Introduction
Most mobile phone users have heard that a new technology, 5G, is coming soon. Indeed, mobile network operators (MNOs)—AT&T, Verizon, and T-Mobile—have actively advertised the coming wonders of 5G. The new 5G, or fifth generation, mobile networks promise to launch dramatic changes in many industries with potential impacts on competition review and regulatory action. Although not yet deployed, 5G’s advent has affected how regulators and antitrust enforcers think about growth and innovation for MNOs, mobile virtual network operators (MVNOs), and the network equipment manufacturing market. Also, at the forefront of policy choices is how to facilitate 5G coverage and the growth of consumer access to telemedicine and online education. In short, 5G is already a disruptive new technology.
This chapter examines how the influence of 5G affects competition and, in turn, affects regulatory and antitrust decisions. Because the mobile telecommunications industry is dependent on spectrum licenses[1], 5G deployment will implicate Federal Communications Commission (FCC) regulation and merger review.[2] In addition, as a traditional telecommunications industry, MNOs and other related industries are subject to antitrust scrutiny by the Department of Justice (DOJ), Antitrust Division.[3]
As both the FCC and the DOJ make many decisions based on the state of competition in an industry,[4] considering the potential competitive impacts of 5G development is an important exercise. Indeed, the importance of guarding potential procompetitive innovation is often as important to federal agencies as is preventing or prosecuting anticompetitive conduct. This has already played out in the approved 2019 merger of Sprint and T-Mobile where the prospect of speeding the spread and adoption of 5G technology encouraged joint DOJ and FCC approval.[5] The following discussion focuses on the importance of 5G in competition review in various contexts.
The first part of this chapter puts forward a brief background on technology. The second part examines the use of 5G in FCC and DOJ merger review. The third part analyzes the potential increased efficiency and decentralization of the traditional MNO and how this might impact future competition analyses. And the fourth part examines how 5G may be a factor in less traditional competitive analyses—for example in federal attempts to develop markets in underserved areas, in delivering education and telemedicine, and in increasing competition to minimize theoretic bottlenecks.
I. A Brief 5g Background
A. What Is 5G
5G is a general-purpose technology. No mere update to 4G, 5G is a major, architectural innovation, capable of helping many other complementary innovations take root. The most promising aspects of the technology are increased capacity (bandwidth), increased data upload and download speeds, decreased latency (delay) in data transmissions, and greater input efficiency.[6] With the anticipated capacity increases, 5G may enable connections to “everything, always (24/7) and everywhere connectable to networked digital communication, computing, and storage resources wherever and whenever wanted.”[7] Looking at a few anticipated changes, architectural changes are likely to increase consumer quality, increases in spectral and other efficiencies will decrease costs, and new technological options will expose manufacturing markets to increased competition.
To bring about these benefits, the MNO will change the architecture of the underlying network. One such change will be the “densification” of mobile networks. MNOs will increase the number of small cells, densifying the spread of cells in any given area.[8] These small cells, often the size of a pizza box, amplify the broadcast from towers and may be installed, for example, directly on tall buildings. Tall buildings are notorious for obstructing radio signals that create dead spots and lead to lost signals. The small cell densification of urban areas will decrease these signal problems and increase quality.
Another architectural innovation of 5G is that it increases spectral efficiency. 5G is sufficiently robust that it can use a large variety of different spectrum frequencies, even some frequency bands that were commercially unusable by previous network technology. Usually, the mid-level band frequencies are the most fertile for mobile transmissions, but the 5G technology allows even higher bands, that are more abundant, to be productively used in the network.[9] For example, 5G will facilitate the use of new radio frequencies above 6 GHz, maximizing transmission, latency, and reliability over previous generations.[10] This permits increased spectral efficiency.
Additional 5G cost efficiencies will come in part from the increase of data capacity of the network. Data capacity increases are of course desirable for consumers, but it also helps operators design a more efficient network architecture. For example, with 3G and 4G, each MNO runs as many as 10 or 12 “separate” subnetworks. Each network is used for a specific purpose or customer group—general consumers, business consumers, etc. Increased capacity allows these multiple networks to run on one infrastructure and share valuable, limited spectrum—potentially saving administrative, engineering, and other operator costs as well.[11]
Perhaps most exciting, and discussed at greater length below, is the potential move from the current standard of Radio Access Network (RAN) technology to Open Radio Access Networks (O-RAN). This move may decrease costs, increase network efficiencies, and increase competition in the mobile network equipment and software market. In the standard RAN technology, the hardware provider also provides embedded software for the network. With 5G and O-RAN, network software is decoupled from network hardware. This permits greater flexibility in network design. As noted, one result may be increases in network efficiency by permitting network hardware to serve many different customers. This “network slicing” or “softwarization” of the underlying hardware is revolutionary.[12] Not only new efficiencies, but also new market entrants in both the software supply chain and end-user markets might develop.[13]
B. What Benefits and Innovations Might Come
It is reasonable to ask if 5G will live up to the hype. Put another way: What benefits and innovations might consumers reasonably expect in a 5G future?[14] The prospective benefits to consumers fall into three general categories. First, 5G raises the possibility that mobile broadband will become a compelling alternative to cable, DSL, and satellite broadband. Second, there is strong potential that the switch to 5G will usher in new innovations yet unknown, much like the change from 3G to 4G saw the rise of the app economy and a new industry of streaming video. Third, the cost savings and efficiencies of 5G may release capital and resources to invigorate innovation in other parts of the economy.
First, 5G may make mobile broadband, and mobile provided fixed broadband, vigorous competitors in the high-speed broadband market. Several commentators have expressed concern that cable providers dominate the high-speed broadband market. This dominance is largely traceable to superior quality characteristics of cable over other technologies. These attractive qualities are exactly those that 5G promises to improve on mobile networks: increased speeds, faster data rates, fewer delays in streaming (decreased latency), increased mobility, and greater connection density.[15] Even before 5G, mobile operators have seen massive jumps in consumer demand for streaming video that relies on high quality broadband connections.[16] By increasing quality, mobile operators providing mobile and fixed broadband access will be better positioned to compete with other broadband technologies.
Second, based on experiences with the move from 3G to 4G, the move from 4G to 5G will usher in yet unknown innovations. With the switch from 3G technology to 4G analysts noted a fantastic uptick in applications (apps), programs, and other innovations not previously seen in the industry.[17] A prominent example is the creation and growth of a mobile, streaming video market. Given that the move from 3G to 4G was a technological update compared to the architectural shift to 5G, excited expectations abound. One of the best guesses for 5G, is that it will facilitate killer innovations in the Internet of Things (IoT).[18] More than just smart refrigerators that nag you to buy more broccoli,[19] anticipated new services include “smart highways and vehicles, smart energy grids, smart healthcare, smart supply chains, smart agricultures and natural resource management, and smart finance and payments.”[20] The benefits and the multiplier effect of such innovations are theoretical but reasonably anticipated.[21]
Third, intertwined with the demand-pushing innovation story, there is a cost-saving efficiency story in the move to 5G. 5G promises to permit companies to reduce redundant infrastructures and to use spectral assets more efficiently.[22] To be sure, cost savings will not be realized for many years. As one commentator notes, to deliver, MNOs must manage diverse spectrum assets (low, mid-band), small cells, and “softwarization.”[23] “SNL Kagan estimates that the transition to 5G will require building an additional 225,000 small cells by 2021.”[24] However, in the near future cost efficiencies may result from the “softwarization” of the network permitting network delocalization, increased cloud services, remote control, and network slicing.[25] These cost savings may or may not be passed on to consumers but users can capitalize on these novel network characteristics to create truly “bespoke” services for their own needs, scale, and innovative designs.
