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FCC Moves on Spectrum Draw New Attention to Washington

Few issues have technology and telecommunications companies in rapt attention and at the mercy of the federal government like spectrum policy.

Those companies are watching closely as the Federal Communications Commission appears to be working to covert much-coveted radio waves used by over-the-air television broadcaster into wireless broadband spectrum to feed the hungry masses of gadget-obsessed Americans.

It's where policy, potential fortunes and technological innovation collide in Washington, and the FCC's recent moves are expected to spur a race for what is estimated to be $63 billion worth of spectrum for mobile high-speed Internet, according to a study by the Consumer Electronics Association. Wireless carriers spend more than $20 billion a year combined to upgrade their networks, according to wireless industry trade group CTIA. CTIA has stepped up a lobbying offensive to get the FCC to bring more commercial spectrum into the market.

"Last week, a big new issue reached critical mass -- the prospect of using some local TV airwaves for wireless broadband," said Paul Gallant, a senior vice president of research at Concept Capital. All telecom and tech companies "will get involved because 200 MHz of prime spectrum isn't up for grabs every day."

FCC Chairman Julius Genachowski has called spectrum the oxygen of the wireless networks, and promised to bring more spectrum into their hands so they can develop faster and better services. In a previous post, an FCC official explained that the U.S. only has about 50 MHz of spectrum available for the next generation of iPhones, netbooks, and wireless laptops. The New York Times wrote last September about how capacity problems for some smartphone users portend bigger trouble for spectrum-hungry network carriers down the road as more people use their mobile phones to do things they previously only did on their desktop computers.

The FCC's push has few critics. Consumer groups, wireless service providers, equipment manufacturers, educators and President Obama have called for the need.

Except for television broadcasters. Hundreds of local stations, such as King-TV in Seattle and CW21 in Birmingham, are sitting on the valuable airwaves and want to keep spectrum for their viewers who rely on over-the-air television. There are about 10 million of those viewers.

Analysts say the agency appears to be working out an agreement with broadcasters to share revenues from the licensing or auction of that spectrum. The FCC would also allow broadcasters to keep enough spectrum for over-the-air programs, analysts said.

"Spectrum policy is closely tied to economic growth," Gallant said.

Rebecca Arbogast, head of technology policy research at Stifel Nicholaus, wrote in a note that the FCC would likely include a plan for spectrum in a plan due next February to bring broadband Internet to all U.S. homes and businesses. And that plan would have to go through Congress.

"Broadcast spectrum would likely require legislation, and we expect there will be broadcast spectrum fatigue after the completion of the lengthy digital TV transition," Arbogast said. "But the broadcast spectrum is sufficiently attractive in several regards that we doubt that will be the end of the matter."

By Cecilia Kang  |  November 3, 2009; 9:30 AM ET
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