Last month, the Federal Communications Commission (FCC) issued an order to streamline the deployment of the next generation of wireless telecommunications technology, 5G. This measure is a significant victory for American consumers.
Upgrading the nation’s wireless communications infrastructure to 5G will mean lower latency and Internet speeds at least ten times faster than what current 4G technology offers. The economic benefits of 5G will stretch far beyond the telecommunications industry, catalyzing innovations in transportation, medicine, agriculture, education, and public administration, to name just a few.
But these benefits will require significant private investment. Major infrastructural changes are needed to build 5G networks across the U.S. Unlike current 4G wireless technology, which relies on about 200,000 large cell towers, 5G operates on a network of millions of microsites, called small cells. These cells (each about the size of a shoe box) need to be installed in neighborhoods around the country to deliver the speed and network capacity to meet the growing demand for wireless connectivity.
The task of moving from today’s network of 200,000 towers to a 5G network of millions of small cells is gargantuan, especially given the myriad state and local regulations telecom companies need to navigate.
State and local restrictions on 5G inhibit America’s economic growth. An analysis by the American Consumer Institute estimates that a nationwide 5G network would boost GDP by $533 billion in and, once built, can deliver $1.2 trillion in consumer benefits. Another study by Accenture Strategy projects that 5G would create 3 million American jobs.
But the enormous number of local governments in the U.S. — including some 3,000 counties and 20,000 incorporated places — will hinder 5G deployment. Application and permitting requirements vary from locality to locality, as well as exorbitant fees in some areas, and this had led to delays and unnecessary costs. The uncertain and convoluted regulatory environment has deterred investment and allowed other countries to take the lead in the global race to rollout 5G.
That’s why the FCC’s recent ruling is so important.
The new rule will limit the fees local governments can charge for the deployment of small cells and establishes national guidelines for states and municipalities that will reduce regulatory costs by up to $2 billion for companies working to buildout a nationwide 5G network.
A recent study found that small cell fees are a major deterrent for telecom companies considering an investment in 5G technology. Inconsistent fees and disparate requirements between different states and localities create unnecessary complexity and uncertainty that discourage private sector investment.
The study predicted that capping the application and attachment fees at the national median — $150 and $100, respectively — would spur an additional $2.6 billion in small cell investment over a five-year period. The analysis found that 97 percent of these new investments would be directed to rural or suburban areas that are underserved by broadband.
The influx of private sector investment would translate to 1.9 million additional homes and businesses receiving next-generation wireless services that otherwise would be beyond their reach.
In streamlining these fees, the FCC has removed one of the biggest obstacles to 5G investment. The U.S. is now better positioned to regain its international competitiveness on this next generation technology. Most importantly, the FCC’s actions will accelerate consumer access to the myriad benefits 5G will provide.