Another exciting cost saving advance might come from blockchain. Blockchain technology can be used to counter increased costs resulting from more compact infrastructure and increased user density.[26] Blockchain is a technology that decentralizes data and holds it securely by storing the data in blocks. This technology utilizes smart contracts that manage the interactions and agreements between parties. It is anticipated that 5G will work with blockchain on public and private platforms.[27] Blockchain can be used to facilitate payment in addition to tracking and managing the active and passive sharing of network resources.[28] Another benefit of blockchain is that it could be used to manage spectrum sharing in a secure way without third parties and to track usage, ownership, and management of resources. In general, blockchain could open up cost saving opportunities for 5G that are secure and decentralized.[29]
In sum, if 5G can deliver in even one of the described areas—increasing high-speed broadband competition, facilitating innovations, or reducing costs and efficiencies—it will have delivered on the hype.
II. Merger Review and 5G
A. Sprint and T-Mobile
The most significant communications industry merger in recent memory is the 2019 merger of Sprint and T-Mobile, two of the four national, facilities based mobile networks. By tradition, mergers within the communications industry are reviewed by the Antitrust Division of the Department of Justice. Additionally, as in any merger involving the building, extension, or acquisition of a telecommunications line[30] or the transfer of spectrum licenses[31], the Federal Communications Commission must also review and approve the merger.
Although two agencies review a communications industry merger, each agency may emphasize different concerns due to differences in their respective standards of review. Generally, antitrust enforcement is based on the “consumer welfare standard”—a standard that seeks to answer whether the competitive gains of a given action outweigh the potential competitive losses.[32] More specifically, the standard of review for the DOJ is whether the merger will “tend to lessen competition” within the relevant market (Clayton Act § 7). The standard for the FCC is whether the merger is in the “public interest”[33]—arguably a broader standard of review that encompasses not only the costs or benefits from decreased or increased competition but also expressly considers directly mandated, and non-economic factors.
In analyzing the merger, the FCC considered standard antitrust competition analysis—the FCC spectrum screen.[34] The merger analysis for the FCC, the DOJ, and even the general public, was particularly of interest as it represented the first major “four-to-three” merger in US mobile telecommunications. Based on many metrics, including revenue, consumer base, and geographic coverage, this was a historic merger proposal for the industry. A cursory examination of the industry structure (four operators), the market’s Herfindahl-Hirschman Index (HHI), and the impact of the transaction, provided a naïve inference of a highly concentrated and uncompetitive market. However, as the FCC and DOJ have noted, inferring competitiveness from concentration is not dispositive and can be counter to the public interest.[35]
Like the HHI, the merger triggered the FCC’s unique concentration metric, the spectrum screen, which measures spectrum license concentration. When a single entity holds one third of the usable spectrum in any given area, it indicates that additional, more comprehensive competitive analysis is required. In several regions, the spectrum screen was triggered. On a national level, after the merger, the undifferentiated T-Mobile spectrum holdings would exceed the holdings of both AT&T and Verizon.[36]
The HHI and the spectrum screen were first cuts—indicators that further analysis was appropriate. Extensive and comprehensive economic analysis followed. Of special focus for the FCC and the DOJ is what impact the merger would have on quality-adjusted consumer prices, investment, and innovation. The latter two items are particularly difficult to anticipate as they involve dynamic choices—choices that may change and grow depending on future events, including dynamic changes to competition as competitors reposition in response to the merger and/or consumer demand. So too, consumer prices may go through various changes as competition waxes and wanes, supply costs decrease, and new applications lead to new consumer demand patterns.[37] Indeed, experience has demonstrated that investments in next generation technologies have led to quality adjusted price decreases.[38]
To sum up the first blush narrative—a move from four operators to three operators could lead to consumer price increases because of increased unilateral market power and/or an increase in the incentives and ability to cooperate on price with competitors. As in any merger, that simple narrative must be validated and balanced against countervailing merger specific benefits (for example, cost decreases, increased investment, spectral efficiency), and the dynamic impacts of innovation. In this case, the latter benefits were determined to outweigh potential price increases.[39]
Interestingly, even though the FCC and the DOJ have different standards of review, in the analyses of both the potential consumer benefits of robust, national 5G networks were pivotal to the ultimate approval of the merger.[40] The 5G benefits were calculated in two ways. First the benefits of the merged T-Mobile gaining by merger the additional spectrum and cell towers it could use to quickly deploy 5G technology. Second, by voluntary commitment, the merged T-Mobile agreed to sell spectrum to DISH and to otherwise assist DISH in building a viable national 5G MVNO. DISH in turn made extensive commitments to build-out 5G to at least 70% of the U.S. population by June 2023.[41]
1. Can you Build a 5G Network?
In its analysis of the market, the competitive use of spectrum licenses purchased by merger, as opposed to open auction, is of paramount concern to the FCC.[42] That concern is rooted in the FCC’s statutory basis for merger review[43] and by the use of the spectrum screen in the first instance. Although the holders of spectrum licenses are determined by auction, the FCC determines the use. That means licenses for mobile networks are a subset of all available licenses. Moreover, not all licenses are the same. For example, they vary by region and by band—low, medium, and high—each with different propagation strengths. The analysis of spectrum as a crucial input to the industry is a central part of the FCCs merger analysis. Since the US government limits licenses, aggregating the licenses necessary for coverage may be impossible if mergers (or other cooperative behavior such as roaming contracts) are not permitted.
Turning back to the Sprint T-Mobile merger, recall our first naïve narrative, that four national facilities based mobile operators defined the premerger market and the merger would take the market down to three facilities based mobile operators. However, further review of the competitive strengths of Verizon and AT&T versus T-Mobile and Sprint highlighted the latter as highly innovative but competitively ineffectual.[44] Empirical analysis of T-Mobile’s famous “uncarrier” campaign [45] showed this to be the case. In general, T-Mobile would take consumers from Sprint but few from AT&T and Verizon. In other words, to some extent, the premerger market was differentiated into low cost carriers (T-Mobile and Sprint) and higher cost carriers (Verizon and AT&T).[46] Such differentiation is pro consumer and arguably, a healthy form of competition but the question of 5G had a clear impact on the analysis. Would the lower cost competitors be able to invest and innovate to bring consumers into a 5G world or would their customers be left behind?[47] Would it be better to permit the merger and have more robust competition among three 5G competitors (New T-Mobile, Verizon, and AT&T) than just between two (Verizon and AT&T)? When framed that way, it might be more accurate to characterize this as a “two-to-three” merger rather than a “four-to-three” merger.
T-Mobile and Sprint have complimentary spectrum holdings, with Sprint having mid-band spectrum and T-Mobile having low-band spectrum.[48] This combination is expected to work interestingly well with new 5G technology. In addition, the planned build-outs for both companies appeared to complement each other. In other words, it did not appear on its face that the companies wished to merge only to nullify an existing competitor but rather to build something new.[49]
2. A Toehold for New Competition
As is common in mergers, voluntary commitments were used to limit consumer harm in the wake of merger approval. The FCC and the DOJ both required T-Mobile to divest problematic holdings to a third-party buyer, in this case DISH. DISH first purchased the prepaid server of Sprint, Boost.[50] In addition, the FCC and the DOJ raised concerns around the need for a facilities-based operator that could service and support other MVNOs. A third-party buyer, DISH, again provided the solution.
DISH came to the table with significant unused holdings of spectrum assigned for general IoT use.[51] Those holdings, with FCC permission, can now be used to support mobile virtual networks. To succeed as a competitor in the mobile network market (in particular the wholesale market), DISH would need additional spectrum licenses and transitional support with a functioning facilities-based operator. T-Mobile agreed to sell additional spectrum holdings to DISH and to provide six years of operating support (with strict price controls and other agreements) to provide a competitive leg up to DISH.
For its part, DISH made extensive promises to the FCC and the DOJ to build out a 5G network.[52] There is no question that the 5G build-out promises were essential to the FCC’s agreement to the transfer of licenses and waiver of use restrictions. In the prepaid market, there are fewer competitors[53] and an independent competitor deemed essential was (potentially) found in DISH. In addition, the promise to build a 5G network incorporating open radio access network technology (see below) was particularly interesting.
