White House insiders this week told CNN the Trump administration is fast tracking a no-bid effort to dole out tens of billions of dollars in valuable spectrum to a new wireless venture backed by several high-profile Trump allies. It’s an effort opposed by the FCC, incumbent wireless providers, and consumer advocates, who say it’s little more than cronyism run amok.
For much of the last year, a collection of GOP financial backers like Peter Thiel, Karl Rove, and Newt Gingrich have been heavily hyping a company by the name of Rivada Networks. The company’s website says its goal is to partner with the Department of Defense to build a 5G network using highly-desired middle-band spectrum leased from the agency.
Traditionally, such spectrum is managed by the FCC, which periodically auctions off available spectrum as it did last August, when 70 megahertz of spectrum sold to a long list of bidders for $4.5 billion. Since there’s only so much spectrum available, Rivada has been proposing sharing spectrum with the DoD to help bring additional services and wireless capacity to market.
But CNN quotes anonymous White House insiders who say the Trump administration and Rivada are trying to “fast track” what would “essentially be a no-bid contract” of direct benefit to Trump allies with a financial stake in the project, doling out 350 megahertz in spectrum leases potentially worth tens of billions of dollars uncontested.
Rivada denied the allegations in a statement to CNN.
The report claims the effort is being managed on behalf of the Trump White House by chief of staff Mark Meadows, who is pressuring the Pentagon to sign off on the effort outside of the traditional FCC-managed spectrum auction process. One White House insider called the covert deal "the biggest handoff of economic power to a single entity in history.”
Rivada has complained the existing FCC spectrum auction process tends to favor deep-pocketed, politically-powerful incumbent giants like AT&T, T-Mobile, and Verizon. In 2017, Rivada lost a bid to build the nation’s first national emergency wireless network (FirstNet), resulting in a Rivada lawsuit, which it lost.
“The FCC’s spectrum-auction process, which began as a great way to discover the highest and best use of a scarce resource, has been captured by the big carriers, and now serves merely to divide the spoils among the current winners,” Rivada CEO Declan Ganely wrote this week. “New entry into wireless via FCC auction is all but impossible.”
Experts say Rivada’s correct that the existing process often favors deep-pocketed, entrenched incumbents, and does too little to police speculative spectrum squatters. There’s also widespread agreement that the U.S. has been slow in making middle-band spectrum available for public use, resulting in U.S. 5G networks that are much slower than overseas equivalents.
But FCC lawyer Gigi Sohn told Motherboard that while Rivada’s grievances may be legitimate and its underlying proposal sound, the alleged effort to bypass the existing system to the benefit of Trump allies and detriment of smaller competitors is just a different flavor of terrible.
“This is yet another example of the Trump administration making bad policy choices to help its friends,” Sohn said. “Trump friends Peter Thiel, Karl Rove and Newt Gingrich benefit if Rivada gets a no-bid contract for 350 MHz of prime spectrum, but the American people don’t. For the grifters in this Administration, the sky is literally the limit.”
Incumbent wireless carriers appear to have been ginning up consternation in DC by claiming Rivada’s goal is to build a nationalized, government-owned 5G network. While such a network is something the Trump administration briefly discussed, experts say the chance of it happening is extremely unlikely, especially given AT&T and Verizon’s lobbying power.
Both companies are bone-grafted to the NSA, ghost write state and federal telecom law, and enjoy their own cozy, immensely profitable relationship with the Trump administration. Even with Karl Rove’s help, Rivada will have a hard time disrupting the stranglehold such giants have over U.S. lawmakers relentlessly lobbied to keep the broken status quo intact.
Rivada has repeatedly denied that a nationalized 5G network has ever been its goal.
“When Rivada suggested that the government consider sharing spectrum that the private sector currently has no access to at all, an audacious lie of ‘nationalization’ emerged,” Ganely said, accusing incumbent carriers of a coordinated attack on the company.
At the same time, Rivada’s use of figures like Rove and Gingrich to advocate on behalf of the company have caused rifts in Trumpland, where some back the existing dysfunction favored by giants like Verizon and AT&T, and others support Meadows’ alleged, dubious end-around. Experts like Sohn say if the allegations are true, neither side has the moral high ground.
“The carriers may be overstating the case against granting the no-bid contract to Rivada, but it doesn’t make it good policy — it’s still a sweetheart deal for Trump’s friends,” she said.