to your calls… We have to have a secure network that doesn’t allow bad actors to get in. We also have to ensure the Chinese don’t take over the market and put every non-5G network out of business.

If the U.S. government decides to lead the charge in building a 5G network for the nation, it could very well create millions of jobs, drive growth, and inspire and encourage new technologies like smart appliances on the Internet of Things and autonomous vehicles.

Until next time,

Monica Savaglia Signature Park Avenue Digest

Monica Savaglia

Monica Savaglia is Wealth Daily’s IPO specialist. With passion and knowledge, she wants to open up the world of IPOs and their long-term potential to everyday investors. She does this through her newsletter IPO Authority, a one-stop resource for everything IPO. She also contributes regularly to the Wealth Daily e-letter. To learn more about Monica, click here.

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