The FCC National Broadband Plan: Long Haul Expected

Paul Karpowicz has nothing against broadband. But he has no plans to take part in a government effort to bring it to more homes.

Karpowicz is president of Meredith Broadcasting, which owns 12 local TV stations from Portland, Ore., to New Haven, Conn. Meredith also holds unused TV airwaves covering some of those markets and Karpowicz intends to use them to stream programming to handheld devices.

As part of its National Broadband Plan, due to be unveiled Mar. 16, the federal government wants broadcasters like Meredith to relinquish and let the government sell excess airwaves, which could then be used by wireless carriers to deliver mobile-Web access. Karpowicz says he has no intention of giving up Meredith's airwaves. "I truly don't visualize a scenario where proceeds [from a sale] would exceed lost business opportunities," says Karpowicz, who also sits on the executive committee of the National Association of Broadcasters.

Opposition from the NAB is just one of the hurdles the government must clear as it presses ahead with a plan to bring broadband access to almost 100 million U.S. residents.

For starters, the plan is just that. Federal Communications Commission officials, under Chairman Julius Genachowski, will present the proposal to Congress, which will weigh in as the FCC embarks on a years-long process of implementing the various proposals. "The really difficult policy options are going to be made in follow-through actions," says Paul Glenchur, senior analyst at Potomac Research Group, a Washington-based consultant.

Plan Resistance

Along the way, the FCC may face resistance from lawmakers unwilling to approve additional funding and from parts of the communications industry, such as satellite providers, largely left out of the plan. "If it were easy, [this reform] would have been done a long time ago," Blair Levin, the Federal Communications Commission official who's spearheading the National Broadband Plan, says in an interview with Bloomberg BusinessWeek.

Besides asking broadcasters to give up some airwaves, the plan will also propose a nationwide wireless broadband network for use by public safety agencies and urge an overhaul of a federal program that supplies funding for telecommunications carriers which provide phone service in rural areas, FCC officials have said in recent weeks. The plan is also expected to push for the broader adoption of electronic health records and so-called smart grid technologies designed to help consumers and utilities better monitor energy use.

Parts of the plan that have been made public have enjoyed widespread support in the telecommunications industry, including from the main U.S. wireless industry group. FCC officials "were given the difficult task of providing a road map to ensure all Americans—regardless of location, income, or education level—are able to access the Internet, and we were pleased to be able to assist with their efforts as it appears they are on target," CTIA, the wireless trade group, said in a Feb. 24 statement. Derek Khlopin, head of regulation and policy, North America, for Nokia Siemens Networks, a telecommunications equipment maker, says the plan "could positively impact investment."

Airwave Auctions

To pay for the plan, the government will rely largely on auctions of airwaves to wireless carriers. Yet the plan will call on Congress to approve spending $12 billion to $16 billion over 10 years to construct the wireless public safety network. That may not sit well with some lawmakers. Texas Republican Joe Barton, a member of the House Energy & Commerce Committee, on Mar. 4 criticized the way the Obama Administration has spent some funding previously allocated for widening broadband access. A Republican congressional aide who asked not to be identified said that if it turns out some stimulus money was misspent, lawmakers may be reluctant to free up added broadband funding.

Michael Nelson, an analyst at Soleil Securities, says FCC officials may face legal opposition to a proposal, outlined by Genachowski on Feb. 25, that would give public safety agencies access to spectrum already in the hands of certain telecom providers including Verizon Wireless (VZ, VOD).

One component of the broadband plan may be taking an inventory of wireless airwaves held by various government agencies. "No one knows what spectrum the government has, nor how it is used," says Lawrence White, a professor of economics at New York University. The FCC hopes to take some of the unused airwaves away and sell them for wireless broadband. Yet the accounting and airwave auctions are expected to take years, analysts say.

"Voluntary" Spectrum Sales

And what if the government can't find enough broadcasters willing to free up unused airwaves? Many broadcasters have privately told FCC officials that they would sell spectrum, Levin says. "We believe a voluntary system will work," he says. But if it doesn't, the approach may be reevaluated, he says. NAB spokesman Dennis Wharton says he's concerned the government may force broadcasters to comply. "Sometimes in Washington, voluntary means, 'If you don't do what we are suggesting, we are going to make it mandatory,' " he says.

Companies that provide satellite communications are unlikely to play a big role in the national plan, Levin says. That may not sit well with satellite providers, says Mark Dankberg, CEO of satellite Internet service provider and equipment maker ViaSat (VSAT). By pouring funding into other technologies, "the government is distorting the market and guaranteeing that there won't be competition in the future," Dankberg says.

Levin says regulators are well-girded for what may be a long, sometimes uphill climb. He says, "This is really a journey of a thousand miles beginning with a single step."

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