Accelerating 5G in the United States
March 1, 2021
5G will shape the economic future of the United States in the same way that commercializing the internet did 25 years ago. 5G is the infrastructure for the next phase of digital transformation. 5G raises security issues, since global networks and technology have become a key arena for competition among states, but 5G involves not just how we build secure infrastructure but how we use it to accelerate innovation and growth. The goal for a 5G strategy is to ensure that the United States can maximize economic returns while minimizing national security risk.
This report emphasizes market-driven decisions rather than a Washington-centric approach. None of the major networks America has built—canals, railroads, telecommunications, or the internet—was based on a federal strategy. Instead, they were the product of commercial imperatives and market forces. Government grants were sometimes needed to provide essential research or kick-start investment, but the key policy decision was to allow markets to determine deployment. In the case of the internet, this allowed for an outburst of entrepreneurship and commercial competition that continues to drive the American economy. We have the same opportunity with 5G.
The United States is more than holding its own in 5G. 5G is more than cellular telephony. It is a central part of a new digital environment that blends artificial intelligence, cloud computing, and 5G networks to enable new services and products. 5G meets the growing demand to create and move data and new knowledge faster and more efficiently to support an increasingly digital and interconnected economy.
This 5G strategy offers a comprehensive approach to network technologies, building on the strength of the United States to innovate and invest while designing government policies to support and complement those strengths. The report is the work of a group of experts and provides ideas and recommendations on how to speed infrastructure deployment, how to ensure supply chain security, and how to accelerate 5G use. Our recommendations include:
Accelerate spectrum repurposing. Compared to other countries, the United States is doing well in allocating high-band and low-band spectrum for 5G. However, it lags in the allocation of mid-band spectrum. The United States needs to repurpose mid-band spectrum for 5G using auctions, spectrum sharing technologies, and compensation for agencies if they need to relocate. The recent C-band auction, while expensive, was an important step in providing the spectrum needed for American 5G networks.
Remove regulatory obstacles. Telecommunications regulation in the United States is a complex blend of federal and local authorities. The interpretation and implementation of those rules by some local governments has often been inconsistent. The next administration should continue efforts to remove regulatory obstacles, accelerate deployment, and identify those instances where federal law should supersede local regulation to provide uniform national rules.
Promote supply chain trust. The two keys to supply chain trust are promoting supplier diversity and creating risk management strategies for technology acquirers. The work of the Department of Homeland Security’s Information and Communications Technology Supply Chain Risk Management Task Force provides guidance on supply chain security, and the United States can encourage the adoption and use of the Prague Proposals, including the criteria developed by this working group, for governments and network owners or operators to determine trustworthiness and security. An essential action for building trust is for the Federal Communications Commission (FCC) to move ahead with Rip and Replace, using the $1.9 billion recently provided by Congress.
Directly counter predatory practices. Use transparency and diplomatic pressure to counter predatory practices. The United States should make transparency and accountability for predatory trade practices a central part of 5G policy. In other areas, it has been helpful to intervene privately with foreign governments or to make public instances of foreign corrupt practices. The United States and its partners should expose Chinese misbehavior, such as illicit subsidies, and assign intelligence resources to identify predatory behavior.
Redirect American and allied export credits. One major advantage Huawei has is that its prices are subsidized, making them artificially low. We do not need to match Chinese subsidies, but we do need to reduce the financial burden of not buying from Huawei. Cooperative policies with Japan, Australia, Korea, and the European Union to use foreign assistance, co-financing, and export support in the developing world for 5G infrastructure can accomplish this but require reforms to ExIm Bank rules and procedures.
Make 5G security part of a larger cybersecurity strategy. Building on the work already done in the European Union, a 5G cybersecurity strategy should look beyond supply chain security to build cooperative mechanisms among allies for cybersecurity. This requires closer intelligence, technology, and security partnerships with countries that share the assessment of the risk of using untrustworthy Chinese network technologies. The foundation for this partnership is the Five Eyes, Nordic countries, Japan, and other nations that share our concerns.
Increase federal spending in support of 5G and 6G. Federal spending on R&D is crucial in a competition with China. The private sector already invests heavily in 5G research. The next administration should identity those areas where there are R&D shortfalls. Remedying these shortfalls requires providing substantially more funding to the National Science Foundation. Important areas for R&D investment include spectrum sharing, developing new waveforms, and finding new approaches to 5G security. Congress should allocate sufficient funds for R&D and test beds and encourage collaboration among government, service providers, and cloud service providers.
Congress needs to appropriate funds. Several congressional initiatives have authorized federal action to accelerate 5G, but they were unaccompanied by appropriations. These include the Multilateral Telecom Security Fund to be administered by State Department, the Open Radio Access Networks (O-RAN) grants program authorized for the National Telecommunications and Information Agency (NTIA), and the funding of the CHIPS Act, including funding for federal matching grants and the act’s investment tax credit. These key programs require federal funding to accelerate adoption and use of 5G in the United States and globally.
