The 5G Snafu Was Avoidable
The snafu over 5G cellular service at U.S. airports is unfortunate and unnecessary. From what I can tell, most of the blame falls on a bureaucratic battle between sister agencies, the Federal Aviation Administration and the Federal Communications Commission. Politics trumped economics.
The latest: On Tuesday, AT&T and Verizon said they would scale back Wednesday’s scheduled debut of new fifth-generation cellular service near airports to address concerns that the technology would interfere with airplane equipment. They had already postponed the rollout by two weeks after airline executives had warned of chaos at airports and cargo hubs from 5G interference with their own wireless communications.
It’s possible that the airlines are exaggerating the risks of interference, as the former F.C.C. chairman Ajit Pai and others contend, but that’s not an argument I want to make. If there’s even a remote risk that planes will fall from the sky, it makes sense to dial back the rollout of 5G until the situation can be rectified.
The real question is why this interference controversy has been allowed to fester, unresolved.
Remember, a rapid rollout of 5G is a national priority for the United States. With its greater speed and capacity and quicker response, 5G will enable an array of new digital services such as telemedicine, autonomous driving and precision agriculture. There’s a geopolitical aspect as well. The United States trails China in the race to supply 5G and is laboring to catch up.
The F.C.C. auctioned off frequencies for 5G last February, raising $81 billion. The winning bidders spent another $13 billion to compensate existing users of the spectrum that needed to move to other frequencies. The auctioned frequencies were in a portion of the spectrum near — though not adjacent to — frequencies used by radar altimeters of airplanes and helicopters to measure their height above the ground. Those radar altimeters help aircraft land and are especially useful in fog and low clouds.
The problem is that the radar altimeters, also sometimes called radio altimeters, are based on designs from the 1960s or 1970s, when the airwaves were less crowded. They weren’t designed to filter out interference from devices transmitting at neighboring frequencies because the neighbors at the time were whisper-quiet. As a result, radar altimeters “may be more susceptible to blocking than other types of receivers,” the RTCA, a standards organization formerly known as the Radio Technical Committee for Aeronautics, wrote in a webinar presentation in 2020.
So why didn’t the Federal Aviation Administration order the industry to install better equipment to filter out interference? Since 1930, radio engineers have been familiar with filter devices that can silence signals that come from outside a desired frequency band. Now there are digital signal processing chips that do the same thing in a more sophisticated way. The airlines are using neither.
“This is very, very easily solved technically,” said Theodore Rappaport, a developer of 5G technology who is a professor at New York University’s Tandon School of Engineering. “It’s frustrating as an engineer” to see the old technology still in use, he said.
The F.A.A.’s argument is that it couldn’t issue a new standard for radar altimeters without knowing in detail the design of the 5G equipment. A technical working group that was formed in early 2020 to bridge differences between wireless carriers and air transport disbanded in November without agreement. The F.A.A. says that only in the past two weeks have its engineers and the telecom companies’ engineers begun to exchange data, after agreeing on procedures to protect proprietary information.
The F.A.A. also argues that it was excluded from decisions about 5G. In 2020, the F.A.A. administrator, Stephen Dixon, prepared a letter to Pai, then the chair of the F.C.C., expressing concerns about 5G interference, but the letter was not passed along by Adam Candeub, the acting director of the Commerce Department’s National Telecommunications and Information Administration. “What they came forth with was not enough for us to do something,” Candeub recently told Bloomberg News. “They came in at the last minute with a report that left serious questions, and when we asked they told us to pound sand.”
Larry Kudlow, who headed President Donald Trump’s National Economic Council, even bragged about blowing off the F.A.A., saying on his Fox Business show, “We ignored them because the science said don’t worry about it.” He added later, “We actually fought the F.A.A. and we won.”
It appears now that the Trump administration won the battle but not the war. One result of the extended conflict between the F.C.C. and the F.A.A. is that even now, nearly a year after the spectrum for 5G was auctioned off, the F.A.A. is still at the stage of information-gathering as it moves toward eventually issuing new requirements for radar altimeters. It is likely to take five years for all altimeters to be upgraded.
This dispute isn’t stopping the rollout of 5G; more than 90 percent of it will proceed as scheduled. But it is holding back its deployment within two miles of runways at some airports, which are natural users of 5G technology. (Last month, for example, Alaska Airlines announced a big 5G deployment with T-Mobile.) AT&T said on Tuesday that it had “voluntarily agreed to temporarily defer turning on a limited number of towers around certain airport runways.” Verizon also said it would take measures to address interference concerns around airports.
Two elements make this an economics story. One is how this dispute is disrupting the rollout of a technology that’s vital to America’s technological future. The other is how bureaucracy is messing up the results of the auction, casting doubt on the ability of the government to deliver on its promises.
Auctions of spectrum have been a triumph for the field of economics, raising money for the government while accelerating the rollout of new services that depend on the airwaves. Auctions “allocate licenses to the highest bidder rather than to the first in line, the one with the best lawyer, or the best political connections,” Robert Litan, an economist, wrote in a 2014 book, “Trillion Dollar Economists: How Economists and Their Ideas Have Transformed Business.”
But auctions don’t work if the government undermines them. “You have to have a government speaking with one voice,” Thomas Hazlett, a professor of economics at Clemson University who was an early proponent of airwave auctions, told me.
Two things might have made the 5G process run better, Hazlett said. One would have been strong leadership from the White House to stop the bureaucratic infighting. Another would have been payments to the aircraft industry to help it foot the bill for upgrading its technology. There’s precedent for that in the $13 billion in payments that were made to satellite and terrestrial microwave operators to relocate to new frequencies.
At the moment, Hazlett said, “The system is broken.”
Greg Nelson of Ithaca, N.Y., wrote to suggest that I write about the cost of living for households at various income levels. There has been some excellent academic research on this question recently. A November paper by Rebecca Diamond of Stanford and Enrico Moretti of the University of California, Berkeley, found that the cost of living faced by households with post-tax incomes below $50,000 a year living in the most expensive commuting zone, San Jose, Calif., is twice as high as the cost of living faced by households in that income range living in the least expensive commuting zone, Natchez, Miss. Looking at consumption of goods and services by lower-income households, the authors find that it’s lowest in San Jose, San Francisco and San Diego and highest in Huntington, W.Va., Johnstown, Pa., and Elizabeth City, N.C.
Complicating matters, people in cities such as San Jose tend to be paid more. The question is why. An October paper by David Card and Jesse Rothstein of the University of California, Berkeley, and Moises Yi of the Census Bureau finds that two-thirds of the difference in the observed wage premiums for working in places such as San Jose and New York “is attributable to skill-based sorting” — that is, people with higher skills tend to sort themselves into cities that pay higher wages.
Quote of the day
“From Reconstruction to Jim Crow to the present day, our economy has never worked fairly for Black Americans — or, really, for any American of color.”
— Treasury Secretary Janet Yellen, in prepared remarks on Monday for the National Action Network’s King Day breakfast
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