T-Mobile CEO John Legere (L) speaks as Sprint CEO Marcelo Claure looks on at the New York Stock Exchange, April 30, 2018.
Brendan McDermid | Reuters
As FCC chair in the 1990s I opposed mergers in radio, among Baby Bells, and later between T-Mobile and AT&T. In 2014, I declined to help Sprint buy T-Mobile. But when this time around Sprint asked if I would advise them on how to close their acquisition by T-Mobile I said, absolutely yes.
The reason is that the demands of technological progress have changed remarkably in a few short years. With the conditions imposed by the federal and state governments including limits on consumer prices and job preservation, the new company and its competitors will help cause the long-awaited convergence of computing and communications necessary to stimulate new economic growth and produce new ways for society to benefit from technology.
For decades communications and computing industries have had only limited relationships to each other. Even today for example, most personal computers do not connect directly to a cellular network – only accessing the Internet through embedded Wi-Fi.
On the other hand, fewer than 500 big data centers effectively govern the critical computer calculations of the modern world. These data centers –run by Amazon, Facebook, Google, Microsoft and their Chinese counterparts – transmit massive information over thousands of miles at nearly the speed of light to and from businesses through fiber optic cables.
Yet close to three decades after the Internet became the critical commercial medium, we still do not have really high-speed broadband to every home. Moreover, the concentration of influence in the owners of these data centers justly gives cause for concern.
But the break-out of newly robust competition and innovation is near at hand.
The formula is 5G meets AI, producing brave new world.
The United States might ban Chinese firms, but whether we like it or not, the rest of the world will not. To keep up with the pace of change in China and compete worldwide, all American firms need distributed connected computing to be pervasively deployed in our country.
The next evolution in wireless –5G, or the fifth generation of digital wireless technology launched on my watch at the FCC — will expand the data carrying capacity of wireless networks by as much as 1000 times. Millions of sensors – measuring devices with radios – will record the observable world, watching traffic patterns, measuring greenhouse gas emissions, monitoring heart rates, tracking robots in dangerous industrial operations.
Networks built for 5G will gather all this information and transmit it probably less than a mile away, in milliseconds, where computers resembling the big centralized data centers, but at smaller scale, will apply the mathematical calculations generally known as artificial intelligence (AI).
This number-crunching will enable the seemingly magical instructions and predictions that are the essence of AI: redirecting traffic, spotting environmental problems, sending someone to the hospital before the heart attack, making the robots do the hard work.
These services must be created close to where the information is obtained because the results of AI calculations have to be delivered to the point of use in milliseconds – even at the speed of light information cannot be sent thousands of miles, analyzed, and then sent back in time to obtain factory efficiency or save a life.
For this reason, innovators in computing and communications businesses, aware their industries are at last on a collision course, say these mini-data centers are at the “edge” of networks.
This edge, where 5G and AI meet, is new ground for doubling, tripling, probably quadrupling the size of America’s information industries. Barely perceptible now, this new ecosystem would be wide open for competition and innovation.
Big cable, existing wireless firms, and many other new entrants will have tremendous opportunities to create and capture value as they enable distributed connected computing – the name for converged computing and communications. These developments will stimulate cable and fiber-optic firms to build high speed broadband to every residence, as well as generate wireless alternatives.
This is the burgeoning new ecosystem that the post-merger market structure of communications firms will and must create.
There’s one other alarming and significant consideration. Our country is falling behind China in realizing the technological future.
Unlike the era when I was FCC chair, today U. S. firms in all sectors face vigorous competition in global markets from firms in China. Operating under the central government’s direction, Chinese communications firms will roll out 5G to its billion plus people and innumerable businesses. Using AI to create new commercial and consumer applications in their huge domestic market, Chinese firms will learn how to leverage their learning and scale into competing in every other country.
The United States might ban Chinese firms, but whether we like it or not, the rest of the world will not. To keep up with the pace of change in China and compete worldwide, all American firms need distributed connected computing to be pervasively deployed in our country.
For this reason, our platform builders – the communications companies – need to get quickly to the job of building America’s 5G networks. That’s why I urge rapid closing on T-Mobile’s acquisition of Sprint: it is important to propel our economy and society into the era of distributed connected computing in a hurry.
Next week, one of the last remaining hurdles to closing this merger will finally get underway. A handful of US states led by California and New York are suing to try to block the deal which has received all the necessary US government approvals including national security, regulatory, and antitrust. The conditions imposed by these federal agencies and other states which are supporting the merger are constructive and yet another reason T-Mobile and Sprint should be allowed to combine.
Reed Hundt is former chairman of the Federal Communications Commission, a member of the board of various technology firms, an advisor to Sprint as to the pending merger, and recently the author of “A Crisis Wasted: Barack Obama’s Defining Decisions.”
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