Safeguard the international standards process. China has made a wholesale effort to capture the standards process. While American and Western companies have held their own, the pressure continues. The United States and its partners need to ensure the independence of the standards processes, consider means to promote American attendance using tax policy or federal support for academic researchers, and remove impediments that prevent holding standards meetings in the United States. As part of a new approach to standards, we should avoid a directive role for government agencies.
Support the technological transition to O-RAN and 6G. The next generation of telecom technology is already starting to be deployed. Policymakers should allow the private sector and markets to set pace for O-RAN and 6G rather than mandating an accelerated schedule and look for places where federally funded R&D can accelerate this. A first step would be to use some of the $1.9 billion allocated for “rip and replace” to fund trials of O-RAN technology at eligible carriers.
5G policy should be part of a larger strategy to reinforce America’s strength in technology. A 5G strategy works best as part of a larger investment strategy to build technological strength in both emerging and foundational technologies. This starts with funding basic research, STEM education, and workforce training. It should include support and funding for the semiconductor industry. A strategy must go beyond traditional telecom policy and be part of a larger national approach to maintaining technological competitiveness. Entrepreneurs and companies will need to identify the opportunities of 5G and commercialize them. The ultimate metrics of success will be in how 5G is used to create revenue and growth as people gain access to it and can begin to experiment with new products and services. This strategy lays out steps to achieve this.
Accelerating 5G in the United States
Americans are right to focus on 5G. 5G will shape the economic future of the United States in the same way that the commercializing of the internet did 25 years ago. It is the infrastructure for the digital transformation of our economy. The goal for a 5G strategy is to ensure that the United States can maximize economic return while minimizing national security risk. This report discusses and makes recommendations on how to do this.
To start the discussion, we need to take stock of where the United States stands on 5G. Contrary to some initial commentary, the United States is doing well in 5G when measured by production of crucial 5G technologies, construction of a trusted supply chain, and deployment of 5G networks. Accounts of a race where the United States is behind are misleading.
The United States, unsurprisingly for a technological superpower, leads in 5G deployment, with as many as 270 million people having access to 5G services in the United States. The real race is over developing commercial applications that use 5G, a contest where the United States has advantages, but so do China and Europe (particularly in industrial applications). China would like to dominate the market using any means necessary, and this creates issues for security, supplier diversity, and trade.
Our starting point is that, in most cases, the United States is better served by relying on private sector actions taken in response to market forces when it comes to 5G. The internet was a powerful new technology that enabled all kinds of new activities and reshaped the American economy. The model of powerful new network technologies that creates immense business opportunities is a good way to understand 5G. Telecommunications technology is now going through a transition similar to that brought on by the internet 25 years ago. There are differences—5G by necessity operates in a regulated environment (the electromagnetic spectrum and telecom services). Also, 5G will provide mobile connectivity across a range of devices, not just computers or smart phones. It will expand opportunities for innovation in software and services—sectors where economic growth has been strong and can be made stronger. The internet’s commercialization offers useful precedents for thinking about how to accelerate 5G adoption by the American economy.
It is important to start by noting that the internet did not follow a strategy. In fact, none of the major networks America has built—canals, railroads, telegraphs, and telecommunications—were based on federal strategy. Instead, they were shaped by commercial imperatives and market forces. For the internet, there were policy decisions on transitioning the new technology from a government-funded activity to a private one, but the key decision was to allow the market to drive investment and development and to avoid over-regulation. This allowed for an outburst of entrepreneurship and commercial competition that continues to drive the American economy.
A strategy can be useful in three areas: when it is in the national interest to accelerate market actions (such as the invention of a Covid-19 vaccine), when it is useful to remove obstacles to innovation and investment, and when it is necessary to meet foreign challenges to national security, as when a foreign power intentionally distorts the market for its own advantage, something China has made an art form. 5G requires a strategy that addresses all three areas.
In thinking about this, we need to emphasize that 5G is more than cellular telephony. It is central to a new technological environment that blends artificial intelligence, cloud computing, and 5G networks in ways that enable new services and products and create economic growth. A strategy will need to go beyond traditional telecom policy and be part of a larger national approach to maintain American technological competitiveness.
Two previous CSIS reports described 5G technology and international competition. How 5G Will Shape Innovation and Security: A Primer explained the basics of 5G technologies. “Can Telephones Race?” looked at American performance in 5G compared to other nations. 5G will change how services and goods are produced and delivered. It will play a central role in the development of the next generation of digital industries, such as smart factories and self-driving cars.
