The FCC National Broadband Plan: Long Haul Expected

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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."

With reporting by Arik Hesseldahl. Kharif is a reporter for Bloomberg BusinessWeek in Portland, Ore.

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