Newt Gingrich, 5G, China, and Capital: Nationalist policy doesn’t contribute to long-run Black community sustainability in the long run.

The Eye Catcher …

In an opinion piece posted earlier today, former Speaker of the U.S. House of Representatives, Newt Gingrich (R-Georgia), proposed that the U.S. government provide for a national 5G wholesale network, constructed by a private party. The network would be “carrier-neutral”, according to Mr. Gingrich, and help the U.S. beat China in the race for 5G wireless dominance.

Mr. Gingrich and the Trump Administration are concerned that China through state-subsidized firms such as Huawei and ZTE will be able to continually extend their smartphone and telecommunications manufacturing ability globally.

Mr. Gingrich sees a number of benefits flowing to America as a result of a nationalized 5G network, including the spurring of microelectronics manufacturing; accelerated deployment of next-generation networks; and the demonstration that China’s dominance in 5G is not a foregone conclusion.

It amounts to a nationalism play … that benefits capital

Based on his article, Mr. Gingrich would like to see a national 5G network in place so that telecommunications device and hardware makers can test drive new offerings.  If Huawei, ZTE, or other Chinese firms can get their product to global markets first, the United States will be in a hard place competition wise, trying to put 5G technology in the markets of multiple countries that may not have a problem with ZTE’s relatively inexpensive Android phones, subsidized, in part, by the Chinese government.

The above point is made in an article by Vlad Savov in The Verge.  Citing data from Canalys, a market analysis firm, Mr. Savov describes Europe as a market ready for price competitive wireless products offered by Huawei and sister Chinese firms Oppo and Xiaomi.  The political antipathy held by the United States toward China is not apparent in Europe with roughly 32% of smartphone shipments to Europe coming from Chinese firms.

But let’s suppose that a nationalized 5G network was built in the U.S. Who would gain the most from Mr. Gingrich’s proposal? I believe the greatest benefit would go to the wealthy, primarily those holding shares in telecommunications companies, other internet core companies, and internet edge companies.  A significant number of Blacks would not see the spoils that would flow to shareholders.  The vast majority of Blacks do not own stocks directly.

According to 2002 data by the Social Security Administration, the percentage of Blacks owning stocks directly was approximately nine percent compared to 36% of whites.  By 2014, the percentage of Blacks owning stocks had fallen.  According to data collected by the United States Census Bureau, approximately 5.2% of Blacks owned stocks or mutual fund shares.

Reduced access to components means greater difficulty for Black communities to innovate …

Google Fiber has been in Atlanta for a few years now, but they never deployed in my neighborhood which has a high Black population. Atlanta has its share of Black engineers as well as a few Black entertainers, businessmen, and investors capable of developing and deploying innovative communications technology.  Ideally, Black communities like those in Atlanta should be designing their own technologies, especially given their access to local teaching and research universities.  But if a nationalist policy toward Chinese telecommunications manufacturers limits access to affordable devices and hardware, that would only put a strain on Black community capacity to be resilient, self-sufficient, and sustainable.

Conclusion …

With all the talk of the negative impact of the digital divide on the Black urban community, “telecommunications nationalism” does not serve Black people well. Telecommunications nationalism does not send more capital to Black communities and does not facilitate technological sustainability.  It is not a policy that Blacks should get on board with.

 

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Verizon moves ahead with 5G

Verizon yesterday announced the rollout of Verizon 5G Home internet service. Verizon claims in its press release that it is the first company to introduce 5G commercially in the United States with service to be provided in parts of Houston, Indianapolis, Los Angeles, and Sacramento.

Given the lack of uniform industry standards, being first to provide 5G service means moving ahead with the service based on its own proprietary 5G standards.  According to Hans Vestberg, Verizon’s chief executive officer,  “To be first, we encouraged others in the ecosystem to move more quickly at every step. We appreciate the partnership of network equipment makers, device manufacturers, software developers and chip makers in reaching this critical milestone. The entire wireless industry gets to celebrate.”

Verizon will start taking consumer orders for the service on 13 September 2018 with the service taking effect on 1 October 2018.

SDx Central, a technology content provider and research firm, estimates that the first phase of 5G standards will probably not materialize until late 2018 when industry can base concrete standards on high profile cases. However, Verizon sees no concerns with moving forward with its own proprietary standards.  Rather, it sees itself as a leader on moving the industry further along the journey to rolling out 5G. According to company spokesman John O’Malley:

“The 3GTF standard we developed actually accelerated the adoption of the international standard last December — two years earlier than most people thought it would happen. And now, device, infrastructure and other technology leaders are developing products that will run on that standard. And when those products and technologies are available, we’ll evolve our offerings as well. The entire industry is working together on this.”

Although Verizon did not mention the impact of its 5G rollout on global trade, broadband communications has been described as an important platform for international commerce, particularly for small and medium enterprises.

In 2013, the World Economic Forum determined that 95% of businesses located in countries that are part of the Organisation for Economic Co-operation and Development has an online presence. The internet in general and social media in particular allowed these businesses to market products globally and reach customers outside of their regions.

Joshua Meltzer of the Brookings Institution in a paper addressing the internet as a platform for international trade said the following:

“Significantly, the Internet is creating new opportunities for small and medium-sized enterprises (SMEs) and for businesses in developing countries to engage in international trade and become part of the global economy. By providing opportunities to access business inputs such as cheaper telecommunications, strategic information on overseas markets, legal and consulting services, and cloud computing, SMEs and developing country firms are now more than ever able to become globally competitive. With a website, these firms can now engage internationally, reaching customers and communicating with suppliers all across the world.”

Could we see further integration of the aforementioned cities into global trade as a result of this rollout?