5G is a new network architecture that will greatly expand connectivity and support new kinds of services. 5G networks can be divided into edge devices, the radio access networks (RAN) to which devices connect, and the core network. 4G equivalents for edge and RAN are smart phones and cell towers. At the “edge,” there will be a broad range of devices, such as mobile phones, industrial robots, or cars. These connect over the RAN, which will have some computing capability, which will increase speed and reduce the need to send data back to the core. The RAN connects user devices to the core, which uses cloud services (computing resources that can be accessed over the internet) and specialized routers, switches, and other packet handling technologies to aggregate and manage billions of calls made daily. Much of the back-end processing is in the cloud, but in 5G, some processing will move to the “edge,” creating both opportunities and risks for security.
The 5G supply chain involves semiconductors, mobile telecom chipsets, and specialized software (including “open-source” software). Service providers are already moving toward greater reliance on the cloud and software-defined networking (SDNs), where software replaces specialized hardware, because it means lower capital expenditures. These are all areas where the United States has a substantial lead, and in some cases, there are no Chinese competitors.
Building out 5G infrastructure is important, but economic growth also depends on creating applications that take advantage of the infrastructure. An analogy would be building highways, but not the cars and trucks to run on them. 5G could be the start of another round of innovation and growth, but for this to happen, it must be accompanied by “complementary investments”—new products and services that make use of 5G networks. This points to the need to strengthen America’s innovation base and adopt policies that increase technological competitiveness.
Spectrum Allocation Is Key
The most important thing the next administration can do to accelerate 5G deployment and adoption in the United States is to increase the amount of available spectrum. This requires “repurposing” mid-band spectrum. Existing spectrum allocations must change, to be repurposed for commercial use or to allow for sharing (and federal support for spectrum sharing R&D would help this).
Compared to other countries, the United States is doing well in allocating high-band and low-band spectrum for 5G. However, it lags in the allocation of mid-band spectrum. The United States needs to repurpose mid-band spectrum for 5G if it is to remain competitive in the new digital environment. Repurposing may meet with opposition from some incumbent spectrum holders, but the requirements for national security that shape spectrum allocations have changed. The United States is in a competition where technological and economic leadership are as important as military strength. Our opponents know that technological leadership is a source of national power. The United States needs to adjust its spectrum allocations for this new competition, but this may require difficult trade-offs. Defense priorities will need to accommodate 5G spectrum allocation. If the United States is slow in deploying 5G, adding more weapons systems will not compensate for the economic harm and the damage to national security this will produce. When repurposing is necessary, agencies should be compensated for the costs of moving, as has been done in the past.
Spectrum should not be allocated by Executive fiat to a government-franchised 5G monopoly or a national 5G network run by the Department of Defense. Proposals like these would slow 5G deployment in the United States and harm the economy. Using spectrum allocations to create a national 5G monopoly is unnecessary and harmful.
Spectrum decisions have not yet put the United States at a competitive disadvantage. Existing spectrum allocation mechanisms work well. The FCC and NTIA have done a good job in supporting 5G deployment. In some cases, spectrum will be reallocated through auctions. Interviews with industry officials suggest that while the auction process could be improved by making it faster and less costly, overall, it works well when there is sufficient spectrum for auction. The just completed C-band auction, while expensive, was important for providing the mid-band spectrum needed for American 5G networks. The most complicated spectrum allocation issue is deciding when federal agencies (like the Department of Defense) should retain spectrum or when it should be reallocated. Future policies for 5G should prioritize economic benefits as this will better serve U.S. national interests.
Spectrum sharing, where many users can access the same spectrum bands, is becoming more practicable as the technology for sharing matures. Further improvements are likely. Increasing the ability to share spectrum between federal and commercial users will allow greater use of spectrum. Expanded spectrum sharing requires further funding for research and development to improve spectrum sharing technologies, along with adequate regulatory flexibility. The work of NTIA and the Department of Defense efforts to build dynamic spectrum-sharing, called Incumbent Informing Capability (IIC), based on wireless technological advances, could increase spectrum access for commercial 5G networks while minimizing disruption to federal use.
Many deployments will use 5G at the enterprise level—factories, ports, hospitals, and energy companies. There will be cases where spectrum-using technologies converge (e.g., where Wi-Fi is used for enterprise local area networks, combined with 5G spectrum for wide area networks). Both licensed and unlicensed spectrum will continue to coexist and be utilized depending upon the use case, on the specific band, and perhaps on technical issues like interference and performance. The key issue is making more spectrum available.
5G relies on dense, lower-power networks (compared to 4G), and this requires a different approach to infrastructure. The next administration should work with Congress to continue efforts to remove regulatory obstacles that hinder deployment and identify those instances where federal law would need to provide uniform national rules to supersede local regulation, since the interpretation and implementation of local rules by some municipalities can be inconsistent. This could be done as part of a larger effort to accelerate broadband deployment.