B. Future Mergers
The high capital investments required to build 5G infrastructure, along with the dependency on cable for small cell technology, could lead US wireless companies to merge with cable companies in the future. Cable companies have access to fiber assets that could be useful to mobile wireless companies. However, it appears that cable companies are still unsure about the effectiveness of 5G and have taken a wait-and-see approach to merger decisions. Future merger reviews will no doubt be affected by the relative success of the T-Mobile merger and the voluntary build-out commitments made by the merged company.[54]
III. Regulatory Market Design
As noted in the discussion of merger review, both the DOJ and the FCC requirements that T-Mobile divest spectrum, sell the prepaid mobile service Boost, and enter into contracts that would facilitate the growth of DISH as an MNO demonstrated the importance of maintaining competition. In general, they were permitting a merger while simultaneously laying the groundwork for a new market participant. Except in the case of mergers where such express mandates are frequent, this direct form of industry design is an unusual role for antitrust enforcers but not for the FCC. The FCC has statutory mandates to support the building of markets in ways that Congress has defined to be in the public interest. Examples include incentivizing investment, encouraging the buildout of rural broadband connections, creating a market for the sale of spectrum licenses, and facilitating growth and connectivity for telehealth and education purposes.
Although mandated to build or shape various markets, the law permits the FCC leeway on how to accomplish these directives. As is prudent, and arguably legally dictated, the FCC looks to economic analysis and competitive incentives to maximize consumer benefits with the most efficient deployment of government money and resources. Examples of economic analysis are evident in FCC decisions that implicate private investment incentives, rural connections, spectrum license allocation, and telehealth and education.
A. Rural Connections
Discussing building markets by regulation in a chapter that examines competition analysis and 5G may seem counterintuitive, but a great deal of the FCC’s time and work is spent on developing policies to build-out private networks (especially high speed broadband networks) in low income, rural areas.[55] It is not surprising that gaps in network provision exist in these areas. Industries such as telecommunications that require high capital investments to provide the basic industry need certain levels of demand to justify the expense. This effect is further exacerbated in that rural areas not only have lower consumer demand, they are also sometimes in areas where geographic characteristics and lack of basic infrastructure make network development even more expensive than in densely populated urban areas. In competition terms, choosing not to build in rural areas is not a “market failure” as much as it is the rational choice of a prudent operator given the low expected return on investment in rural areas.
As a policy choice, Congress has instructed the FCC to encourage the deployment of broadband services to all Americans. This may be accomplished in many ways. For example, some countries have decided to provide public networks. This has proven an overall disappointing strategy[56] but has not been the choice of the US. The FCC has used carrot regulation to incentivize build-outs in rural and less developed areas. This is accomplished by providing government subsidies to participating market operators that, ideally, will change the return on investment calculation to justify a network build-out.
To calculate the amount of subsidy required to align private incentives with public objectives is a complex competition analysis. It includes the calculation of cost factors as well as the potential demand drivers.[57] In the world of mobile, these factors are complex and, among other things, include terrain factors, road access, spectrum licenses, population, population density, and current coverage footprints.
Beyond subsidies, as noted above, during a merger review, the FCC may ask companies to make a voluntary commitment to expand their network reach into rural areas for which they hold spectrum licenses. The goal is to capture for the underserved American population some of the private benefits of the merger. The drawback is that mergers in the market—particularly mergers the size and magnitude of the Sprint T-Mobile merger—are few and the network coverage of the merging parties will vary from merger to merger.
With the advent of 5G, there is no doubt that the cost of network densification in urban areas may decrease.[58] However, it is not clear that costs would decrease in rural, lightly populated areas. If the network is a new build (a green field), investment costs will still be high, and it is unclear that building direct to 5G would be lower in cost than transitioning to 5G from existing 4G.
A potential benefit to 5G deployment in rural areas is that 5G will rely on small cell sites as opposed to macro cell towers. This, however, could lead to increased pressure on local authorities to approve applications. This process could benefit from uniform and predictable application and approval processes with fast turnaround times.[59] Along with subsidies, voluntary commitments, and other mechanisms, the FCC has attempted to align certain local ordinances to match FCC objectives.
B. Spectrum Policy and 5G
When speaking of regulatory market development, the most significant regulation for broadcast technologies is spectrum policy. Spectrum is the essential input to all broadcast—broadcast television, radio, satellite, and mobile. The FCC has complete control over the distribution of licenses for nongovernmental use. The FCC not only approves the allocation of licenses—the “who” of the license—but it also takes a strict approach to the use permitted by the license—the “what” of the license. The manner these two are determined is vital to competitive and innovative growth.
The manner in determining the “who” of licenses has evolved overtime. Originally, the FCC held “comparative hearings” and made subjective determinations of which candidate was most deserving. The process, as might be expected, favored incumbents and stifled growth. Perhaps the greatest regulatory innovation of the FCC was the move to auctions to match the pre-designated license to its highest value user.[60]
Although there has been tremendous increase in the allocative efficiency of licenses, the FCC’s control of the use designation for licenses has seen less development. There have been changes—moves to flexible use licenses, reallocation of some fallow spectrum, and an incredibly successful “reverse auction” to move broadcast licensees off their underutilized spectrum holdings. The advent of 5G and the economic importance of mobile technologies in general have spurred additional innovations in reallocating spectrum holdings for mobile network use.[61] One such move is the C-Band auction. As FCC Chairman Ajit Pai explains,
[t]he C-band is a 500-megahertz swath of spectrum from 3.7 GHz to 4.2 GHz. It’s mostly used by fixed satellite companies to beam content to video and audio broadcasters, cable systems, and other content distributors. This mid-band spectrum is well-suited for 5G because it combines good geographic coverage and good capacity. And we can make available much of it because satellite companies don’t need all 500 megahertz to continue providing the services they are providing today.[62]
After facing some legal challenges from incumbents[63] the C-band auction is ready to proceed. The move reflects a federal push for 5G development and is part of a larger realignment to move both nongovernment and government licenses to higher valued uses.
C. Telehealth, Education, and 5G
Today, during the limitations brought by COVID-19, the importance of fast, robust, and capacity rich broadband connections have never seemed more important. The economy has moved online and some revealed advantages of teleworking, telemedicine, and online education, are sure to impact post-pandemic demand.
The FCC itself has moved aggressively to elevate personal and corporate connections in the fields of telemedicine and education in particular. For example, before COVID-19, the FCC had directed that $100 million of the Universal Service Fund be allocated for building telehealth connectivity.[64] Since COVID-19, Congress directed the FCC to distribute $200 million for telehealth, which it has done via its COVID-19 Telehealth Program.[65] For education services, the FCC has provided special spectrum licenses and government subsidized telecommunication services to qualifying applicants.[66] In both these markets, 5G may have an important role to play. In the health care field, 5G will allow advancements in telemedicine that will likely become not only useful, but also necessary in the near future.[67] The faster speeds and reduced latency that 5G is expected to bring could not only make a doctor’s appointment more enjoyable when the screen does not freeze, it may even make remote robotic surgery a possibility.[68] The FCC has started the process to incentivize the supply of telemedicine options and now it appears that a change in consumer demand might also be super charging the market.[69] In addition to telemedicine, now more than ever, it is obvious how important home broadband connections are for the educational field.[70] High-speed internet access facilitated by 5G could make the educational experience more enjoyable and efficient by providing smooth communication without delays.[71]
IV. Monopolization versus Increased Competition and Network Decentralization
The ever-present concern of antitrust is the anticompetitive use of market power. Market power may be exhibited by a company’s ability to charge supracompetitive prices or to decrease output to facilitate higher pricing. The coming of 5G mobile broadband is set to have a potentially significant impact in the broadband marketplace. Three potential changes come easily to mind. First, the entrance of 5G will have a direct impact on the high-speed broadband markets. Second, 5G may provide additional competition in both MNO and broadband markets by creating the conditions necessary for an increase in MVNOs. Finally, and most exciting, 5G allows for the decentralization of the mobile network. That decentralization may permit greater end-user flexibility and differentiation but more immediately will permit increased opportunities for network software designers.
