Obama Says U.S. Needs to Expand its High-Speed Networks, Pledges $15 Bln

President Barack Obama said expanding high-speed Internet networks will help the U.S. compete economically with other countries and pledged to spend more than $15 billion on wireless systems for emergency networks and expanded access to mobile service.

“We can’t expect tomorrow’s economy to take root using yesterday’s infrastructure,’’ Obama said at Northern Michigan University in Marquette, Michigan. “To attract the best jobs and newest industries, we’ve got to out-innovate, out-educate, out-build, we’re going to have to out-hustle the rest of the world. That means investing in cutting-edge research and technology.”

In Marquette, a city of about 20,000 people on the shores of Lake Superior, Obama said that high-speed Internet networks have helped local businesses reach global markets. He said further technology investments could help bring down the U.S. unemployment rate, which was 9 percent last month. Michigan’s unemployment rate was 11.7 percent in December, down from 14.5 percent a year before.

“I’ve come here because in the 21st century, it’s not just the big cities where change is happening. It’s also in towns like this, where the jobs and businesses of tomorrow will take root,” Obama said, after seeing a demonstration of the university’s wireless network and discussing with local business owners how broadband access has helped them expand and hire more employees.

Airwaves Auction

The money would come from $27.8 billion raised from auctioning airwaves relinquished by television broadcasters and also contribute $9.6 billion to reducing the federal deficit over the next decade, Jason Furman, deputy director of the White House National Economic Council, said during a conference call yesterday.

The FCC has proposed the government conduct auctions in which broadcasters voluntarily surrender airwaves in return for part of the proceeds. Buyers may include Verizon Wireless, AT&T Inc., Sprint Nextel Corp. and Deutsche Telekom AG’s T-Mobile unit. The auctions require congressional approval.

That would raise enough revenue for the government to pay for the $10.7 billion public-safety network, $5 billion to expand access to high-speed wireless service, and to devote $3 billion to communications research, with money left over to reduce the deficit, Furman and U.S. chief technology officer Aneesh Chopra told reporters on the conference call.

Use of Resources

“The policy as a whole makes better use of our existing spectrum, better use of our existing resources” Furman said.

Because it relies on auctions rather than tapping the federal treasury, Obama’s initiative has “a better-than-even chance of happening,” Paul Gallant, a Washington-based analyst for MF Global, said in a note to investors today.

The spending could help companies including network- equipment maker Alcatel-Lucent and tower builders American Tower Corp., Crown Castle International Corp. and SBA Communications Corp., Gallant said in the note. The announcement also should be good for Motorola Solutions Inc., the dominant supplier of handsets to public safety entities, Gallant said.

The initiative fleshes out a pledge he made in the State of the Union address to make wireless high-speed Internet, or broadband, available to 98 percent of Americans within five years as a way to accelerate economic growth and job creation.

Expanding Business

‘High-speed Internet allows small businesses to reach markets beyond the one that they’re in, in the next town, in the next state or even in a different country,’’ Federal Communications Commission Chairman Julius Genachowski said in a Feb. 8 interview. “We need to take that as seriously as we took electricity and telephone service in the 20th century.”

Concerns about the deficit, forecast by the Congressional Budget Office to hit $1.5 trillion this year, prompted Obama to propose a five-year freeze on discretionary federal spending outside security. Still, the president said he wants to shift more money into infrastructure, education and research by cutting other programs more deeply.

“We’ve got to live within our means,” Obama said today. “Even as we do so we cannot sacrifice our future.”

The White House budget for fiscal year 2012 is scheduled to be released Feb. 14.

Infrastructure includes building wireless towers and laying fiber to compete globally, Genachowski said.

The U.S. ranked 40th out of 40 countries in a study ranking innovative capacity and competitiveness, he said in a Feb. 7 speech in Washington. “We risk falling behind our global competitors if we don’t accelerate our rate of progress.”

Swing States

Today’s visit marks Obama’s sixth to Michigan since taking office, according to the White House. It’s his third recent visit to a political swing state that will figure in the 2012 presidential election, following trips Feb. 3 to Pennsylvania and Jan. 26 to Wisconsin.

All three states “are suffering badly” economically and they have lots of newly elected House Republicans, said Wendy Schiller, a political science professor at Brown University in Providence, Rhode Island.

Schiller said the president is making a calculation that he can pressure newly elected Republicans to show voters what they’re doing to help their district’s economies and embarrass them if they stand in the way of his proposals.

“There is no better place to wage a political battle than in your opponents’ backyard,” she said.

Obama carried Michigan in the 2008 presidential election, winning by 16 percentage points. Two years later in the midterm elections, Republican Rick Snyder, former president of computer- maker Gateway Inc., won Michigan’s governorship, replacing Democratic Governor Jennifer Granholm. Republicans won nine of Michigan’s 15 U.S. House seats. Neither of their two Senate seats was up for re-election.

To contact the reporters on this story: Kate Andersen Brower in Marquette, Michigan at 1973 or kandersen7@bloomberg.net; Todd Shields in Washington at tshields3@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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