One potential obstacle to deployment involves concern about the health risk of 5G, seen most dramatically in several European countries where activists set fire to 5G towers. Conspiracy theories, encouraged by Russia, have tapped into a wave of concern over public health, but there is no evidence to support the theories that 5G damages health. Decades of studies on the health effects on radio emissions have found there are no major public health risks. A concerted effort to make information available in both conventional and social media to counter these charges and provide factual assessments is necessary.
Federal Spending for R&D and 5G
Much of the concern over 5G revolves around ensuring a secure supply chain. This is the result of errors made over the last 20 years to not support a strategic industry. The United States has learned the cost of not intervening. American companies once led in making telecommunications infrastructure. Now, there are no American manufacturers left. 5G and 6G provide an opportunity to remedy this, by building on America’s strength in telecoms in semiconductors and software. An essential action for building trusted networks is for the FCC to move ahead with “Rip and Replace” for carriers still using Chinese telecom equipment, using the $1.9 billion recently provided by Congress.
While most progress will come from market-driven activities and investments, there are places where federal investment is crucial. The most important of these are in fundamental research (e.g., research with no direct commercial application) and in the provision of test beds, which 5G relies upon, as will future generations of telecom infrastructure equipment. Financing for R&D on wave forms (the physical shape of the signal that carries information), spectrum sharing, the fundamentals of semiconductors (physics and material sciences), and 5G cybersecurity will accelerate and secure 5G deployment. To achieve this, funding for the National Sciences Foundation (NSF), such as its Platforms for Advanced Wireless Research Project, should be increased substantially.
Federal investment in research provides both economic and military benefits. Arguments against federal spending are that subsidies distort the market and that the private sector does not need funding. This is definitely not true for fundamental research, usually carried out by academic institutions, and it does not recognize a changed international environment, driven by our competition with China and by the use of subsidies by many nations. It is unrealistic to expect to compete with China without spending money. In some technology areas, China’s announced plans will let it outspend the United States by 50 to 1. China’s government does not have to worry about voters and elections, but a strong case can be made to American voters that new federal spending will provide both security and economic benefits that justify the cost. For 5G, this spending could be part of any new federal infrastructure investment programs.
While our general recommendation is to use market-based approaches whenever possible, there are key programs to support 5G that require federal funding. Several congressional initiatives have authorized federal actions to accelerate 5G, but they were unaccompanied by appropriations. This renders them moot. These initiatives include the Multilateral Telecom Security Fund to be administered by State Department, the Open RAN grants program authorized, but not funded, for NTIA, and the full funding of the CHIPS Act, which would include funding for federal matching grants and the act’s investment tax credit. The United States cannot expect to compete with China without spending money, and a strategy without money is like a car without gas.
Ensuring Global Competition
The United States has made significant progress internationally. Its achievements include a global recognition of the risks of using Chinese telecom technology, the decision by a number of countries to ban Chinese telecom technology, and the development of multilateral principles for identifying trusted 5G suppliers. The outcome of these efforts has been to improve cybersecurity in key allies and to undercut Chinese claims that they led in 5G technologies and were the only ones capable of supplying it.
The focal point for security concerns over 5G is China’s behavior. Given their sensitivity for national security, telecommunications systems should only be sourced from trustworthy suppliers or manufacturers. The global supply chains used for telecommunications networks’ software and hardware can raise security concerns. The risks are that China will use telecom infrastructure for espionage or to disrupt services and will use illicit actions to dominate the 5G market, as it has tried to do in other sectors. A first-order goal should be to preserve diversity in telecommunications technology suppliers and leadership in foundational wireless innovations so that the United States and its allies do not find themselves dependent solely on a supplier or suppliers in a hostile country.
The United States has done well in its efforts to counter this and improve 5G supply chain security. This does not mean the contest is over, however. Discouraging the use of Huawei equipment is not enough. The United States now needs to use domestic policy and international cooperation to protect a diverse supply base and avoid a dominant vendor (this dominance appears to be Huawei’s objective, something that worried even Chinese telecommunications executives, who feared a Huawei monopoly). Protecting supplier diversity requires creating a shared framework with allies to ensure a trustworthy supply chain, developing a common approach to countering predatory Chinese trade and technology practices, and lowering the cost of trustworthy 5G technologies. The United States has made progress in each of these areas but needs to do more.
As part of this, the United States should continue the Department of Homeland Security’s Information and Communications Technology Supply Chain Risk Management Task Force to help understand and manage risk and continue to encourage the adoption and use of the Prague Proposals (including the Trust Criteria developed by this group and now part of the Prague 5G Repository). A rigorous evaluation of suppliers and supply chains should take into account the rule of law, the security environment, ethical supplier practices, and suppliers’ compliance with security standards and best practices.
