Wireless Spectrum Policy: Alternative Analysis of 5G Implications
This Summer the Federal Communications Commission took measures to open up additional radio frequency spectrum for 5G (5th Generation) mobile broadband use. While the U.S. should maintain global leadership not only for 5G but technology at large, some consumer protections are not being adequately analyzed in the 5G race. In the words of CCG Consulting, “The cellular carriers are crafty and they are using the 5G race narrative as a way to get politicians to support their demands.”
What is 5G?
In short, 5G will bring consumers lightning fast mobile broadband speeds by utilizing new wireless technologies via dense cellular networks. One can equate 5G speeds and antenna density to the equivalent of having a very fast WiFi router placed every 100 meters in urban settings.
How Does 5G Technology Work?
Imagine a scenario in which John Q. Public has a cell phone with Telco X that happens to own his favorite sports network. When John moves into a new apartment building he realizes that only one Internet Service Provider (ISP) services the building. That ISP, a competitor of Teleco X, throttles John’s favorite sports channel to favor its own content. John is left with no other options to watch his favorite sports channel in his home since the building he lives in has an exclusivity agreement with the ISP and his wireless provider also lacks rights for indoor 5G antennas. This example is a reflection of the current Technology Media and Telecommunication (TMT) landscape.
Figure 1: Technical Description of 5G
How Does Market Consolidation Cause Consumer Harms?
The implementation of 5G at the same time that the TMT market is consolidating can pose a threat to consumers. The proposed mergers in the TMT ecosystem threaten consumers with reduced choices and opens the door for predatory pricing practices.
As the Venture Capitalist Peter Thiel infamously lectured at Stanford, “competition is for losers.” In Mr. Theil’s words “under perfect competition, all profits get competed away.” Thus, the consolidation of the TMT market would create less competition amongst providers and raise significant barriers to entry for new competitors.
In the post consolidation landscape, wireless telecommunications operators are no longer just operating as the ‘pipes’ that deliver content. Vertically integrated telecommunications and media firms would control content production and the infrastructure that delivers it to consumers. This market consolidation wields vertically integrated firms more power over which content gets a ‘fast lane’ or downloads faster. In theory, providers could render some content so slow that it would be unviewable or at least not pleasantly viewable as result of video buffering. To get a sense of the possible consumers harms that might result one needs to look no further than the case of Winlock, Washington.
What Is Vertical Integration?
The AT&T and Time Warner merger is a good example of vertical integration. The Wall Street Journal characterized the ongoing AT&T and Time Warner vertical integration as having a strong incentive to stifle competition. Similarly, The Verge characterized the merger as having unparalleled market power over both content creation and distribution.” This scenario creates a path dependency for consumers, handcuffing consumers to a provider.
In essence, telecommunications firms would have a ‘stickier’ product that consumers could not easily move away from. For instance, consumers could easily become locked into a contract with AT&T because of consumer preference for the Time Warner media holdings (e.g. HBO). The practical implications of a stickier TMT ecosystem means that consumer choice in wireless carriers is strategically made regarding a firm’s media assets.
How Does Market Consolidation Relate to Net Neutrality?
Aside from a swell in market power, vertical integration invites Net Neutrality abuses. AT&T — Time Warner merger would give the new entity an an unfair advantage over its media distribution, in addition to financial incentives to create ‘fast lanes’ for its content under current Net Neutrality rules. Post merger AT&T could create an artificial scarcity in its network to slow competitor content without any consequences from U.S. Regulators.
However, consumers still have a fighting chance. The Department of Justice’s work to protect consumers from anti-competitive practices is admirable, but it will not address the harms caused by the Net Neutrality repeal. Voters have the power to tell Congress about the importance of those consumers protections and make the Net Neutrality repeal an election issue in November. The Senate has already voted in favor of using the Congressional Review Act to reinstate Net Neutrality and it is pending in the House of Representatives. The demand must come from voters, urging members of Congress to act.
What is the Long-Term Impact of 5G Policy?
5G policy that is executed properly has the potential to create economic growth and deliver true value to consumers. However, if 5G policy is hastily executed as a result of overzealous special interest groups, consumers maybe be left with less than optimal consumer protections. In the words of Harold Feld, Senior Vice President at Public Knowledge, “We need to make policy decisions based on a clear-eyed cost/benefit analysis.”
Importantly, communities of color and other marginalized communities are at risk of further being left behind in the digital divide if adequate consumer protections are not put in place during the 5G policy debate. Sprint and T-Mobile have touted 5G as a bedrock synergy for their merger to appease U.S. Lawmakers. The Sprint/T-Mobile merger would consolidate the low end of the wireless market and leave low income consumers with fewer choices. Similarly, the vertical integration of the TMT market’s media assets could allow firms to throttle marginalized voices without the resources to pay for prioritized content delivery.
The TMT landscape has been described as “a sign of the times: a corrupt administration, lobbyists in charge of regulation, and a president who can be swayed with the simplest arguments.” Professor Dans was right. If we do not rethink 5G policy, “this isn’t going to end well.”
Action Steps for Voters
5G policy at the hands corporate lobbyist should stand as a reminder of the harm caused by those very same lobbyist with the repeal of Net Neutrality. Sweetheart 5G policies together with the repeal of Net Neutrality comprise Telecommunications firm’s strategy to legislate their business models into monopolies.
Recent polls have have highlighted the both the importance of Net Neutrality to voters and the overwhelming support of Net Neutrality by the electorate. Here are some steps you can take to make help restore the free and open internet.
- Ask your member of Congress to sign on to the Discharge Petition to restore Net Neutrality protections.
- Get out and vote!
Nothing Follows.
