U.S. officials worried about White House's sweetheart deal to lease mid-band spectrum for 5G use
According to CNN, some senior Trump administration officials are getting pressure from the White House to allow a company called Rivada Networks to lease some mid-band spectrum. The spectrum belongs to the Defense Department and the firm seeking to lease the hard to find mid-band airwaves is owned by big-name Republicans and Trump supporters. Rivada is a privately held company that has previously won government contracts. Among its investors is venture capitalist and billionaire Peter Thiel, who is a Trump supporter.
White House seeks to lease mid-band spectrum to a company without using competitive bidding
Mid-band spectrum is very important to wireless carriers who are building out their 5G networks. They travel longer distances than high-band mmWave spectrum and deliver faster speeds than low-band airwaves. Obtaining Sprint's hoard of 2.5GHz mid-band spectrum was the main reason why T-Mobile acquired its rival and with its low and mid-band 5G signals, T-Mobile can deliver nationwide 5G on its sub-6GHz airwaves at a rate as fast as 300Mbps. So are mid-band signals important to the dissemination of 5G in the states? You bet it is.
Sources tell CNN that the pressure to speed up the answer to Rivada's proposal (which would be similar to a no-bid contract) has been led by White House chief of staff Mark Meadows. And others with knowledge of the matter say that the pressure to approve the transaction has been growing since last month. These sources also said that Meadows has been acting on orders given by President Trump. The president reportedly was asked to use his influence to help Rivada lease the mid-band spectrum by Fox News commentator and former GOP strategist Karl Rove. Rove, a veteran of many presidential races, is not only an investor in Rivada but is also a lobbyist for the company.
Rove has denied that Rivada is looking to lease the spectrum using a non-competitive process. He told CNN that "If we were offered a no-bid contract we would turn it down. The technology should stand on its own." A Rivada spokesperson also stated that "We have always advocated for a competitive process." But with the amount of money at stake, the temptation to get involved in this deal might be too much for the White House not to get involved. Consider that back in August the government auctioned off 70MHz of mid-band spectrum for $4.5 billion. The amount of spectrum that Rivada is bidding for is 350MHz or five times that amount; at 350MHz, the mid-band spectrum could generate bids in the area of $22.5 billion. Why are airwaves so valuable? As Rove says, "Spectrum is intensely valuable. God is not inventing any more. There is a finite amount of spectrum available to carry wireless communications."
Even though the White House has denied the veracity of this story, CNN says that it has been told by informed sources that the Pentagon is being pressured to approve what is being called "the biggest handoff of economic power to a single entity in history" without using a competitive bidding process. Craig Moffett, an analyst with MoffettNathanson LLC, says that "The whole story smacks of cronyism at best and reeks of 'the swamp' at worst." The White House responded to questions about leasing mid-band Defense Department spectrum to a company without using a competitive bidding process by stating that "the White House has not taken a position in favor of any company over another with regard to 5G spectrum; conversations are ongoing but it is still pre-decisional. Regardless, whatever decision is ultimately made will be a result of best cost/benefit for the taxpayer, not any political reasons."
Lawrence Kudlow, the president's chief economic adviser, had Trump's ear when he advocated that a free-market process should be used to lease or sell the spectrum. But those in the know say that the president changed his mind as the election loomed nearer. Now, he reportedly is leading the charge to lease the spectrum to Rivada.
This story is part of:5G connectivity (14 updates)
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