Obama Proposes Funding for 4G Buildout, National Public Safety Network

Obama proposed that part of the more than $20 billion expected to be raised through an auction of broadcast spectrum and other incentive auctions be dedicated to public safety communications, with $7 billion spent on building a network and $3.2 billion to reallocate the 700 MHz D-block directly to public safety entities. The rest of the proceeds would be dedicated to deficit reduction. Obama also proposed that $5 billion be used for a one-time injection into the Universal Service Fund, to pay for high-speed wireless buildout.

"In the 21st century it’s not just the big cities where change is happening,” Obama said. “To attract the best jobs and newest industries, we've got to out-innovate, out-educate, out-build and out-hustle the rest of the world.” Obama compared broadband to the earlier electrification of rural America and the expansion of the railroads. “When it comes to high-speed Internet, the lights are still off in one-third of our households,” he said. “If we build it they will come, but we've got to build it.”

Former FCC Chairman Reed Hundt said Obama’s speech was historic, the biggest push by a president on a communications issue since the Johnson or possibly the Roosevelt administration. “This is the biggest role played by a President in the FCC’s ballpark since LBJ did public broadcasting, or maybe even since FDR did television,” Hundt said.

Obama faced criticism from the left and the right following his speech. “We're certainly glad that the president and the White House and the administration is focusing on a very important technology issue,” said Free Press Research Director Derek Turner. “We're a little perplexed at what they're proposing. They seem to be focusing on the wrong problem and they're really coming at this in the wrong way.”

Adoption is the biggest issue on wireless broadband rollout, not deployment, Turner said. “It’s clear we're going to hit the 98 percent 4G coverage mark without any government action whatsoever,” he said. “It’s a little puzzling that they're tying a spectrum push to coverage. There’s no spectrum crisis in rural America.” Turner also said that like Obama’s speech at the U.S. Chamber of Commerce Monday, the remarks were aimed at “mending fences” with business. “This entire package is focused on helping business,” he said. “It’s not focused on helping consumers."

"Barack Obama isn’t winning the future, he’s stealing it -- burying our children and our nation under a mountain of debt,” said Seton Motley, president of Less Government. “Here we have yet another utterly absurd Obama claim of ’savings’ as a result of spending more of our money. Much like his ObamaCare, the claims of savings don’t pass the laugh test, or make it past the first legislative draft."

"There are some positive elements to President Obama’s wireless initiative, although I would prefer a cleaner auction with much more of the proceeds devoted to deficit reduction and much less to government-directed spending,” said Free State Foundation President Randolph May. May questioned whether the money dedicated to wireless build out would be “used wisely” with the government directing funds to various programs and companies: “It is hard to argue that the wireless providers are not already very innovative, and they sure have invested a lot."

Public Knowledge Legal Director Harold Feld said the announcement is mostly positive. “The investments promoted by the administration would, if implemented, go a long way to bringing next generation wireless service to areas which may not receive it any other way,” he said. “While we are also pleased that some of the reclaimed spectrum would be reserved for unlicensed use, we would be remiss if we did not raise a warning flag over the estimates of revenue to be gained from spectrum auctions. It is not at all clear that incentive auctions or reverse auctions will take place. Even under circumstances of familiar auction procedures, estimates of revenue can very greatly from what is actually achieved."

CTIA President Steve Largent said making more spectrum available for wireless carriers to use is the key to promoting wireless broadband. “Our members are willing to spend billions of dollars to purchase reallocated spectrum at auction so we can remain the world’s leading wireless industry and provide consumers with the best products and services,” he said. The NAB “is not against the President’s plan,” said spokesman Dennis Wharton. “We will work to ensure that incentive auctions remain truly voluntary, and that broadcasters who don’t volunteer to return spectrum -- and the millions of viewers that we serve -- are held harmless."

Rep. John Dingell, D-Mich., praised Obama for making the trip to Marquette to see the largest 4G education network in the U.S. “The benefits of high-speed Internet, whether wireless or through cables, for education and business cannot be overestimated,” he said. “Connect Michigan estimates that median annual revenues for Michigan businesses with broadband Internet access are $200,000 greater than for businesses without it.” Rep. Doris Matsui, D-Calif, said the Obama proposals will “allow for businesses to grow faster, students to learn more, and our public safety to be enhanced."

Any proposal “must be cost-efficient about how we go about it and be realistic in our expectations of what taxpayers can afford,” House Communications Subcommittee Chairman Greg Walden, R-Ore., said Thursday during a hearing on broadband stimulus oversight. “In pursuit of the goal of increasing the deployment of wireless broadband to the unserved areas of rural America, it will be important to remember the colloquial definition of ‘insanity': repeating the same actions and expecting different results."

The announcement is “generally positive for the broad wireless industry” including the major wireless carriers and equipment makers, Stifel Nicolaus said. “It could raise some concerns for rural wireline and cable providers that could face further wireless broadband competition, though some money would also be targeted for rural wired broadband.” MF Global analyst Paul Gallant said the announcement builds on Obama’s commitment in the State of the Union address to making certain that 98 percent of U.S. households have access to wireless broadband within five years. The fund is positive for wireless infrastructure companies in particular, as well as for Motorola Solutions, “the dominant supplier of handsets to public safety,” Gallant said.