The importance to the US economy of broadband access is not only self-evident, it is embedded in the Communications Act.[72] It is the hope that broadband not only be available, but that it is of high quality and competitive prices. In other words, the competitive market for broadband is important to homes and businesses across the nation. Historically DSL and cable operators have dominated this market, but if the three major mobile operators become competitive in this market it could be a game changer. Indeed, given the attractiveness of mobile access, with increased speed and network reliability, mobile may soon become the dominant player in broadband.[73]
As previously noted, perhaps the most interesting development of 5G based networks is the potential to aggressively decentralize the hardware and software markets that provide the 5G technology.[74] Decentralization is always of interest in antitrust analysis because many potential antitrust violations are associated with centralization and increases in market power. A market power increase might come through outright monopolization by one firm, or by cooperation between and among firms. An example of the latter might be a price-fixing agreement among competitors (a per se antitrust violation) or a benign exclusive deal that increases market share of one supplier and forecloses that opportunity to competitors. The less centralized a telecommunications network, the more dispersed its supply chain. The new technology innovation to look for is O-RAN, open radio access networks.
In today’s RAN marketplace, there are four dominant equipment manufacturers—Ericsson, Huawei, Nokia, and Samsung.[75] A network operator may select just one equipment system, or it may combine two, but once selected, that is the only type of gear the operator can use. The equipment includes not only the radio hardware, but the software for the hardware. O-RAN decouples the software from the hardware. One of the advantages is that as new services are demanded by consumers, the network operator can just update the software without having to change the hardware. Another advantage is the development of a less centralized software provider marketplace.[76]
This mixing and mingling of different vendors for software and hardware decreases the bargaining power of any of the four major equipment makers. It also opens up opportunities for innovation in services, security, and efficiencies.
Conclusion
5G opens up a huge array of possibilities from simply faster video download speeds to possibly self-driving cars. While we can and are expecting great things from 5G, the bottom line is there is still much uncertainty regarding what 5G technology will enable and how a roll out will actually look. The benefits of the move to 5G can be sorted into two broad categories. The first benefits will come with direct and rapid increases in competition for broadband services. This growth in competition is set to invigorate the MNO, MVNO, and equipment manufacturing markets and move outward to service industries that rely on these network industries. The second category for benefits is those that flow from the indirect impacts of the new technologies. These benefits include those that come from increased competition (such as quality increases and price decreases), greater spread and densification of coverage, growth in IoT technologies, increased practicality of telehealth and online education opportunities.
Prudent competition analyses by both antitrust enforcers and regulators will continue to include the potential impact of technological innovation in 5G. To do otherwise, to impose too much regulation or antitrust scrutiny too early about the progress of an underdeveloped technology, would discourage future innovation and the investment necessary to realize the full benefits of a 5G network.
Footnotes
* Babette E. Boliek, J.D., Ph.D., is a Professor of Law at Pepperdine Caruso School of Law. Professor Boliek served as the Chief Economist of the Federal Communications Commission (FCC) from 2018-19. The author is responsible for all content presented and no part should be construed to reflect the opinions of the FCC, the FCC Commissioners, or the FCC staff. The author would like to thank Nicole Hood for her phenomenal research assistance, skilled editing, and inexhaustible patience.
[1] See Applications of T-Mobile US, Inc., and Sprint Corporation for Consent to Transfer Control of Licenses and Authorizations, Memorandum Opinion and Order, Declaratory Ruling, and Order of Proposed Modification, 34 FCC Rcd. 10,578, 10,580 ¶ 1 (Oct. 16, 2019), https://docs.fcc.gov/public/attachments/FCC-19-103A1_Rcd.pdf [hereinafter T-Mobile/Sprint Transfer] (where T-Mobile and Sprint filed an action with the Federal Communications Commission under section 214 and 310(d) of the Communications Act of 1934 “seeking Commission consent to the transfer of control of the licenses, authorizations, and spectrum leases held by Sprint and its subsidiaries to T-Mobile”). Section 310(d) requires application to the Commission prior to transfer of licenses and the Commission must find that the transfer will serve “the public interest, and convenience, and necessity.” 47 U.S.C. § 310(d). For well-defined purposes, the cell phone industry is considered a common carrier. 47 U.S.C. § 201 (Title II of the Communications Act). As 5G’s greatest impact will be felt in the increase of high-speed broadband services (Title I) rather than common carrier services, the regulatory discussion in this article will concentrate on the former type of regulation.
[2] Title II of the Communications Act of 1934 (47 U.S.C. 201) gives the FCC wide-spread power to regulate the communications industry. Babette E.L. Boliek, FCC Regulation Versus Antitrust: How Net Neutrality is Defining the Boundaries, 52 B.C L. Rev. 1627, 1643 (2011), https://lawdigitalcommons.
bc.edu/bclr/vol52/iss5/2/. The FCC can “perform any and all acts, make such rules and regulations, and issue such orders, not inconsistent with [section 4 of the Communications Act of 1934], as may be necessary in the execution of its functions.” Id. 1631 n.11 (quoting 47 U.S.C. § 154(i) (2006)). See also Memorandum from the RSFI and OGC on Current Guidance on Economic Analysis in SEC Rulemakings to Staff of the Rulewriting Divisions and Offices at 1, (Mar. 16, 2012), https://www.sec.gov/divisions/riskfin/
rsfi_guidance_econ_analy_secrulemaking.pdf (discussing the importance of high-quality economic analysis to SEC rulemaking and how a rule’s potential benefits and costs are important to determine if the rule is in the public interest).
[3] Under Section 7 of the Clayton Act, the Antitrust Division’s review analyzes whether the merger is likely to lessen competition and is limited to an analysis of the competitive effects of the particular merger. 15 U.S.C. § 18.
[4] See supra, note 2. The Sherman Act (15 U.S.C. §§ 1–7), established in 1890, is the United States’ commitment to a free market economy, benefitting consumers. Antitrust Enforcement and the Consumer, DOJ 2 (2005), https://www.justice.gov/atr/file/800691/download. The Clayton Act (15 U.S.C. §§ 12–27 (2006)), passed in 1914 and amended in 1950, prohibits mergers and acquisitions “likely to lessen competition.” Id. Persons considering a merger or acquisition must notify the DOJ and the FTC. Id. at 2. The Federal Trade Commission (FTC) Act (15 U.S.C. §§ 41–58 (2006)) created the FTC and prohibits unfair competition in interstate commerce. Id. at 3.
[5] See T-Mobile/Sprint Transfer, supra note 1, at 10,672–73, ¶ 215–16 (applicants state the combination of Sprint and T-Mobile will better position the US to lead the race for nationwide 5G deployment); Statement of Ajit Pai, Chairman of the FCC, Applications of T-Mobile US, Inc. and Sprint Corporation for Consent to Transfer Control of Licenses and Authorizations, 34 FCC Rcd. 10,578, 10,842–43 (Oct. 16, 2019), https://docs.fcc.gov/public/attachments/FCC-19-103A1_Rcd.pdf (agreeing that the merger is in the public interest by helping to enable the US leadership in the race to 5G deployment); U.S. Dept. of Justice, Court Enters Final Judgment in T-Mo/Sprint Transaction, Justice News (Apr. 1, 2020), https://www.justice.gov/opa/pr/court-enters-final-judgment-t-mobilesprint-transaction (quoting Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division stating “the end result [of the merger] will be strengthened competition with high-quality 5G networks that will benefit American consumers nationwide”).
[6] William Lehr, The Future of Broadband Competition in a 5G World 6–7 (Aug. 15, 2018), https://ssrn.com/abstract=3240191. 5G is anticipated to offer data rates in the 100s of Megabits per second (Mbps) or more compared to an estimated 10s of Mbps that 4G currently offers. Id. at 6. Latency is anticipated to decrease from 10 milliseconds (ms) to 1 ms. Id. Enhanced mobility across radio nodes is expected and will be important because small cells will likely result in increased hand-offs between radio nodes. Id. Since the number of devices per person is increasing, these devices need to be connected to the network, likely causing increased connection density. Id. Improved spectral and energy efficiency are also expected to help lower costs. Id. at 7.
[7] Id. at 4–5.
[8] Christopher S. Yoo & Jesse Lambert, 5G and Net Neutrality, Faculty Scholarship at Pa. L. 6 (2019), https://scholarship.law.upenn.edu/faculty_scholarship/2089. 5G densification could be as high as one base station per twelve (12) homes or even as small as a single home router, meaning one per user. Id. This use of small cells could allow multiple users to use and share the same spectrum, resulting in more efficient use of existing spectrum. Id.