China and Huawei have used predatory trade practices to increase market share and drive competitors out of business. These practices take several forms. One is to subsidize the purchase of Chinese equipment through artificially low process or through favorable financial terms. This may be accompanied by espionage support, where the Chinese firm is supplied with illicitly obtained information on a competitor’s bid so that they can undercut it. In discussion of 5G supply chain security, a European telecom executive said the failure to control Huawei’s predatory practices was one of the greatest strategic blunders by Western countries. The United States and partner nations must take action to counter predatory trade practices, whether this is through illicit subsidies, espionage, or threats of retaliation from the Chinese government (as occurred in Germany).
The antidote to predatory practices is to change the politics of acquisition, not only by pointing out the security risks (since China subsidizes telecom infrastructure for strategic and intelligence advantage) but by adopting measures that increase transparency and accountability in 5G transactions and financing. The United States has found it helpful to make public instances of foreign corrupt practices in other areas and should, with its partners, expose Chinese activities and illicit subsidies in telecommunications.
This is not an action that the private sector can lead. It will create accountability and reduce the effectiveness of predatory practices. It requires assigning intelligence resources to track illicit subsidies and other forms of corruption the way the United States does for arms sales or sales of passenger aircraft. Transparency can be difficult, as when a service provider in a European ally takes advantage of subsidized prices, and exposing this could create diplomatic issues, but experience with foreign corrupt practices shows that transparency can change behavior.
Holding China accountable to its World Trade Organization (WTO) commitments must be part of this. Some argue that recent U.S. actions have undercut the organization, but others point out that these actions were in response to the 20-year failure to hold China accountable. As the WTO begins the process of reform, the United States should make accountability and enforcement for predatory trade practices and non-compliant behavior central tenets. Subsidies (hidden or otherwise) run counter to China’s WTO obligations and commitments. An accountability strategy will need to involve public disclosure, action in the WTO, and Western trade assistance to reduce the incentive to buy untrustworthy equipment.
Exposing predatory practice or practices that run counter to WTO commitments is a first step. The alternatives to Chinese suppliers can be more expensive because Chinese infrastructure is often government-subsidized, and this higher cost dissuades buyers in the developing world (and even smaller European countries) from buying secure technology. One major advantage Huawei has is that its prices are artificially low, since they are often subsidized directly or indirectly (and usually not transparently) by the Chinese government. The United States does not need to match Chinese subsidies, but we do need to reduce the financial burden of not buying from Huawei. This does not have to be a dollar-for-dollar match but at a level sufficient to allow security concerns, which are always present, to take precedent over financial burdens.
Cooperative aid policies with Japan and the European Union to use foreign assistance and export support in programs for the developing world will increase the overall trustworthiness of international networks and counter Chinese actions. This will require adjusting U.S. Trade and Development Agency (USDTA) and ExIm Bank rules and procedures that hamper the ability to support telecom infrastructure acquisitions by developing countries, such as liberalizing American content requirements. These were recently lowered to 51 percent (from 84 percent) but should be lowered even further. Some of these changes may require legislation on the rules for domestic content and eligibility requirements. Japan and European allies are ready to work with the United States on this. There are sound trade and development reasons to use export credits to promote 5G in the developing world, but there are important foreign policy and security reasons as well.
China Tech Strategy
Supply chain security, standards setting, and trade reform also require a strategy to engage China on technology issues. This is best done in partnership with allies and should be part of a more comprehensive strategy for dealing with China. Despite recent backchannel signals, it is not clear if the Chinese are ready to make any concessions, and the economic pressure from sanctions and export controls may not be enough to change this. Even if they are, progress will take years. Discussing how to negotiate with China is outside the scope of this paper, but China is dependent on the West for technology and markets and has few allies, so a multilateral approach that takes advantage of potential areas of leverage (like China’s access to Western economies) could eventually change China’s behavior.
Greater transatlantic cooperation is necessary to reduce the flow of advanced technology to China and counter its predatory commercial practices. Addressing these problems requires agreement between Japan, Europe, and the United States, but the close commercial connections in telecom, the Prague Proposals, and the work in the European Union on 5G security provide a foundation for a coordinated approach to China. While China is unlikely to end illicit support to a prized national champion linked to its intelligence services, the United States can work with its allies to develop policies that limit supply chain risk and limit technology transfer. On 5G, there is an emerging transatlantic consensus (along with Japan and Australia) on the need to look beyond cost when making decisions on trustworthy infrastructure. The interesting question now for 5G is not just how to build secure 5G infrastructure but how to use it to accelerate innovation and commerce among allies.
Safeguarding an Independent Standards Process
Another area best served by multilateral action is working with allies to safeguard the impartiality of the international standards process. The definition and development of 5G standards is an international activity intended to identify the best technologies for wireless communication standards. 3G and 4G standards were developed by a partnership of global standards organizations, with dozens of companies from around the world attending meetings in standards bodies and creating new technical solutions. Similarly, the private 3rd Generation Partnership Project (3GPP) develops standards for 5G.
