Industry Voices—Entner: Can Rivada succeed where the U.S. government has failed?

5G
The entire debate is happening against the backdrop of a robust and methodical 5G build-out in the U.S. (Pixabay)

Roger Entner

President Trump’s re-election campaign recently spun the wireless industry into turmoil again. Kayleigh McEnany, national press secretary for President Trump’s 2020 reelection campaign, told Politico that “A 5G wholesale market would drive down costs and provide access to millions of Americans who are currently underserved. This is in line with President Trump’s agenda to benefit all Americans, regardless of geography.”

This new message comes after months of private comments by Trump 2020 campaign manager Brad Parscale and adviser Newt Gingrich that promoted a different plan for 5G, one that would have the federal government seize 5G spectrum from the Pentagon and give it to a private company to manage and lease to other, private companies for use. Enter Rivada, a company headed by Declan Ganley and backed by political heavyweight Karl Rove and venture capitalist Peter Thiel.

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As the rumors about Rivada being “given” commandeered spectrum to manage a 5G network swirled, shares in Intelsat took a dive from $23.55 on Friday, March 1, 2019 to $17.76 on Tuesday, March 5, a 25% drop in just two trading days, shaving off $700 million in market cap. This reflects how concerned Wall Street is about the specter of a government-sponsored national 5G wholesale network.

Robert Spalding, a retired brigadier general and author of the now-infamous National Security Council memo suggesting the government create a government-controlled national 5G network, has not backed off his idea despite the swift and negative reactions the idea has spawned. Spalding reiterated in an interview discussing the potential Rivada 5G wholesale network that he still saw merits in a nationwide wholesale network. This was followed by an opinion piece by Kevin Werbach in The New York Times who advocated for a national wholesale network, arguing that it would magically reduce consumers’ mobile bills.

Oddly, Werbach advocates breaking the “wireless oligopoly” by replacing it with a monopoly. Mr Werbach concedes that there have been notable failures of government-controlled communications networks like Australia’s open access fiber network, but suggests that in the U.S. it will be a success with “careful oversight and a long-term commitment by the government.” This is a dog whistle for economic regulation at best and nationalization at worst.

This entire debate is happening against the backdrop of robust and methodical 5G build-out in the U.S. American mobile operators have already started building 5G networks, having engaged in the standards-setting process to make it a reality for years. Some operators are already up and running and in dozens of cities we will have mmWave 5G networks in only a few months. By the end of the year, wireless operators will use some of their existing wireless spectrum for 5G as well, which means we’ll have nationwide 5G networks by the end of the year, with larger and larger ultra-high speed areas in even more places. How can a state-sponsored 5G wholesale provider catch up to this reality when they are at least two years behind in building out the infrastructure, and their prospective customers all have their own networks?

When I take a step back and look at the entire hoopla, it appears to me that it is a solution that is looking for a problem. Rivada is looking for a business and its investors are looking for a payoff. In 2016, Rivada applied to become the wholesale broadband provider for Mexico’s Red Compartida, but was disqualified from bidding after failing to post a bid bond. In 2017, Rivada tried to become the nationwide FirstNet provider but lost out to a competing bid from an existing carrier. In both cases, Rivada sued the respective governments without success.

Each state in the United States had the choice to opt in or out of using FirstNet or pursue their own first responder network. Initially, New Hampshire chose Rivada to run its first responder network, but with hours left to make the decision, New Hampshire changed its mind and chose FirstNet. The push for a nationwide 5G wholesale network is Rivada’s third (or fourth) try to convince a government to give it spectrum for free. You can’t blame Rivada for a lack of trying, but just because Rivada is trying to make a buck does not mean its idea makes business sense, or is something the U.S. government should adopt at the expense of depriving existing 5G efforts of more spectrum.

Instead, like it has in the past, the U.S. should invest in its winning strategy of clearing more spectrum for commercial deployment, expedite the siting of 5G infrastructure, and allocate spectrum based on sound analysis of which companies are best positioned to use the critical input as efficiently and quickly as possible.

Roger Entner is the founder and analyst at Recon Analytics. He received an honorary doctorate of science from Heriot-Watt University. Recon Analytics specializes in fact-based research and the analysis of disparate data sources to provide unprecedented insights into the world of telecommunications. Follow Roger on Twitter @rogerentner.

Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by Fierce staff. They do not represent the opinions of Fierce. 

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