[9] Low-band spectrum, or spectrum below 1 gigahertz (GHz) can be used to cover a wide range or area, but at lower speeds of about 30-250 Mbps. GSMA, 5G Spectrum, GSMA Public Policy Position at 6, (Mar. 2020), https://www.gsma.com/spectrum/wp-content/uploads/2020/03/5G-Spectrum-Positions.pdf [hereinafter 5G Spectrum]; Jeremy Horwitz, The Definitive Guide to 5G, Low, Mid, and High Band Speeds, Venture Beat (Dec. 10, 2019, 1:29PM), https://venturebeat.com/2019/12/10/the-definitive-guide-to-5g-low-mid-and-high-band-speeds/. This type of spectrum will be useful to provide 5G rural coverage. 5G Spectrum, supra, at 6. Mid-band spectrum ranges between 1 and 6GHZ, Sue Marek, 5G Spectrum Bands Explained—Low, Mid and High Band, Futurithmic (Feb. 11, 2020), https://www.futurithmic.com/
2020/02/11/why-spectrum-bands-matter-in-a-5g-world/#:~:text=Low%2Dband%20spectrum%20is%20any
.low%2Dband%20800%20MHz%20spectrum.&text=T%2DMobile%20also%20plans%20to.in%20the%20millimeter%2Dwave%20band, and can be used to cover a several-mile range from about 100–900 Mbps. Horwitz, supra. High-band spectrum is ideal for high speed mobile broadband delivering about 1–3 gigabits per second (Gbps), 5G Spectrum, supra, at 6, however it covers a smaller range of about a mile. Horwitz, supra. High band spectrum is in the range above 24 GHz. 5G Spectrum, supra.
[10] James E. Prieger, An Economic Analysis of 5G Wireless Deployment: Impact on the U.S. and Local Economies, Act Online, 5 (Feb. 2020), https://actonline.org/wp-content/uploads/ACT-Report-An-Economic-Analysis-of-5G-FINAL.pdf. While higher spectral bands are more abundant than lower bands, they are less able to pass through barriers or support “non-line-of-site” (NLOS) connectivity. Lehr, supra note 6, at 12 n.31; see also Prieger, supra, at 5 (explaining how the use of small cells could help solve this problem). Small cells are smaller, lower-power stations than macrocells, and therefore will need to be 10 to 100 times more prevalent. Prieger, supra, at 5. By making the cells smaller, the cells become easier to install and more available, therefore facilitating the use of higher bands of spectrum. Lehr, supra note 6, at 13.
[11] 5G is anticipated to influence and facilitate growth in the equipment sector and communication sector. Doug Brake, Economic Competitiveness and National Security Dynamics in the Race for 5G between the United States and China, ITIF 1, 9 (Aug. 2018), https://ssrn.com/abstract=3142229. The US competes with China regarding the information and communication technology (ICT) services such as radio equipment, chipsets, software, and handsets. Id. While less expensive Chinese equipment might enable a faster 5G roll-out, some commentators fear that this could also result in a decrease in US competitiveness in the sale and development of ICT services. Id. In addition, two Chinese companies, Huawei and ZTE, are suspected to be influenced by the Chinese government and there is concern that the use of these companies’ equipment inside US telecommunication networks could pose a security threat. Id. at 21–22 (external citation omitted). For example, Huawei has been charged with stealing trade secret information and copyrighted works as well as other intellectual property in an attempt to grow and operate Huawei’s business. Chinese Telecommunications Conglomerate Huawei and Subsidiaries Charged in Racketeering Conspiracy and Conspiracy to Steal Trade Secrets, Justice News (Feb. 13, 2020), https://www.justice.gov/opa/pr/chinese-telecommunications-conglomerate-huawei-and-subsidiaries-charged-racketeering. In May, President Donald Trump “extended for another year an executive order signed in May 2019 declaring a national emergency and barring U.S. companies from using telecommunications equipment made by firms posing a national risk.” David Shepardson & Karen Freifeld, Trump Extends U.S. Telecom Supply Chain Order Aimed at Huawei, ZTE, Reuters (May 13, 2020, 9:18AM), https://www.reuters.com/article/us-usa-trade-china-trump/trump-extends-order-on-u-s-telecom-supply-chain-security-until-2021-idUSKBN22P2KG.
[12] See Yoo & Lambert, supra note 8, at 12–13 (discussing how network slicing enables rapid reconfiguration of resources to meet end users’ needs, allowing more efficient sharing and use of resources and enabling greater flexibility and customizability of the communication network).
[13] Chih Lin et al., O-RAN: Towards an Open and Smart RAN 6, (O-RAN Alliance 2018), https://static1.squarespace.com/static/5ad774cce74940d7115044b0/t/5bc79b371905f4197055e8c6/1539808057078/O-RAN+WP+FInal+181017.pdf. Mobile operators must meet increased capacity demands brought about by 5G while controlling costs and, at the same time, offering more to consumers. Id. The goal of the O-RAN Alliance is to “bring cloud scale economics” and “agility to the RAN.” Id. The openness of the network enables smaller vendors to modify the network to fit their individual needs. Id. at 7. In addition, the intelligence embedded in the RAN architecture will optimize efficiency. Id.
[14] The expected benefits are of course just predictions, not certainties. And “[i]t’s tough to make predictions, especially about the future.” Yogi Berra.
[15] See Lehr, supra note 6.
[16] Id. at 11–12; see also Communications Marketplace Report, Report, FCC Rcd. 12,558, 12,624–26, ¶ 124–26 (Dec. 12, 2018), https://docs.fcc.gov/public/attachments/FCC-18-181A1_Rcd.pdf (stating in 2016–17 traditional cable Multichannel Video Programming Distributors (MVPDs) lost subscribers while virtual MVPDs and large Online Video Distributors (OVDs) that offered video on demand (VOD) gained subscribers). In 2017, the global market for video on demand was $43.9 billion and is expected to reach $87.1 billion at the end of 2025. Summary of Video On Demand Market Size, Share and Industry Analysis by Technology (SVOD, TVOD, AVOD), Content Type (Sports, Music, TV Entertainment, Kids, Movies), and Regional Forecast 2018-2025, Fortune Business Insights, (Apr. 2019), https://www.fortunebusinessinsights
.com/industry-reports/video-on-demand-market-100140. Additionally, since the COVID-19 pandemic, total Internet hits have increased between 50% and 70% and streaming is estimated to have increased by 12%. Mark Beech, COVID-19 Pushes Up Internet Use 70% and Streaming More Than 12%, First Figures Reveal, Forbes (Mar. 25, 2020 3:49PM EDT), https://www.forbes.com/sites/markbeech/2020/03/25/covid-19-pushes-up-internet-use-70-streaming-more-than-12-first-figures-reveal/#3e42e60c3104.
[17] Jeffrey A. Eisenach & Robert Kulick, Economic Impacts of Mobile Broadband Innovation: Evidence from the Transition to 4G 14–15 (AEI Econ., Working Paper No. 2020-05, 2020), https://www.aei.org/wp-content/uploads/2020/06/Eisenach-Kulick-Mobile-Broadband-Innovation-WP.pdf. The transition from 3G to 4G brought about the development of services such as music and video streaming due to improvements in data speed and capacity, and applications like Lyft and Uber. Id. at 15.
[18] While it is difficult to predict the exact course 5G will take, there is some guidance based on analysis of the path taken by 3G and 4G. Id. at 15–16. Economic benefits are expected to be similar to 4G adoption with more advanced applications and new business models. Id. at 17.
[19] See Jacob Morgan, A Simple Explanation of ‘The Internet of Things’, Forbes, (May 13, 2014, 12:05AM EST), https://www.forbes.com/sites/jacobmorgan/2014/05/13/simple-explanation-internet-things-that-anyone-can-understand/#8b267e21d091 (demonstrating how on a personal level, the IoT could enable your coffee pot to turn on when your alarm goes off (something we can all appreciate) or on a broader scale, even facilitate smart cities that have the potential to reduce waste and improve efficiency).