Standards are the technical guidelines that companies use to build their products. Standards-setting is a competitive arena, but in 5G it is a competition where the United States is holding its own, despite China’s efforts to politicize the international standards process. This effort is part of a long-term strategy by the Chinese government. Interviews with executives from numerous American companies identify this as a plan to dominate standards processes to give Chinese companies an advantage. Technology built to Chinese standards may also create cybersecurity risks. The standards-setting process is complicated, making it easy to exaggerate China’s success, but there should be no doubt about China’s intent. Anecdotal reports from attendees at international standards meetings tell of greatly expanded Chinese participation.
Standards bodies use voting to make decisions. Chinese companies face intense pressure to vote the party line to support Chinese proposals, even if they are technologically inferior. In 2018, for example, the chairman of Lenovo was forced to apologize publicly after Lenovo representatives voted in favor of a technologically superior American proposal instead of a Chinese proposal and promise never again to vote for a non-Chinese standard. This is not how the standards process is supposed to work, but China will flout norms to gain dominance.
China has been unable to dominate the 5G standards discussions, but it continues to try. We should not be surprised that China’s telecoms and high-tech industries play a more significant global role than in the past. Given the success of its predatory practices, its extensive espionage campaign, and its investment in R&D (reinforced by espionage), the Chinese government has made it a priority to increase the national ability to innovate. The issue is not that Chinese companies play a larger role—it is China’s efforts to manipulate the standards process to favor Chinese products. The United States will need to work closely with Western governments and companies to ensure standard processes remain politically neutral and decisions are based on selecting the best technology.
One easy change for a new administration involves visas. American visa rules make it hard for Chinese participants to attend standards meetings in the United States, and in response, the standards community tends to hold most meetings in Europe and Asia. This enables higher participation from other countries than the United States and makes it more expensive for U.S. participants, reducing attendance levels. At a minimum, the United States needs a special and accelerated process for visa approvals for standards participants to promote international cooperation and bring more conferences and standards events to the United States.
Common understandings with allies on standards decisionmaking processes, increased support for American researchers to attend standards meetings, and a reasonable approach to visa issuance so that standards meetings can be held in the United States are necessary to ensure the process remains neutral. Strengthening the standards process does not require the U.S. government to coordinate American participation in 3GPP and other non-government standards bodies. We should not copy the Chinese example of state control over private companies’ actions. Where government action is needed is in finding ways to support American participation.
International Partnership Is Key to 5G Security and Competitiveness
The market for telecommunications infrastructure is global and shaped by high capital costs and economies of scale. The United States should work with allies and like-minded countries to promote international norms that enable secure, trusted, and diversified 5G supply chains that will facilitate greater global adoption of 5G and 5G network infrastructures.
Partnership is the key to supply chain trust and to 5G cybersecurity. Developing a common approach to 5G creates opportunity for cooperation on cybersecurity among Western democracies. This common approach could identify common measures to mitigate the main cybersecurity risks of 5G networks, provide advice, and share intelligence on how to do this. One starting point is the European Union’s 2019 Coordinated Risk Assessment on Cybersecurity in 5G Networks, which identified threats and threat actors and vulnerabilities, including vulnerabilities created by the legal and policy frameworks of third countries. In 2020, the European Union endorsed a joint “toolbox” of mitigating measures agreed by EU member states to address 5G security risks. This European initiative, in which the United States was involved, provides a starting point for further collaboration on cybersecurity as 5G technology evolves.
Cooperation in countering predatory practices and in cybersecurity, aligning and coordinating trade promotion policies, and collaboration in protecting standards processes point to the need to work with allies. The basis for renewed cooperation is the shared values of the transatlantic community. These values are now under threat from powerful and ambitious authoritarian regimes, and a growing concern over their behavior offers the United States an opportunity to build a new approach to technological security, including in 5G, with European nations and Asian democracies. The United States should work with allied countries to establish international norms that enable a secure, trusted, and diversified 5G supply chain without creating fragmented or nationalized markets.
5G is a different kind of network architecture. Great reliance on the cloud and pushing processing to the edge offers opportunity for greater security, as does an increasing reliance on a supply chain based on American software and semiconductor technology. Cybersecurity will remain a challenge for the foreseeable future. Our goal with 5G should be that the move to new technology does not increase that challenge and, preferably, would actually shrink it. The emphasis on supply chain security in the last few years has closed off one avenue to potential risk. Further progress will require addressing cybersecurity fundamentals and closer partnerships with like-minded nations.
