FCC Chairman Opposes Trump Proposal To Nationalize 5G Wireless
Shares in AT&T (T), Verizon Communications (VZ) dipped while ZTE and other Chinese telecom gear makers fell Monday on reports that the Trump administration is considering nationalizing 5G wireless networks in an move to prevent Chinese spying on U.S. mobile traffic.
The proposal is being put together by Trump’s national security team.
Shares in AT&T slipped 1.7% in early trading on the stock market today. Verizon fell 1.5%.
“One option would be for the government to create a new, wholesale wireless utility to offer services over the 3.7- 4.2 GHz (radio frequency) band,” said Blair Levin, an analyst at New Street Research in a report. “If that utility were to become operational, it would effectively offer an opportunity for an unlimited number of retail resale providers to offer wireless services capable of gigabit speeds to throughout the United States. Other options under consideration include more private sector control but still greater federal government involvement than currently is contemplated by the market.”
Shares in ZTE, China’s second biggest telecom gear maker behind Huawei Technologies, fell in trading on Hong Kong’s stock exchange.
“ZTE’s 7% correction and similar drop in other 5G-related Chinese shares seemed to be related to Trump’s plan to build a government-owned 5G network in the US,” said Edison Lee, a Jefferies analyst in a report. “Trump could invite lawsuits from those (wireless firms) who spent billions buying spectrum.”
U.S. lawmakers in early January pressured AT&T to back off from selling 4G phones manufacturer by Huawei.
The government would lease the 5G network to wireless operators, according to reports by Axios and Bloomberg. The Axios report said a formal proposal is still months away.
“We can’t comment on something we haven’t seen,” said Fletcher Cook, an AT&T spokesperson. “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.”
The Justice Department has sued to block AT&T’s purchase of Time Warner (TWX).
“The existence of the plan means the current plans of the incumbent carriers to invest in next generation networks have to be reconsidered to consider the risk of government activity in space,” added Levin.
Verizon has said it will launch wireless residential broadband services offering 1-gigabit-per-second or better speeds in three to five U.S. markets in 2018.
AT&T has announced plans to whisk 5G wireless services to mobile phone users in 12 markets by the end of 2018, While AT&T also is testing 5G broadband services to homes and businesses, it has been putting infrastructure in place for 5G mobile phone services.
The advent of 5G networks is also expected provide new services to web-connected industrial and consumer devices, drones and self-driving cars.