[20] Lehr, supra note 6, at 8.
[21] Eisenach & Kulick, supra note 17, at 15–16. If 5G follows the 4G adoption path, the 5G contribution to the GDP is anticipated to reach a peak of about $635 billion in the 17th quarter after 5G adoption, id. at 21, and a peak of about 3 million jobs in the 18th quarter after 5G adoption. Id. at 20.
[22] Shane Tews, Telecom Supply Chain Security and 5G: Highlights from my Discussion with David Stehlin, AEI (April 24, 2020), https://www.aei.org/technology-and-innovation/telecom-supply-chain-security-and-5g-highlights-from-my-discussion-with-david-stehlin/. 5G will enable service providers to increase efficiency by combining many networks into two or three rather than operating ten to twelve networks, each requiring its own products, management, and team. Id.
[23] Lehr, supra note 6, at 1.
[24] Id. at 14.
[25] See Yoo & Lambert, supra note 8, at 11–13 (demonstrating how network slicing will allow resources to be reconfigured quickly to meet the needs of end users, allowing resources to be shared similarly to cloud computing); see Lehr, supra note 6, at 15.
[26] Abdulla Chaer et al., Blockchain for 5G: Opportunities and Challenges, IEEE Globecom Workshops, 1, 1 (2019), https://www.researchgate.net/publication/335518169_Blockchain_for_5G_Opportunities_and_
Challenges (explaining how blockchain technology is utilized by Bitcoin, however blockchain can also be used to control communications between parties or devices in a secure and decentralized way.) Id.
[27] Id. The private platform will offer more security as consumer and provider data will be publicly available on the public platform. Id. at 2.
[28] Id. at 3.
[29] Id. Some potential challenges associated with adopting blockchain are that blockchain is a de-standardized and de-regulated technology. Id. at 5. Local and international standardization may be necessary for widespread blockchain adoption. Id.
[30] Section 214(a) of the Communications Act of 1934 states:
[N]o carrier shall undertake the construction of a new line or of an extension of any line, or shall acquire or operate any line, or extension thereof, or shall engage in transmission over or by means of such additional or extended line, unless and until there shall first have been obtained from the Commission a certificate that the present or future public convenience and necessity require or will require the construction, or operation, or construction and operation, of such additional or extended line.
47 U.S.C. § 214(a).
[31] Section 310(d) of the Communications Act of 1934 states:
[N]o construction permit or station license, or any rights thereunder, shall be transferred, assigned, or disposed of in any manner, voluntarily or involuntarily, directly or indirectly, or by transfer of control of any corporation holding such permit or license, to any person except upon application to the Commission and upon finding by the Commission that the public interest, convenience, and necessity will be served thereby.
47 U.S.C. § 310(d).
[32] For more on the consumer welfare standard, see Elyse Dorsey, Antitrust in Retrograde: The Consumer Welfare Standard, Socio-Political Goals, and the Future of Enforcement, in The GAI Report on the Digital Economy (2020).
[33] See id.
[34] Broadly defined, the spectrum screen measures the spectrum holdings held by a particular owner in a given geographic area. T-Mobile/Sprint Transfer, supra note 1, at 10,618 ¶ 94.
The spectrum screen, applied on a county-by-county basis, identifies local markets where an entity would hold approximately one-third or more of the total spectrum suitable and available for the provision of mobile telephony/broadband services, post-transaction. Further, if the acquiring entity would increase its below-1-GHz spectrum holdings to hold approximately one-third or more of such spectrum post-transaction, [the FCC] appl[ies] enhanced factor review.
Id. The spectrum screen revealed that
New T-Mobile would hold 240 megahertz or more of spectrum in 356 CMAs covering approximately 82% of the population in the United States (and territories). Across those local markets, New T-Mobile would hold a maximum of 361.7 megahertz of spectrum post-transaction. Although the spectrum screen is triggered in much of the nation, we note that the combination of spectrum and other resources brought together as a result of the proposed transaction would give New T-Mobile the capability to deploy a highly robust nationwide 5G network.
Id. at 10,619 ¶ 97.
[35] See, e.g., Horizontal Merger Guidelines, US Dept. of Justice & Fed. Trade Comm’n § 2.1.3 (2010), https://www.justice.gov/sites/default/files/atr/legacy/2010/08/19/hmg-2010.pdf (noting that concentration levels may lead to a rebuttable presumption).
[36] See Applications of T-Mobile US, Inc. and Sprint Corporation for Consent to Transfer Control of Licenses and Authorizations, Description of Transaction, Public Interest Statement, and Related Demonstrations, 101 (June 18, 2018), https://ecfsapi.fcc.gov/file/10618281006240/Public%20Interest%20Statement
%20and%20Appendices%20A-J%20(Public%20Redacted)%20.pdf [hereinafter Public Interest Statement] (stating T-Mobile and Sprint’s combined “5G network will have more capacity than any network in history—more than three times the available capacity of the standalone T-Mobile and Sprint 5G networks combined in 2024.”).
[37] See, e.g., Edward Carlson, Cutting the Cord: NTIA Data Show Shift to Streaming Video as Consumers Drop Pay-TV, NTIA (May 21, 2019), https://www.ntia.doc.gov/blog/2019/cutting-cord-ntia-data-show-shift-streaming-video-consumers-drop-pay-tv (demonstrating how the percentage of Internet users that viewed online videos grew from 45% in 2013 to 70% in 2017).
[38] Gus Hurwitz et al., Comments of ICLE in Opposition to Petitions to Deny, ICLE, 20 & n.54 (Sept. 17, 2018), https://ecfsapi.fcc.gov/file/10918839300242/ICLE%20-%20Comments%20-%20TMobile-Sprint%20Merger.pdf (finding studies showing price increases that follow mergers were actually offset by efficiency gains that led to lower prices). A price decrease from increased efficiencies is a lagging effect. T-Mobile gave a [six] year deployment timeline, T-Mobile/Sprint Transfer, supra note 1, at 10,589 ¶ 26, that would eventually show cost efficiencies. The FCC required the company to make certain consumer price commitments to negate potential price increases during the transition period before cost efficiencies might be realized. Id. at 10,644 ¶ 152. A two-year time period is often used by the DOJ to consider the merger’s competitive effects; however, a longer time period is appropriate for the novel innovation, and the extensive CAPEX investment required for 5G. Hurwitz et al., supra, at 35.
[39] To mitigate potential price increases the merged entity was required to enter into various voluntary commitments including: (1) agreement not to raise consumer prices for three years; (2) an agreement to sell its existing prepaid business line, Boost, (3) an agreement to support the purchaser of Boost, DISH, in its attempt to build a national network, both facilities based and virtual. See T-Mobile/Sprint Transfer, supra note 1, at 10,618–19, ¶ 95–97.
[t]he United States considered (1) the Case 1:19-cv-02232-TJK Document Filed 07/30/19 “Network and In-Home Commitments” commitments made to the FCC by T-Mobile and Sprint, and (2) the “DISH Network 5G Buildout Commitments and Related Penalties” commitments made to the FCC by DISH. These documents were determinative in formulating the proposed Final Judgment, and the Department will file a notice with the Court that includes these documents to comply with 15 U.S.C. § 16(b).
United States et al. v. Deutsche Telekom AG et al., Proposed Final Judgment and Competitive Impact Statement, Notice, 84 Fed. Reg. 39,862, 39,879–80, (Aug. 12, 2019), https://www.federalregister
.gov/documents/2019/08/12/2019-17153/united-states-et-al-v-deutsche-telekom-ag-et-al-proposed-final-judgment-and-competitive-impact; see supra note 2.
[41] Letter from Jeffrey H. Blum, Senior Vice President, Pub. Policy & Gov’t Affairs, DISH, to Donald Stockdale, Chief, Wireless Telecomm. Bureau, FCC 3 (July 26, 2019) [hereinafter Blum Letter] (determining a nationwide 5G network was more specifically defined as having download speeds equal to 35Mbps, 15,000 deployed 5G sites, and at least 30 MHz of DISH’s downlink 5G spectrum averaged over all DISH 5G sites nationwide).