Embracing the Next Generation of Technologies
Telecommunications technology is going through a transition similar to the transition in computing 30 years ago. Networks are shifting from being predominately hardware-based to software-based, embracing software-defined networking (SDN) and network function virtualization (NFV) as ways to virtualize their operations. Using internet and information technology infrastructures combined with cloud computing and artificial intelligence in wireless networks speeds connectivity and reduces supply chain risks. Virtualization drives the industry toward a more interoperable and modular network design. This will foster competition between suppliers and lower the barriers to entry to the telecom equipment market.
This shift has been underway for several years in core networks and now is occurring in RAN. The advent of open radio access architectures, which enable hardware and software from any vendor to interoperate via a non-proprietary, standardized interface, changes the dynamics of the market in ways that increase competition. Many in the industry have invested heavily in the development of open technologies and participate in groups such as the O-RAN Alliance to advance the development of open interfaces.
The pace of deployment will depend upon the extent to which the technology can be scaled and whether carriers and network operators can incorporate open radio access networks into existing infrastructure. The benefits of open networks have led some to propose that the United States mandate its use, but a government mandate to accelerate adoption of open radio access technologies would be unnecessary. Given the potentially large savings in capital expenditures that open technology promises, we do not need regulatory requirements to encourage a move.
Companies are drawn to new technologies because of cost advantage, but there are issues that will take time to resolve. The best guide to moving ahead is to let market forces and demand drive the acquisition and deployment of new network technologies. The recipe for progress here is the same as in other areas of technologies: fund fundamental research, remove regulatory obstacles, let the pace of deployment be dictated by market demand, and allow collateral innovations (e.g., new applications and services) to make use of the connectivity and speed new network technologies will provide. Open networks will co-exist with legacy network architectures for the foreseeable future.
From a supply chain perspective, technological change favors the United States. New generations of telecom technology will rely on software and semiconductors, areas where the United States is very strong. China will endeavor to catch up (in part to reduce the damage from U.S. sanctions) and develop indigenous capabilities, but the future telecom supply chain will be less susceptible to manipulation.
The FCC has an opportunity to accelerate the move to open technologies by using some of the $1.9 billion allocated for rip and replace to fund trials of open radio access network technology at eligible carriers. The replacement of Chinese technology offers the opportunity to test and use open technologies (especially radio access network technology) that could make the United States a leader in the move to the next generation of telecom. Using rip-and-replace funds could also ensure that smaller, local carriers have access to cutting edge technology and do not need to reinvest in a few years. Linking rip-and-replace to trails of open technology is an investment in the future.
Similarly, 6G—the next generation of telecom technology—will rely on technologies where the United States and its allies (like Japan) are strong. 6G will involve a greater focus on standards development, R&D funding, expanding a skilled tech workforce, and new approaches to security and data protection, since 5G and 6G devices will be ubiquitous. These could benefit from federal support. The full adoption of 6G is years out, but many of the recommendations we have made for 5G will work equally well in accelerating 6G adoption.
Focus 5G Policy on Economic Growth
5G policy has focused largely on supply chain security, and largely on suppliers of RAN equipment. But the 5G supply chain is much broader if one considers the components that go into the manufacture of infrastructure. This includes semiconductors, chipsets, and specialized software, all areas where the United States has a substantial advantage. The growing involvement in telecommunications by major software companies changes the dynamics of technology and innovation by creating a dynamic and innovative market.
One reason for the expanded participation is that 5G will enable the “industrial internet” and change how services and goods are produced. These changes will increase productivity and lower costs. The marketplace for consumer-oriented personal apps exploded with the introduction of 4G. A similar change is occurring in industrial systems; machines and products are increasingly guided by industrial apps that will run over 5G networks.
5G policy must consider how to promote America’s technological competitiveness (since it is part of a larger set of technological changes involving artificial intelligence and cloud services). This can be done using the measures on R&D, regulation, and international partnerships identified in this report. The 5G discussion should move from a focus on supply chains and deployment to consider what some experts have called “the application space,” as this will be an indicator for global leadership.
Most of this work to take advantage of 5G will be done in the private sector, but federal policies and funding to support the academic research community will be important to focus on. 5G for manufacturing, healthcare, transportation, cybersecurity, and other sectors will accelerate private sector action. Building out 5G infrastructure is the crucial first step, but economic growth depends on creating applications to take advantage of the infrastructure. An analogy would be building highways, but not the cars and trucks to run on them. 5G could be the start of another round of innovation and growth, but for this to happen, it must be accompanied by “complementary investments,” the development of new products and services. 5G networks, in combination with AI and cloud services, will transform the economy and services that make use of 5G networks. This reinforces the point on the need to strengthen America’s research base and adopt policies that increase technological competitiveness.
