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  (Source: Comsoff)

Barack Obama has finally unveiled hard numbers and a plan of action for his call to expand wireless and broadband access to Americans who don't currently have it.  (Source: Majordomo)

Among the targets of increased broadband coverage will be poor rural farming regions across the country. Many of these regions currently have no broadband or 3G cell phone service.  (Source: Timberside Farms)
Inside Uncle Sam's magical self-funding internet dream

After much talk, U.S. President Barack Obama has finally delivered a concrete plan for how he will fund his plan for government-funded internet expansion.  The only thing is the published details [press release] concerning the plan jump all over the place.  But never fear, we're here to break it down for you, exactly where the Obama administration (claims) the money for Nation wireless and broadband is coming from and where it's supposed to be going to (and when).

I. Time Frame

First the time frame -- according to the release, the National broadband plan will be executed over the next 10 years, with much of its success criteria targeting improvements at the five year mark.

II. Funding

(This gets rather long... there's a quick cheat sheet at the end)

Funding for the initiative begins with the auction of 500 MHz of wireless spectrum over the next decade.  That measure is supposed to raise $27.8B USD in today's money.  Presumably this figure is after broadcasters' cut from incentives auctions (more on that in a bit), but the release wasn't exactly clear in this regard.

The National Telecommunications and Information Administration (NTIA) has already found 115 MHz of unused government spectrum to put towards the auction (hopefully this isn't a case like when the U.S. accidentally sold the spectrum it used for B-2 Stealth Bomber communications).  The NTIA is currently evaluating another possibly auctionable 95 MHz of spectrum.  That would bump the total to 210 MHz.  And the NTIA thinks it may be able to squeeze out a few more small chunks of spectrum by having government networks make more efficient and full use of their allotted spectrum.

President Obama hopes to get the remaining 250 to 300 MHz of spectrum via incentive auctions for broadcast TV companies who are sitting on unused spectrum.  The U.S. Federal Communications Commission does not have the power to hold these auctions.  In order to hold the divided Congress will have to approve of the plan.  

Under the plan, most of the collected spectrum would be sold to companies like Verizon Wireless or AT&T, while a small amount would be reserved for unlicensed use. To "spur innovation" $3B USD of the auction proceeds would be funneled to research grants for "emerging wireless technologies and applications".  This fund would be dubbed the Wireless Innovation (WIN).

The next source of funding would come via a revamping of the Universal Services Fund (USF).  That fund currently pours $4.3B USD into the landlines.  Under the President's plan, that funding would be phased out and replaced with support for funding broadband expansion and services in rural and low-income areas.  That funding could provide as much as $30-40B USD over the next decade, depending on how fast landline subsidies are turned off. 

Under the proposal a "one-time investment" of $5B USD would also be added to the pool.  This investment would go towards expanding rural 4G wireless coverage.

President Obama is also calling for $10.7B USD, including $500M USD from the WIN fund, to develop a modern public safety network to inform the public in the event of a terrorist attack, national disaster, etc.  Of that funding $3.2B USD would go towards reallocating the D-Block of spectrum, which is currently reserved for emergency communications.  Under the plan their might be auctions to telecoms, if those telecoms are willing to work to fund and support coexisting emergency broadcast systems on their chunk of purchased D-Block spectrum.  

In total $7B USD would go towards directly deploying the network.  And the $500M USD from the WIN fund would go towards research and development of new public safety broadcast technologies.

In short, this aspect of the funding would necessitate $10.2B USD on top of the previous funding.

The remaining $9.6B USD from the auction would be put to use cutting a chunk out of the growing deficit.

The follow "cheat sheet" sums up the plan:

+/- $25-30B USD
 (USF transfer -- no more or less funding than current)
+$27.8B USD (auction proceeds, after partners' "cut")
- $ 5.0B USD (4G deployment one time expense)
- $ 3.0B USD (WIN fund)
- $10.2B USD (Public safety network)
$9.6B USD (leftover funding; used to cut deficit)

III. What America Gets Out of the Plan

According to President Obama, $5B USD of the funding will be used to expand wireless coverage from 95 percent of Americans to 98 percent of Americans.  Most of these 3 percent live in impoverished or remote areas that don't make sense for the profit-driven telecoms to come to.  That said, these regions often perform vital functions to our nation's economy like food-growing.