[42] Thomas W. Hazlett, Roberto E. Muñoz, and Diego B. Avanzini, What Really Matters in Spectrum Allocation Design, 10 Nw. J. Tech. & Intell. Prop. 93, 95 (2012) (discussing the importance of the move to auctions from the prior less efficient distribution systems of comparative hearings and lotteries); see T-Mobile/Sprint Transfer, supra note 1, at 10,617–20 ¶ 94–99.
[43] See supra note 33.
[44] Unlike Sprint and T-Mobile, both AT&T and Verizon are part of companies that have wired networks and investments in media content permitting customers the option of a combined broadband experience. Lehr, supra note 6, at 21–22. In addition, with a “wired core and access network infrastructure, both Verizon and AT&T have easier access to the back-haul transmission resources that are critical for connecting base stations into the backbone network.” Id. at 22.
[45] “[I]n the market for nationwide 5G networks, this transaction amounts to a 2–to–3 merger, resulting in the creation of a viable, new market entrant, instead of the 4–to–3 transaction as characterized by opponents.” Hurwitz et al., supra note 38, at 40.
[46] Arguably the higher costs are associated with higher quality. See, e.g., supra note 45.
[47] See T-Mobile/Sprint Transfer, supra note 1, at 10,585, ¶ 18; see also Public Interest Statement, supra note 36, at 18–20 (demonstrating how alone, T-Mobile lacks capacity and Sprint lacks coverage to deploy a 5G network). In addition, New T-Mobile’s spectrum portfolio “will allow New T-Mobile to transition subscribers to 5G much faster than either T-Mobile or Sprint could alone and will allow more spectrum (and a higher percentage of the company’s spectrum) to be dedicated to 5G than either company could manage on its own.” Id. at 36–37.
[48] T-Mobile/Sprint Transfer, supra note 1, at 10,580 ¶ 2. Sprint also has holdings of 2.5GHz spectrum that it is unable to fully utilize at this time. Id at 10,619 ¶ 98. Where Verizon and AT&T have similar spectrum portfolios, New T-Mobile will have less mmWave but more 2.5 GHz spectrum. Hurwitz et al., supra note 38, at 36–37. This different mix of spectrum will lead to a differently architected 5G network. Id. With so much uncertainty surrounding the buildout of 5G, having different markets will likely encourage competition. Id.
[49] See T-Mobile/Sprint Transfer, supra note 1, at 10,585, ¶ 18. The capacity and competitive response resulting from the merger is expected to bring consumer benefits. Public Interest Statement, supra note 36, at 48. New T-Mobile’s network will rely on the combined low and high-band spectrum from T-Mobile and the mid-band spectrum from Sprint. Id. This will allow New T-Mobile to deploy 5G nationwide, even to rural areas. Id. In contrast, while AT&T and Verizon have low and mid-band spectrum, they have concentrated on building 5G networks that rely on millimeter wave spectrum. Id. New T-Mobile’s network will likely produce a competitive response from AT&T and Verizon and ultimately benefit the consumer. Id. at 50.
[50] See T-Mobile/Sprint Transfer, supra note 1, at 10,603 ¶ 60 (finding while there was some question from commentators, prepaid contract features are considered a service offered as part of the mobile/telephony broadband services market rather than a separate market); Hurwitz et al., supra note 38, at 29–30.
[51] See T-Mobile/Sprint Transfer, supra note 1, at 10,669 n.696; Public Interest Statement, supra note 36, at 112–14 (stating “DISH has announced plans to use its spectrum and other resources to start competing in wireless with a focus on IoT followed by 5G wireless service”).
[52] By June 2023, DISH commits to “[a]t least 70% of the U.S. population having access to download speeds equal to or greater than 35 Mbps, as verified by a drive test;” “[a]t least 15,000 5G sites deployed;” and “[a]t least 30 MHz of DISH’s downlink 5G spectrum averaged over all DISH 5G sites deployed nationwide.” Blum Letter, supra note 41, at 3.
[53] See T-Mobile/Sprint Transfer, supra note 1, at 10,582 ¶ 9. T-Mobile and Sprint compete with each other through their prepaid brands, Boost Mobile and Metro, and the merger would likely eliminate this competition. Id. Therefore, the companies were ordered to divest Sprint’s prepaid assets, Boost Mobile, Sprint branded prepaid, and Virgin Mobile to DISH. Id. at 10,582 ¶ 12, 10,591 ¶ 33.
[54] Alex Sherman, Why T-Mobile’s Deal with Sprint Could be the Warmup to a Wild Decade of Mergers, CNBC (Feb. 12, 2020, 4:36 PM EST), https://www.cnbc.com/2020/02/12/t-mobile-sprint-merger-is-a-warmup-to-more-wireless-cable-mergers.html.
[55] Perhaps best known is the Connect America Fund that provides funds to increase voice and broadband connectivity in rural, insular, and high cost areas. See Connect America Fund ETC Annual Reports and Certifications, Report and Order, 80 Fed. Reg. 4445, 4446, ¶ 1–3 (Jan, 27, 2015), https://www.govinfo.gov/content/pkg/FR-2015-01-27/xml/FR-2015-01-27.xml#seqnum4446 [hereinafter Connect America Fund].
[56] See, e.g., Bronwyn Howell, Australia Introduces ‘Broadband Tax’ to Foreclose National Broadband Network Competitors, AEI (May 28, 2020), https://www.aei.org/technology-and-innovation/australia-introduces-broadband-tax-to-foreclose-national-broadband-network-competitors/. Australia’s National Broadband Network (NBN), built by the government after the 2008 financial crisis, has shown that governments are “not the best owners of these networks” through “cost blowouts, delivery time overruns, technological restructuring, and overt politicization” in design and implementation. Id. When governments own telecommunications networks, they have the incentive and ability to monopolize the market and to use the network for other purposes. Id.
[57] Connect America Fund, supra note 55, at 4456 ¶ 74.
[58] For example, the use of small cells will likely increase costs initially due to the expected deployment of about 225,000 small cells by 2021. Lehr, supra note 6, at 14. However, softwarization, or “moving network functionality out of hardware and into software” may bring enhanced “flexibility, customizability, and performance” of the network and ultimately reduce costs. Id. at 15. Like with 4G LTE, MNOs will be able to shift from specialized hardware and therefore be able to separate radio and data network functionality and facilitate the move to IP data network. Id.
[59] Investing in America’s Broadband Infrastructure: Exploring Ways to Reduce Barriers to Development: Before the S. Committee on Commerce, Science and Transportation, 115th Cong. (67) (2017) (statement of Larry Downes, Project Director, Georgetown Center for Business and Public Policy). The FCC has accounted for and codified this concept. 47 C.F.R. § 1 (2018).
[60] Evan Kwerel & Alex D. Felker, Using Auctions to Select FCC Licensees, FCC OPP Working Paper Series, 26-27 (May 1985), https://transition.fcc.gov/Bureaus/OPP/working_papers/oppwp16.pdf. A comparison between auctions, lotteries, and comparative hearings determined auctions were lower in private applications costs, delay costs, and FCC costs. Id. at 26.
[61]See, e.g., Drew FitzGerald, White House to Retool Pentagon Airwaves for 5G Networks, The Wall Street Journal (Aug. 10, 2020 6:41PM, ET), https://www.wsj.com/articles/white-house-to-retool-pentagon-airwaves-for-5g-networks-11597088639?mod=searchresults&page=1&pos=1. The Trump administration recently developed a plan to allow the FCC to auction 100 megahertz of mid-band spectrum. Id. This mid-band spectrum currently used by the military for “naval radar systems, missile control and air traffic” is expected to be auctioned off in December 2021 allowing telecommunication companies to bid on the spectrum. Id. Mid-band spectrum is “ideal” for 5G because of its “extensive bandwidth and reach.” Id. According to FCC Chairman Ajit Pai, this is “a key milestone in securing United States leadership in 5G.” Id.
