5G and ‘slippery slopes’

The carriers are agitating the regulator to be deeply concerned about 5G. Articles appear in the quality press about why 5G will generate the need for capital, and why the CRTC should not allow MVNOs in consequence. Reduced profits through more competition will make it more difficult for Canada to compete against other nations more richly endowed with 5G networks. I am reminded of an expression by PT Barnum of certain people born every minute, which my censorious software will not permit me to write.

About the time that the carriers face the possibility of effective competition, along come vacuous thought-bubbles to confuse, delay or hinder change. Do your recall ISDN? That was the Internet with a cash machine inside it: Integrated Services Digital Network, the Internet run on the basis of billing by the bit or by the minute. Do you recall bit caps, the notion that large users should pay extra because they are hogging bandwidth with their wicked high usage? Bits whose cost of production halves every 18 months. What about MPLS (multi-protocol layer switching)? Another complicated MacGuffin. These devices advance the plot, which is always to retain market power, while making the regulator think he is doing great work in promoting technology and productivity.

I have been inspired by George Friedman’s youtube on the role of technological advances. His contention is that the microchip revolution is essentially over; that it has become like electricity in 1930, or cars by 1960. 5G is just more of the same, at higher frequencies and with more base stations. It is not clear that the results will be so superior to current 3G and 4G technologies as to justify the investments. Nevertheless, justifying investments is not the purpose of 5G right now: justifying high levels of profit is. “Please save us”, dear regulator,  “from technological backwardness because our profits have shrunk.” Whereas the very opposite is true. We need MVNOs because we need a system of permissionless innovation. Such innovation need not be strictly technological; changed arrangements of property (think private cars versus Uber) can be the innovation.

The best way that carriers with market power in Canada can avoid MVNOs at this juncture is to claim they need to maintain profits because of 5G.

“Why do carriers have to justify high profits?”

What a stupid question, I respond. Oh. You are serious. You actually think that high profits are not self-justified? Hmmn. Let me think for a moment.

Oh yeah, 5G. That is the reason.

I want you to repeat after me. 5G is complete BS. Even if you cannot say so aloud, just allow yourself to think it.  

5G is a distraction from the spectre of effective competition (which is its main rhetorical purpose). 5G is sparkles and fairy dust. Yes, there is such a thing as 5G  technology and it will require an effective policy response. However, the possibility that MVNOs will introduce permissionless innovation to telephony is the real challenge, and if carriers can get regulators panicked by a chorus of “5G, 5G, 5G” they will have won another round.

5G is another “slippery slope” argument. If you are old enough to remember when the “slippery slope of competition” anywhere in the phone system threatened cross subsidies, you ought to know or suspect that 5G is yet another iteration of the same nonsense, but made more plausible by spurious technological voodoo. It is merely smaller cells and more base stations. 

Moreover, even if 5G works as advertized, it may still be the next Concorde. Twice as fast but not economic. But who cares? Its real purpose in Canada right now is to distract regulators and governments from effective policy responses to carrier market power. 5G? please make the sounds of “oooooooooooh”.  Remember ISDN. Allow yourself to think that you are being led down the garden path once more, dear regulators and policy wonks. Because you are. 

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