Defence officials lukewarm on 5G spectrum-leasing plan pushed by the White House
By Aaron Gregg
Washington - The White House has pushed the Pentagon to set up a controversial spectrum leasing plan matching one being proposed by a politically-connected company called Rivada Networks, which wants the lucrative job of using that spectrum to create a nationwide 5G network, according to people familiar with the matter and a lobbying document obtained by The Washington Post.
But the military has not embraced the proposal, even though it was pushed directly by White House chief of staff Mark Meadows, according to the people, who spoke on condition of anonymity to discuss sensitive internal deliberations.
"I'll just be honest with you, the department has not embraced spectrum-leasing at this point ... there are just so many issues at play including bringing in receipts and dollars into the department, and we don't know how the DoD would even do that," said a senior defense official who spoke on the condition of anonymity to discuss the matter freely.
"We're looking for industry and [other government agencies] to give us some innovative ideas about how that might happen," the official said.
The lobbying document obtained by The Post shows Rivada proposing that it create a 5G network and rent out that spectrum to private companies such as Netflix, Facebook or Tesla. Some of the revenue would be sent back to the federal government.
If the arrangement moved forward, a formal procurement process would determine what sort of fees Rivada would be able to collect. Craig Moffett, a leading telecommunications analyst with the firm MoffettNathanson, said the spectrum in question is worth between $50 billion and $75 billion.
Rivada enlisted the help of influential Republican political operatives including Karl Rove to directly lobby the White House, which in turn pressured top military officials to start a 5G spectrum-leasing procurement, several people with knowledge of the discussions said.
The Pentagon isn't sold on the idea, those people said. Senior officials at the Department of Defense deliberated for months before publishing a request for information on Sept. 18. Some officials expressed concerns over the U.S. government making a special arrangement to turn over valuable wireless spectrum to a company such as Rivada, questioning whether it has enough experience in running a telecommunications network on the scale that would be required, according to one of the people familiar with the discussions.
An official strategy document released by the Pentagon in late October said "a new model is needed" for how the government allocates spectrum, but it made no mention of leasing. Under federal law, the military cannot use the spectrum to turn a profit. And defense officials are wary of whether leasing spectrum would run afoul of those restrictions.
Rivada founder Declan Ganley, in a statement emailed by company spokesman Brian Carney, disputed the notion that his company is not prepared to operate a 5G telecommunications network at scale. Ganley pointed out that Rivada employs seasoned telecommunications executives from "literally every major carrier."
The company has been open about its campaign to shift U.S. policy on 5G.
"Petitioning the government is a constitutionally protected right and we make no apologies for advocating for policies that we believe are in the interests of the United States," Carney said in an email.
The disagreement over the spectrum-leasing issue is an example of the unusual ways the White House has intervened in military affairs both large and small.
Former Defense Secretary Jim Mattis resigned because he disagreed with the president's approach to Syria. And Mark Esper's path as secretary became something of a political minefield of its own, starting when his office delayed the Pentagon's JEDI cloud procurement following White House intervention, and culminating in his refusal to support use of active-duty troops to quell racial unrest in U.S. cities. Trump fired Esper in a tweet Nov. 9.
Putting a private company in charge of renting out spectrum that is currently controlled by the military would represent a major departure from almost a century of telecommunications policy.
The Federal Communications Commission oversees the country's wireless airwaves, and typically, the telecom regulator puts chunks of spectrum up for auction ― and carriers including AT&T and Verizon bid for the right to use these bands for their phone networks. Other spectrum set aside for national security purposes is off limits to companies. The sort of leasing arrangement proposed by Rivada would open up Pentagon-controlled spectrum to private firms for the first time.
Beyond Rove, former Republican house speaker Newt Gingrich has met with White House officials about the issue as well, said three people familiar with the meetings. Carney, the Rivada spokesman, said the company has no financial or business relationship with Gingrich. Rove, however, is registered to lobby on behalf of Rivada.
