Original URL: http://www.theregister.co.uk/2004/04/30/bush_kerry_broadband/

Bush and Kerry scrap over wireless broadband

Key election issue

By Wireless Watch

Posted in Broadband, 30th April 2004 11:30 GMT

As broadband access becomes an election issue in the US, president George W Bush has placed wireless at the centre of his policy. In a high profile speech this week, he claimed his Spectrum Policy Initiative would be a "keystone for future technological innovation" and called for tax-free broadband access.

The speech focused on the potential of broadband wireless, and increasing competition from alternative operators, to "spur a new generation of American innovation". Key to this is the plan to auction 90MHz of spectrum, to be taken from three government departments - Defense, Transportation and Homeland Defense - to wireless carriers, nearly doubling the amount of spectrum available for Wi-Fi and WiMAX.

Bush's sudden interest in broadband wireless is a hardly subtle election tactic. Although the current Federal Communications Commission has been enlightened in its approach to fostering new services and competition, the president himself has made no reference to broadband Internet for a full two years. Telecoms and electronics executives have put heavy pressure on the Bush publicly to support broadband in order to boost the economy but, despite hopes that he would do this in his 2003 State of the Union address, he remained silent. "It's probably an election year ploy," said Van Cullens, CEO of broadband equipment maker Westell Technologies and a prominent Washington lobbyist on behalf of universal Internet. "But I'll take it."

Flaws in the Bush stance:

Bush has not always been so friendly to broadband wireless interests. Critical to current US trials of broadband wireless technologies such as WiMAX are grants from the US Rural Internet Access Authority, whose remit is to bring broadband access to the most remote areas of the country, and which is increasingly looking to WiMAX as its best option.

However, Bush has long eyed these grants as budgetary fat. While his government plans to award $11.3m in broadband grants to 34 rural communities in 20 states by mid-2004, to en-able them to provide residents with computers and Internet access, the proposed 2004 budget calls for cutting the $20m total rural broadband grant program to $2m in 2004-5. The government argues that rural subsidies deter operators from investing in rural areas, and that a freer market would speed the adoption of 802.16a.

As the market matures, there is a case that the role of public grants may decline as broadband wireless, for the first time, gains the potential to support free market operators without subsidies, because of the lower cost of equipment, higher demand for broadband data (and possibly voice) services and the avail-ability of commodity silicon.

For instance, Qwest, which sold its rural telephone business some year ago, is considering launching a service for the North West combining WiMAX BWA with satellite for TV and back-haul.

If viable operators are seeing an economic reason to invest in such services, the need for subsidies is much reduced, except in extremely remote regions or hostile terrain, argues the anti-grants lobby. However, with the US still only tenth in the world in terms of broadband penetration, it seems premature to make that leap now.

Another flaw in the new found support for broadband wireless is a lack of clear direction on unlicensed spectrum, which provide cheap entry for innovative new operators. These options remain limited in the US. Although the 3.5GHz band is open - though overcrowded - much of the unlicensed 5.4GHz band was given to Boeing by the FCC for radar.

Bush did not mention specific frequencies covered in his spectrum plan. The most obvious would be those around 700MHz, which were previously reserved for UHF television broadcasting - the upper and lower portions of this band have already been earmarked for wireless use. Those broadcasters must vacate the bands by 2006, leaving them free for broadband wire-less - although there are doubts whether this deadline will hold or whether auctions will be postponed.

Although channels in this band are very narrow at 6MHz, they offer strong penetration of obstacles and foliage and good in-door coverage. One company offering equipment in this band is Vyyo, which will migrate its proprietary gear to WiMAX in the future. An early user is Polar Communications, which is delivering services in areas of Minnesota and North Dakota that have dense foliage, using the Vyyo system.

Another possible solution is for Bush to take his 90MHz from the licensed 2.6GHz MMDS band (ideal for WiMAX) and open that up, allowing unlicensed WiMAX operators to compete alongside MMDS spectrum holders such as Nextel and SBC.

Kerry on broadband:

Democratic presidential candidate John Kerry has also noted the election potential of broadband - much as the Clinton/Gore team did with the wired Internet in 1996. Kerry has referred to broad-band wireless in several speeches, claiming the growth of such new industries will spur economic growth while opening up Internet access even to rural populations.

Last Friday, Kerry was one signatory to a letter sent to the president criticising his broadband policy. As well as calling on Congress to ban taxes on wired or wireless broadband access, Bush committed to reducing the regulatory burden to encourage investment in wireless services, and to in-crease access to federal land for towers and to federal spectrum. "Simply stating a goal is not enough. Without aggressive and concrete action, we are concerned that the goal will not be met," the senators wrote. "The administration has not only undermined existing programs, it has not offered any positive alternatives. For example, we have supported tax credits for broadband deployment, but you have not included any comparable proposal in any of your budgets or tax-cut packages. Nor have you exercised vocal leadership on regulatory, tax or other issues relating to broadband."

As part of his presidential manifesto, Kerry says that "widespread, high speed broadband access could increase our national GDP by as much as $500bn annually by 2006", and he believes that wireless will be vital in this, and that more spectrum will be made available for 3G and other networks.

Kerry has other reasons to favour wireless expansion, since his largest campaign contributor is a telecoms lobbyist representing the CTIA, the industry association of wireless operators. According to research by the Center for Public Integrity and its report The Buying of the President 2004, Boston-based law and lobbying firm Mintz, Levin, Cohn, Ferris, Glovsky and Popeo has contributed $187,000 to various Kerry races, including his current presidential campaign, and Kerry's brother works there. Mintz, Levin lobbies on behalf of AT&T Wireless, XO and the CTIA and the Center claims this affects Kerry's policy on telecoms- related issues.

He and his wife also have substantial holdings in telecoms companies, estimated to be worth between $17.6m and $47.1m. Based on past behaviour, Kerry could be expected to favour the established cellular industry in terms of presidential policy on spectrum and to back acceleration of the spectrum auctioning process begun in 1994.

Whether the motivation is vote winning, keeping contributors sweet or raising federal funds through spectrum auctions, the net result is likely to be a rejuvenation of US wireless policy, which will be essential to the country's retaining its competitiveness. Long saddled with a backward broadband wireless infrastructure, the US could see the pragmatic requirements of a presidential race that is likely to be close fought providing a boost whose effects are felt long after November 2004.

Meanwhile, former FCC chairman Reed Hundt told a Senate Committee that broadband could be significantly advanced with-out major rewrites of telecoms regulations, simply by re-examining the digital television signal threshold figures that en-able television stations to hang on to UHF spectrum for analogue broadcast.

He also said Congress should ask the FCC to look at secondary use of broadcast spectrum in areas where it is underused and to issue an order asking that unlicensed devices be allowed to operate in television broadcast spectrum at locations and times when the spectrum isn't being used.

The FCC currently has an inquiry into secondary use in 700MHz bands and has high hopes of cognitive radios to stimulate unlicensed use of licensed bands, since these radios can intelligently avoid interfering with the incumbent's traffic. Hundt is on the board of several wireless companies, including Wi-Fi firm Pronto, and backs OFDM and beam forming technologies as alternatives to 3G for more rapidly expanding broadband services.

© Copyright 2004 Wireless Watch

Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.

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