President Barack Obama proposed spending $2.5 billion next fiscal year on rural high-speed Internet service in a plan that includes auctioning channels devoted to television, according to the budget released today.
The expenditure would be among the early obligations in a wireless initiative projected to raise more than $27 billion through spectrum auctions over the next 10 years, according to the budget.
The administration wants to devote more airwaves to wireless high-speed Internet service, or broadband. It proposes paying TV station owners who voluntarily surrender unneeded airwaves, and needs congressional approval to do so.
“It could take awhile for Congress to agree,” Andrew Lipman, a Washington-based partner in the media, telecommunications and technology practice at Bingham McCutchen LLP, said in an interview. “I don’t see incentive auctions in 2012.”
Questions include how the government and industry split auction proceeds, said Lipman. Republicans could oppose an initiative that seeks to force companies to relinquish airwaves, he said.
Broadcasters say they want the U.S. to examine how spectrum is used before beginning any auctions.
The effect on broadcasters, including ABC owner Walt Disney Co. and News Corp., depends on details of legislation, Rebecca Arbogast and David Kaut, Washington-based analysts for Stifel Nicolaus & Co., said in a Feb. 10 note issued after the White House released a summary of the plan.
“We see the announcement as generally positive for the broad wireless industry” with companies that could benefit including AT&T Inc., Verizon Wireless, Samsung Electronics Co., Google Inc. and Apple Inc., Arbogast and Kaut said.
More spending on wireless broadband could help companies including network-equipment maker Alcatel-Lucent and tower builders American Tower Corp., Crown Castle International Corp. and SBA Communications Corp., Paul Gallant, a Washington-based analyst with MF Global, said in a Feb. 10 note.
Nationwide Radio Network
Obama also proposed spending $7 billion to help police, firefighters and other emergency workers build a nationwide radio network aimed at rectifying communications shortcomings that hampered responses to the terrorist attacks on Sept. 11, 2001. Obama proposed last month allocating a swath of airwaves for the network, and in the budget today said the bands are worth $3.2 billion.
The public-safety plan would benefit Motorola Solutions Inc., the dominant supplier of handsets to emergency workers, Gallant said.
“We were pleased to see that the administration is focusing on these areas for investment,” Grant Seiffert, president of the Telecommunications Industry Association, said in an e-mailed statement today. “It is critical to our industry to see the continued commitment to ensuring that America regains and retains its lead and competitive edge.”
Members of Seiffert’s Washington-based association include Internet and communications gear makers Cisco Systems Inc., Harris Corp. and Juniper Networks Inc.
Giving the airwaves to first responders would scuttle plans for an auction sought by the Federal Communications Commission and backed by Sprint Nextel Corp. and Deutsche Telekom AG’s T- Mobile unit.
AT&T and Verizon Communications Inc. have supported calls to assign the airwaves, known as the D Block, to public safety agencies.
The Obama administration also proposed fees on holders of unlicensed spectrum, which include broadcasters. The proposal hasn’t passed Congress in past years, and “it will do even less well” now that Republicans, averse to government intrusion on industry, are in control of the House, Lipman said.
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