Thursday, July 12, 2012

Obama's Wireless Stimulus Package

On the whole, the Obama administration's new wireless plan is one of the cleanest and most uncontroversial budget proposals in recent memory and it is supported by the fact that the GOP, which is currently balking at most of President Obama's budget proposals, has not elected to attack this one. The reason is simple; on the face of it, Obama's wireless plan intends to dramatically expand the reach of wireless access providers, and thus, the potential market as well.

Overall, bottom lines will increase, as well the wireless network, allowing access providers to begin to phase out the infamous last mile problem. DSL and Cable Internet are costly to build out and maintain, while wireless is not. With the recent FCC Net Neutrality legislation, it is clear there is a heated focus on expanding wireless infrastructure to shift the bulk of communication to the wireless model. Already, most new phone numbers are mobile. The Plain Old Telephone network is being phased out, and a home phone makes little sense in light of the convenience of cell phones.

Plan Details: The Money

Broadcast Spectrum Auction: One of the key parts of the proposal was the 500 MHz broadcast spectrum auction, currently held by television and radio broadcasters, and would be sold off specifically for licensed mobile access providers. The total cost of the program is currently estimated at billion, and total revenue is .8 billion over 10 years, hence the Obama wireless plan will realize a .6 billion net gain. Some will go to the current holders of the spectrum to be sold off in exchange for voluntary surrender of the spectrum.

Infrastructure: The next major part of the plan is the investment of .7 billion to build a public safety wireless infrastructure. This will provide police, fire, and other public services high-speed wireless access, allowing them to share video and exchange email. While a little vague, the scope of the plan is extensive and would involve dedicating the D Block of broadcast spectrum for public safety. Much of the cash would be spent on towers and infrastructure to support the use of the spectrum. The recent buyback of the Wireless Philadelphia, a multimillion-dollar effort to provide free wireless and its re-tasking to fire and police use is an example of the goal of this phase of the plan.

Other Funding: billion would go to fund an expansion of the Universal Service Fund, ensuring low-income families access to wireless services, and to support companies that invest money in building private infrastructure in areas traditionally too costly to develop profitably. Safelink wireless is an example of this initiative, providing cell phones and monthly airtime to low-income American.

An additional billion would be invested in research and development of wireless technologies in the education, health care, and energy sectors, which would dovetail with existing health care technology initiatives. Additional funds are already allocated in the Commerce and Agriculture Departments through the Recovery Act and will be used to fund wireless development in rural areas.

Effects of the Plan

With the deployment of DTV and the end of analog broadcast television, a starting gun was sounded and the race was on. Much of the news, beginning with Google's attempt to enter the most recent spectrum auction and the recent FCC Net Neutrality Act has been the pole positions of the race. For many years, the federal government has supported efforts to bring telephone service to outlying areas of the country. Now the government will assist in the expansion of wireless access to replace the existing infrastructure and create a wireless broadband future.

The plan intends to be a win-win effort with commercial entities benefiting from the creation of a much larger market base, and lower cost of wireless access and America benefiting from a major step forward in technological development. Consumers will benefit by having mobile access nearly everywhere. Finally, the taxpayers will realize 9 billion dollars in revenue over the next ten years. It is rare that any federal program is this balanced and universally accepted.

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