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 US mobile traffic. The 5G network concept is aimed at addressing what officials see as China's threat to US cyber security and economic security, Reuters reported on Sunday.
The Axios report calls the first option "an unprecedented nationalisation of a historically private infrastructure".
The second options states they can get the help from wireless providers to build their own 5G networks.
The plan includes the government building a super-fast 5G wireless network, a senior administration official told Reuters. The official said the memo reported by Axios, however, is "dated" and "not representative of the administration's thinking", declining to provide further details. Access to the network would then be rented to carriers like AT&T, Verizon and T-Mobile.
"We want to build a network so the Chinese can't listen to your calls", an anonymous senior official told Reuters.
The National Security Council is pitching the idea of having the United States government build the infrastructure for the upcoming 5G evolution in wireless communications, according to documents obtained by Axios.
While it's tempting to dive into the technical weeds about this proposal, the startling thing is how dramatic a change federal ownership of the 5G network would be. Still, this hasn't been tried before in the United States - it's hard to know how well the feds would handle a 5G rollout.
Federal ownership of the 5G network offers three big advantages: network speed, security and speed of deployment.
The Trump administration denies the reports that it may seek to nationalize at least part of the 5G network in the U.S.in an effort to win some secret cyber war with China that may or may not exist. "Other options under consideration include more private sector control but still greater federal government involvement than now is contemplated by the market". (NYSE: T), which operates one of the biggest networks in the U.S., recently collapsed after security concerns were raised during negotiations, according to a Reuters report. The best way to future-proof the nation's communications networks is to continue to encourage and incentivize America's broadband companies - working hand-in-glove with the rest of the internet ecosystem, and in partnership with government, to continue [to] do what we do best: "invest, innovate, and lead". "Combined with aggressive pricing, diplomatic support, and suspected payments to local officials, Huawei has quickly taken market share in the radio infrastructure market as well as optical and routing, leaving them poised to take market leadership of 5G". "I think all of us need to be concerned about the influences of the Chinese government on all those businesses".
A debate in the Trump administration on the ways of building and funding such network, as well as the reaction from the industry, may be expected in the coming six to eight months, the news outlet suggested.
A leading trade group, with members including AT&T and Verizon, pushed back on the plans saying it sees a competitive marketplace as the best option for ensuring U.S. leadership in 5G technology.