[62] Statement by Ajit Pai, FCC Chairman, Save the Date (Feb. 6, 2020 2:50PM), https://www.fcc.gov/news-events/blog/2020/02/06/save-date. The FCC decided to make the lower 280 megahertz of the C-band (3.7GHz to 4.2 GHz) available for 5G use. Ajit Pai, The Need for Speed, FCC (July 15, 2020 1:50PM), https://www.fcc.gov/news-events/blog/2020/07/15/need-speed. This spectrum combines “good geographic coverage with good capacity.” Id. The FCC prioritized making C-band spectrum available quickly for 5G and will vote on the final draft procedures for the C-band auction scheduled for December 8, 2020. Id.
[63] See Gary Arlen, C-Band Auction Plan Faces Challenges That May Affect December Start, Multichannel News (Feb. 7, 2020), https://www.multichannel.com/news/c-band-auction-timetable-plan-faces-challenges; see also Kelcee Griffis, C-Band Lawsuits Seen as Unlikely to Derail FCC Auction, Law360 (June 25, 2020 4:01 PM EDT), https://www.law360.com/articles/1286727/c-band-lawsuits-seen-as-unlikely-to-derail-fcc-auction (stating companies, including PSSI Global Services LLC, sued the FCC stating the FCC’s plan to auction part of the C-band spectrum will limit current C-band operators to 40% percent of the spectrum they currently use). It seems unlikely, however, that these lawsuits will stop the planned auction. Id.
[64] See Promoting Telehealth for Low-Income Consumers Notice of Proposed Rulemaking, WC Docket No. 18-213, 34 FCC Rcd. 5620, 5625 ¶ 15 (July 11, 2019), https://docs.fcc.gov/public/attachments/FCC-19-64A1_Rcd.pdf. The FCC proposed “a three-year Connected Care Pilot program [] with a $100 million budget that would provide support for eligible health care providers to obtain universal service support to offer connected care technologies to low-income patients and veterans.” Id.
[65] See Promoting Telehealth for Low-Income Consumers COVID-19 Telehealth Program, Report and Order, WC Docket No. 18-213, 35 FCC Rcd. 3366, 3367 ¶ 2 (March 31, 2020), https://docs.fcc.gov/public/attachments/FCC-20-44A1_Rcd.pdf. The CARES Act provided the FCC with $200 million to support health care providers and the FCC established the COVID-19 Telehealth Program to accomplish this task. Id. This is separate from the $200 million used to enact the Connected Care Pilot Program. Id
[66] Telecomm, Access Policy Div., E-rate Schools & Libraries USF Program, FCC, https://www.fcc.gov/general/e-rate-schools-libraries-usf-program#:~:text=The%20schools%20and
%20libraries%20universal,as%20part%20of%20a%20consortium (“The discounts range from 20 percent to 90 percent of the costs of eligible services. E-rate program funding is based on demand up to an annual Commission-established cap of $3.9 billion”). Interestingly, spectrum previously designated for use by educational entities was determined to be underused and the educational entity requirement was eliminated in part to permit 5G development. Id.
On July 11, 2019, the Commission released a Report and Order, FCC 19-62 [], in which it modernized the outdated regulatory framework for the 2.5 GHz band to make this swath of vital mid-band spectrum available for advanced wireless services, including 5G. The Report and Order gives incumbent entities more flexibility in how they use this spectrum and provides opportunities for other entities, including Tribal Nations, to access unused spectrum in this band. The Order eliminated restrictions on the types of entities that can hold licenses as well as educational use requirements, while preserving incumbent licensees’ private contractual arrangements and provisions in existing leases. Further, the Order removed limitations on leases entered into on a going-forward basis under the Commission’s secondary markets rules, which will create incentives to build out in rural areas.
Broadband Division, Broadband Radio Service & Education Broadband Service, FCC (Updated June 16, 2020), https://www.fcc.gov/wireless/bureau-divisions/broadband-division/broadband-radio-service-education-broadband-service; see Transforming the 2.5 GHz Band, Report & Order, WC Docket No. 18-120 (July 10, 2019), https://docs.fcc.gov/public/attachments/DOC-358065A1.pdf.
[67] Prieger, supra note 10, at 7. Advances in telemedicine could also increase access in rural areas, while creating more employment opportunities for remote workers. Id. As wearable devices become more common for health care, such as heart rate monitors and glucose monitoring devices, patients will likely benefit from a faster network that will provide more reliable service. From Home Care to Health Care, Ericsson ConsumerLab, (June 2020), https://www.ericsson.com/49e91e/assets/local/reports-papers/consumerlab/reports/2017/healthcare-to-homecare_screen_aw2.pdf.
[68] Randal Kenworthy, The 5G and IoT Revolution is Coming: Here is What to Expect, Forbes (Nov. 18, 2019, 10:00AM EST), https://www.forbes.com/sites/forbestechcouncil/2019/11/18/the-5g-iot-revolution-is-coming-heres-what-to-expect/#c66c5906abf6. A doctor in Sanya, China reportedly used 5G remote surgery to insert a stimulation device in a patient’s brain with Parkinson’s disease, who was in Beijing, almost 1,900 miles away. Caroline Frost, 5G is Being Used to Perform Remote Surgery from Thousands of Miles Away, and it Could Transform the Healthcare Industry, Business Insider, (Aug. 16, 2019, 1:49AM), https://www.businessinsider.com/5g-surgery-could-transform-healthcare-industry-2019-8.
[69] See Statement of Brendan Carr, Commissioner of the FCC, Promoting Telehealth for Low-Income Consumers, Notice of Proposed Rulemaking, WC Docket No. 18-213 (July 10, 2019), https://www.fcc.gov/document/fcc-proposes-100-million-connected-care-pilot-telehealth-program/carr-statement (where Commissioner Carr stated “[g]iven the significant cost savings and improved patient outcomes associated with connected care, we should align public policy in support of this movement in telehealth.”). Commissioner Carr compared the move as going from “Blockbuster to Netflix.” Id.
[70] See Peter Linder, Putting the Spotlight on 5G in Rural Areas, Ericsson Blog (July 28, 2020), https://www.ericsson.com/en/blog/2020/7/5g-in-rural-areas-spotlight.; A Personalized, Interactive K-12 Education Powered by the 5G Era, Forbes, (Oct. 21, 2019 4:48 PM EDT), https://www.forbes.com/sites/tmobile/2019/10/21/a-personalized-interactive-k-12-education-powered-by-the-5g-era/#1bfef8f27d54.
[71] See, e.g., supra note 70.
[72] 47 U.S.C. § 1301(1). Congress’ findings show “the deployment and adoption of broadband technology has resulted in enhanced economic development and public safety for communities across the Nation.” Id; see also Connecting America: The National Broadband Plan, FCC 3, https://transition.fcc.gov/national-broadband-plan/national-broadband-plan.pdf (where Congress mandated the FCC to develop the “National Broadband Plan” to ensure Americans have “access to broadband capability”).
[73] See supra note 6.
[74] Why Edge Computing is Key to 5G in 2020, Lanner, (Jan. 2, 2020), https://www.lanner-america.com/blog/why-edge-computing-is-key-to-5g-in-2020/. 5G could benefit from edge computing which decentralizes the computational power from a central location and brings it closer to resources on the “edge” and closer to the end-user. Id.
[75] Tews, supra note 22. Nokia, Ericsson, Samsung, and Huawei are the major RAN, 5G players in the world. Id; see also Telecom Equipment Market Leaders in 2019, Telecom Statistics, (Mar. 2, 2020), https://www.telecomlead.com/telecom-statistics/telecom-equipment-market-leaders-in-2019-94293 (stating in 2019, the top four Telecom Equipment Market Leaders were Huawei with a share of 28%, Nokia with a share of 16%, Ericsson with a share of 14%, and ZTE with a share of 10%, closely followed by Cisco with a share of 7%).
[76] Tews, supra note 22. Typically, a service provider will purchase the entire system (software and hardware) from one or two manufacturers, however this limits the types of gear the provider can use to those manufacturers. Id. ORAN could allow service providers to obtain the software and hardware from different, and even multiple, vendors. Id.