Recommendations for Implementation
Making a comprehensive 5G strategy work requires efforts by many agencies: Commerce, Defense, State, Homeland Security, and the FCC. Given this, the White House must play a central role in coordination and direction. The new administration should start with a White House document laying out actual steps to implement the measures described above, accompanied by funding when necessary, and assign agency responsibility. This should be issued in the first 90 days of the new administration to set objectives for agencies.
Within the White House, the National Security Council (NSC) and National Economic Council (NEC) will need to oversee implementation and adjust plans as necessary as well as push within the bureaucracy and on the Hill for necessary funding. For the most part, this can all be done under existing authorities, but congressional action to finance necessary research, change any legal obstacles to the use of development funding, and continue federal preemption of local regulation remains necessary.
A central focus for our recommendations is the need to accurately scope a government role. America will maintain its global strength in 5G and technology not through top-down government policies, but by strengthening its unmatched innovation ecosystem. In this system, federal agencies, the academic community, and private sector entrepreneurs and innovators each have an essential role. We have identified areas where government action is needed within a larger approach of using business competition, consumer preferences (and by consumer we mean enterprises as well as individuals), and market-driven investment decisions to meet the demand for the better network services and connectivity that 5G will bring.
Metrics for Success in 5G Policy
How do we know than the United States is holding its own in 5G and that market-driven strategy is effective? One sign was that when the United States restricted technology transfers of 5G technology to Huawei, its ability to build 5G infrastructures was hobbled. The chips and software needed for 5G remain, for now, of American and Japanese origin, and the infrastructure itself is available from American allies. This will change eventually as China invests billions in building its own industries.
Better metrics for success will need to go beyond supply chains and examine “collateral” innovations, market size, and revenue. 5G enables valuable industrial applications, and this is where it will generate much value. The availability of 5G to American consumers and enterprises is also a key metric. Currently, some form of 5G is available in more than 2,000 American cities reaching over 200 million potential customers. This number continues to grow, along with the number of enterprise 5G deployments. Coverage, as we might expect, started with the big urban centers and is moving outward. There are also many private 5G networks serving machines rather than people—in factories, ports and industrial facilities. Enterprise 5G will let private networks use the technology the way they use Wi-Fi now.
To take advantage of 5G technologies requires not only 5G infrastructure but also devices and software that use 5G connectivity. When the internet became commercially available, there was a search for a “killer app” that would let the new technology be monetized. We are much further along the path of digitalization, and 5G will provide more connectivity than the early internet. The question for 5G is not just how to build out 5G infrastructure but how we use it to accelerate innovation and commerce in areas like the industrial internet and “smart” applications (like cities, cars, hospitals, and factories). It will take time for entrepreneurs and companies to identify the opportunities of 5G and commercialize them. The ultimate metrics of success will be in how 5G is used once people have access to it and can begin to experiment with new products and services or experience better performance from existing products and services. What we learned from 4G is that smart, connected devices and the data they generate can create a new era of growth.
Deploying 5G infrastructure and allocating the necessary spectrum are essential first steps, but the ultimate metric is financial return. 5G offers new ways to make money. It is too early to tell how this will be accomplished because economic returns will depend largely on how 5G is used to offer new services and to reduce costs, and most of these innovations have yet to be created. While many factors affect economic growth, if 5G policies are done right, 5G can, in combination with other technologies (like AI), provide the basis for accelerated growth.
The United States and its allies have been dragged into a long contest with authoritarian regimes. For China, this contest is made more complicated by the close technology and economic ties between China and the West as well as the size of China’s domestic market. American economic and technological leadership is no longer undisputed. The United States needs to expand the range of its policy and investment choices if it is to preserve its technological strength. Adopting the right policies and partnerships for 5G will play a crucial role. Policies that strengthen our own technology base, build strong cooperation with partners and allies, and maintain supplier diversity in telecommunications will ensure that the United States can manage the risk and reap the opportunities new technology will provide.
Competition among private actors in markets for technology, services, and spectrum should be the centerpiece of an American approach to 5G. While markets can appear messy and even wasteful in the near term, they have repeatedly shown that they are better at making investment decisions than centrally directed approaches. To summarize our conclusions, let the market dictate the pace of deployment, increase support for fundament research, remove regulatory obstacles, and build partnership with allies. With the right policies and a reliance on the market, 5G can produce the same economic growth that the internet brought, but on a bigger and more accelerated scale. Working together, public and private action can achieve this and move America toward a stronger digital future.
Note: This strategy was developed by a group of private-sector experts from companies and research institutions in the United States, Europe, and Asia and was assembled by the Center for Strategic and International Studies.
James Andrew Lewis
Senior Vice President and Director, Strategic Technologies Program
Center for Strategic and International Studies, Washington, D.C.
Wilkinson Barker Knauer, LLP
This report is made possible thanks to support from the Japan External Trade Organization and by general support to CSIS.
This report is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
© 2021 by the Center for Strategic and International Studies. All rights reserved.