"Mr. Rove talks to a great many people in Washington all the time ... most of those conversations, I daresay, are not about Rivada," Carney said of the company's relationship with Rove.
A White House spokesman did not respond to multiple requests for comment. CNN first reported that Meadows had pressured top military officials on behalf of Rivada.
Brian Carney, a Rivada spokesman, said the company never asked for a no-bid contract.
"We also believe that any RFP for spectrum sharing should be awarded through an open and competitive process," Carney said. "We have never asked for a no-bid contract."
Ganley, an Irish businessman and politician who founded Rivada, has railed against U.S. telecommunications companies on Twitter, arguing his plan would give consumers a better deal.
"It shows just how much the wireless cartel are terrified of this," Ganley tweeted shortly after the CNN article. "They'll throw the kitchen sink at it. All so they can try to protect their racket that charges Americans some of the highest mobile wireless prices in the world."
Pentagon spokesman Russ Goemaere said the department is not working on any request for proposals in relation to spectrum-sharing or spectrum-leasing. He added that the Pentagon will follow the rules "if any further acquisition is sought on this effort," implying military leaders have not decided how to move forward on spectrum leasing or whether to do so at all.
"If, after assessment of the [information received through the request for information], it's determined DOD can own and operate 5G on our installations we will pursue funding through our normal budget process," Goemaere said in an email.
It's unclear whether Rivada would be the Defense Department's first choice if it were to move forward. Rivada has no experience in building such a network, said Moffett, the telecommunications analyst. It failed in prior attempts to win a major, multi-billion dollar federal spectrum contract, and it has offered few specifics as to what it envisions creating on behalf of the Pentagon, leaving him skeptical about the company's prospects going forward.
"I think there are all kinds of risks here to taxpayers," he said. "There are potentially many tens of billions of dollars of value at stake here, and it's never been given anything remotely like a conceptual vetting by either government experts or industry experts."
There are legal roadblocks as well. David Redl, a lawyer and former telecommunications regulator who now works as a private consultant, said many of the actions contemplated in the request for information are clearly prohibited under federal law and would require an act of Congress before the Pentagon could move forward. A half-baked procurement could become bogged down in lawsuits.
"Whether or not the federal government should be leasing spectrum to commercial entities should be up to Congress," Redl said.
Members of congress have expressed opposition to the plan. In a Nov. 20 letter Senate armed services committee members Mazie Hirono, D-Hawaii, and Sen. Richard Blumenthal, D-Ct., said Rivada's proposal "is being considered with no clear benefit to national security" and is questionably legal.
"Any effort to lease this coveted spectrum to an entity linked to President Trump's political allies and donors by way of an unprecedented, extralegal, and non-competitive process risks jeopardizing national security while casting doubt on the Department's motivations," the Senators wrote.
In a separate letter published Nov. 6, 53 members of congress said the Trump administration's apparent effort to "nationalize" 5G, noting that the Trump administration's plan is "rumored to hand control to a single company favored by the President." (The letter did not mention Rivada by name.)
"We therefore caution that pursuing unproven and nebulous plans to enable the federal government to enter the commercial wireless marketplace will undermine the tremendous progress made to date," the letter reads. "The last thing we need is distractions such as a 5G nationalization proposal that not only ignores the success of the market-based approach, but also faces significant legal infirmities and practical implementation hurdles."
Some in the government oversight community are concerned that Rivada's connections to the White House could taint a possible spectrum-sharing procurement before it even begins.
"The Defense Department needs to ignore the White House and ensure that there is a level playing field, competition, and that all decisions are in the best interest of the Defense Department and our national security," said Scott Amey, who is general counsel and editor-in-chief at the nonprofit watchdog group Project on Government Oversight.
"Although DoD's request for information speaks to sharing spectrum with commercial entities, how that takes place and who is influencing the government's decisions should be in full public view," Amey said.
The Washington Post