5G etc...

What is 5G?


First of all, what’s wrong with 4G/LTE?


It’s alright, right?


Yes, but carriers can only carry telecommunications from so many devices on the 2G to 4G/LTE frequency spectrum before we will start to see dropped connections and slower service.



As more smart devices of all kinds as well as more wearables and phones come online (heard of the Internet of Things?), the spectrum will become crowded, slow, and buggy.


To grow, we need to expand the telecommunications spectrum to start communicating with radio waves with frequencies greater than 6 GHz…



To communicate with such high energy radio waves, we need new equipment, new software, and new business models…


Enter 5G…


5G is a suite of at least 5 hardware and software innovations:



Lets focus on the first hardware innovation…


Millimeter Wave Technology


New 5G transmitters and receivers devices communicate with millimeter wave, also called extremely high frequency (EHF) or very high frequency (VHF) by the International Telecommunications Union (ITU).


These more energetic waves can carry more data, faster (speeds of 1 Gigabit per second) and this whole, huge range of spectrum up to about 300Ghz is virtually unused by consumer telecommunications.


Opening up this range of frequency spectrum creates space for billions and billions of extremely high speed connected devices with all sorts of consumer and industrial applications, including creating “smart cities” with sensors for every manner of automation as well as autonomous vehicles of all types that are connected and communicate in real time.


Basically, if more everyday devices, sensor, autonomous machines including vehicles and robots are connected to internet for interactive processing, analysis, decision making in real-time, a lot of value can be created by these devices machines and robots. Connected devices and machines and robots can increasingly serve humanity.


Ok… To start, where do we get these 5G transmitters and receivers?


There are a few companies, Nokia (Finland) and Ericsson (Sweden), but Huawei (a Chinese company – strangely, the word Huawei roughly translates as “Chinese achievement”) is by far the largest with the best products. According to CCS Insight, a British Telecommunications consulting firm, Huawei’s 5G kit is “up to a year ahead of the products manufactured by its rivals, as well as being cheaper.” But it also holds a lot of crucial patents in 5G technology.



The cheaper part is important, because to have a meaningful 5G network requires a lot of equipment.


Unfortunately, as part of the trade war with China, President Trump issued Executive Order 13873 prohibiting the “importation, transfer, … or use of any information and communications technology … that poses an unacceptable risk to the national security of the United States….” Aka Huawei.



This actually is a ridiculously thorough Executive Order that gives all power to the Commerce Department to carve out special exemptions, which Commerce ultimately gave to a few companies. Desai Legal Services can represent your business in making a request for a special exemption to this or any Executive Order that unreasonably interferes with your business.


The rationale given for this ban was that Huawei’s products may allow Chinese state-sponsored actors to engage in “sabotage or subversion,” through a “back door” designed into the products.


However, Britain who has been using Huawei products in its telecommunications infrastructure since for decade, through its signals-intelligence agency, GCHQ, has been scrutinizing Huawei products for years. These is even British laboratory Huawei Cyber Security Evaluation Centre (HCSEC) has been dissecting Huawei products since 2010 and has found no inherent back doors.


However, in all fairness, “even if there are no back doors now, there might be in future, perhaps provided through the regular patches or updates that will be required for the huge amounts of code that a 5G network relies on.” In addition “HCSEC’s most recent report, published in March, it suggests that the code in Huawei’s products is a buggy, spaghettified mess. That may not sound sinister. But bugs can be as useful to hackers as any back door. “Why bother going to all the trouble of putting in a back door when you can just look for [accidental] vulnerabilities like everyone else?” asks Jon Crowcroft, a computer scientist at the University of Cambridge.”


Moreover, though “[b]ugs infest every piece of complex software[, they] seem more common in Huawei’s gear than in competitors’ products. Evidence of Huawei’s lax attitude is everywhere, with thousands of snippets of unsafe code. One piece of kit, says the HCSEC, used in mobile-phone base stations, contained 70 copies of four different versions of OpenSSL, a widely used set of cryptographic protocols designed to secure data travelling over networks. Researchers frequently find security flaws in OpenSSL, meaning that sticking to the newest versions is vital. Huawei’s kit, it seems, is at risk from hackers of all kinds, not just Chinese state-sponsored ones. Insiders blame this sloppiness at least partly on the same commercial agility that has made Huawei so popular among its customers for its speedy introduction of new products.”


That being said, other manufacturers products have been used vehicles for espionage and theft by criminals and governments alike. Instead of banning Huawei’s products for flaws that most, if not all, telecommunications software and hardware are subject to, industry groups and perhaps a government group of monitors can take actions to clean up, mitigate and manage bugs and vulnerabilities.


However, we need not worry too much about this national security/espionage/sabotage line of argument as President Trump pretty much admitted these concerns are only a pretext for using Huawei as a bargaining chip in his trade negotiations with China, when he announced in a press conference last week that he would be open to allowing Huawei to continue to do business in the U.S. as part of a trade deal (if there was true concern about espionage, a trade deal would not assuage these concerns and thus make Huawei safe to do business with).


As a general matter, I recommend sending in a comment on your Congresspersons website page for constituent requests to tell them they need to repeal the parts of the International Emergency Economic Powers Act and the National Emergencies Act that give the President, any president the power to interfere in the international free market.


Back to millimeter wave hardware…

Millimeter waves can’t travel as well as lower frequency/lower energy waves through solid objects including buildings and tends to be absorbed by plants and rain.

Therefore, an effective 5G network will require the construction of many mini base station towers within each zone to relay signals to receivers when they are obstructed by some obstacle by relaying the message to a closer, unobstructed mini base station.



As well as these mini relay base stations, 5G networks will require upgrades to the main base station network towers that will handle the bulk of processing and traffic. These upgrades will include an increase of port servers by almost 10X.


All this construction and equipment may require hundreds of billions of dollars of sustained investment.


While the U.S. economy could benefit greatly from 5G with new industries set up that create new smart connected devices that serve humans in as many ways as can be imagined, the economics of the current telecommunications sector cannot justify such an massive investment…


Why?

The two largest telecommunications companies are AT&T and Verizon with over 150M wireless customers each. All other companies are about half the size or less and for them to grow to compete through stealing customers from one another or from AT&T and Verizon is very difficult especially where there are limited numbers of shared base stations (permitting and costs to construct new stations for the same service are difficult to justify) and the threat of a price war against one of the AT&T/Verizon always looms. This duopoly structure with small competitors makes the kinds of 5G investments required almost impossible.


5G investments would need to be spread over huge numbers of customers (like AT&T and Verizon customer bases). With AT&T and Verizon willing only to pretend they are planning to invest (choosing only to talk about evolving to 5G aka 5Ge), a third entrant to the market would be required to shake up the market, to try to seize market share through a splurging on a new, high-profile 5G network.


Enter Sprint/T-Mobile

Masayoshi Son, of Japan’s famous tech investment vehicle, Softbank, that bought Sprint in 2012 has consistently decried the state of U.S. telecommunications infrastructure as compared with Japan’s, South Korea’s and others. In buying Sprint, he aspired to inject competition into the telecommunications market.

However, in order to compete credibly, Sprint needed a partner with enough subscribers to sustainably spread aggressive investments over, and Mr. Son has been pushing to merge with another scrappy, ambitious carrier in T-Mobile.

Sprint with 30M subscribers and T-Mobile with about 80M subscribers would create the third largest carrier in the U.S. with just enough of a subscriber base to compete with the giants and to make the necessary investments in 5G hardware/software to try to grab an early lead in 5G market share.



However, for years, the giants had protection from allies in the federal government, specifically the FCC and Department of Justice, who claimed, disingenuously, that going from four to three major mobile carriers would harm competition and result in higher prices for consumers. By weaponizing anti-trust law, they were able to drop enough threatening hints that they would not approve a putative Sprint-T-Mobile merger.


But it’s not going from 4 to 3, its going from 2 to 3, i.e. from a duopoly of 2 major carriers to a healthier market of 3 major carriers.


However, for several years now, T-Mobile and Sprint have been engaging in high profile lobbying of the federal government and have been able to win, just last week, the approval of the FCC through Chairman Ajit Pai. However, shortly after Chairman Pai announced his support for the merger, the Antitrust Division of the Department of Justice announced it would sue to block a merger.


Here again, Desai Legal Services can aggressively represent your company if you are wrongfully accused of anticompetitive conduct. Desai Legal Services can communicate to regulators the true picture of the economic structure of the market sector in which your company competes so that regulators can understand the competitive necessity of your actions.


Now one of my friends is a trial attorney in the Antitrust Division of the DOJ and I was saddened to hear this news, but they are just doing their jobs. The problem is not the decision making of DOJ, but it is antitrust law itself, which according to several prominent economists, most notably, Nobel Prize winner Milton Friedman is a farcical area of the law. In, fact, it is almost always governmental actions, administrative structures, licensing/permitting and other governmental interventions that stifle competition and impair disruption in most industries.

Don’t take my word for it, listen to a quick vid from a Nobel Prize winning Economist: https://www.youtube.com/watch?v=vMvVmlDN0nY


I encourage you again here to contact your Congressperson through their online portals and instruct them that they should aim antitrust law at governmental action to protect favored companies and industries. Right now antitrust law does not apply to government action, and a simple solution is to make it applicable through legislative action against anticompetitive government action.


In any case, the CEOs of Sprint and T-Mobile have continued to engage in aggressive lobbying as you can see them below taking a break from negotiations with DOJ and regulators by taking a jog together in Washington DC.



Just yesterday, it seems as if their aggressive lobbying is working as the DOJ has indicated they are considering allowing the merger.


However, we must beware that the government is trying to coerce Sprint to shed its Boost Mobile arm as part of the deal, which carries about 9M prepaid users, which would give AT&T a significant advantage as it has over 17M prepaid users. (Although it seems a newly merged T-Mo/Sprint may be able to get around this shedding of these prepaids and still be able to economically take advantage of this base of subscribers for investment purposes through some informal arrangements).

Contact your congressperson so a new T-Mobile will have to strength and power to start the competition to deliver 5G.

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