The additional 3 percent of Americans equates to roughly 9.2 million people.  That figure is substantially more sedate than the previous promise by the FCC and Obama administration to cover 100 million people with 100 Mbps internet.  The additional coverage will all be high-quality 4G networks. (e.g. LTE/WiMAX).

The benefits of the public safety network are obvious.  The government will be able to prevent some of the loss of life and property that occurred in events like Hurricane Katrina.  And the public will be less likely to endure the fear and uncertainty that it did on the infamous 9/11 attacks in 2001.

The transferred $4.3B USD a year in USF funding will help deploy broadband to many other rural Americans, without further expanding the budget.

And the WIN fund will likely go a long ways to support research at universities and wireless startups across the country.

A final upside that must be considered is the positive effects of auction off the 4G spectrum.  While 500 MHz isn't going to radical alter how we consume wireless data, it will go a long way towards relieving congestion and delivering faster service.  In fact, that much spectrum would nearly double the amount currently available to the wireless industry.

The Obama administration claims that, at the end of the day, broadband and high-speed wireless access will spur new business development in rural areas and help Americans enjoy a better standard of living.  These seem like good things and could lead to an increase in the GDP and, in turn, government tax revenues.

IV. Analysis -- Super-Star or Fantastic Flop?  The Outlook for the Plan

So what's the verdict on the plan as a whole?

Probably the best aspect of it is that if it sticks to its promises, it will actually cut federal spending, rather than increase it.  And the key parts of the plan will largely be executed by private sector, which will please proponents of the free market.

Also, it's hard to argue that the government should take no action to try to expand wireless and broadband availability.  Much like high-speed rail, the U.S.'s competitors are spending to expand this infrastructure, and if the U.S. doesn't keep up, it risks becoming a second-class power.  And the private sector, due its focus on profits, has expressed little interest in preventing this from happening.  So at the end of the day the government has to step in, but the questions are "in what way?" and "how much?"

The big problem with the plan is that it is perhaps overly optimistic.  The $10B USD could cover 9.2 million Americans with 4G, if it was applied very efficiently.  However, government efforts, including those of the Obama administration (and its predecessor the Bush administration) seldom showcase such fiscal responsibility.  

In all likelihood the plan will end up either costing more than the Obama administration's optimistic figure, or it will deliver less results.  Either way, people won't be happy.

In other words, this plan is good, but it's not great.  It's a concrete vision, but if we've learned anything from history it's an overly optimistic one.  In the end "yes we can" will likely become, "well we did -- sort of".  The effort will help the U.S. keep from falling behind in the world tech race, but will it be enough?  It's hard to say.  And it is equally hard to predict what the reaction across the political spectrum will be to Obama's vision.

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Back on this topic again?
By Expunged on 2/10/2011 11:09:07 PM , Rating: 5
Wow, apparently nobody in the federal government understands that this is absurd in a multitude of ways. Every time this comes up I bring up these points, a new post emerges and I feel I have to cover it again to inform people..

The spectrum they are selling is absolutely crap for broadband. Wideband antennas at these frequencies aren't practical, they have far too much reflected power when you deviate more than 10 MHz from the designed frequency. This means you have a 20 MHz window MAXIMUM, at the LTE theoretical 16.32 bits per Hz that's 320 Mbits MAX THEORETICAL. Now we start doing time division and etc and we're down to a considerably lower number. Not to mention an antenna with any kind of gain at these frequencies is massive. So you either have a massive antenna or a high powered transmitter because to maintain the signal to noise ratios required to get even close to the practical, not the theoretical, throughput you won't reach very far from the tower.

Let's talk practical now, you'll see more like 1 bit per Hz on broadcast systems after time division, low signal levels, interference, etc. Most licensed microwave backhauls don't have more than 300 Mbits throughput utilizing a totally clear channel in a point to point situation, 40 MHz of spectrum, 6'+ dishes and 128 or 256 QAM modulation. So the technology isn't there to even backhaul the data much less broadcast it at the rates advertised, and they aren't going to put fiber to towers in the middle of nowhere. Unless the FCC is going to magically manufacture more 6 and 11 GHz spectrum so you can run quad backhauls from cell tower to cell tower until you can reach a point that has fiber this is all meaningless. In rural areas it may be 3-4 hops via microwave backhaul before you reach a site that even has copper, much less fiber, and BTW, the channelized T1's that are carrying voice get priority over data. Now lets compound that with the fact that AT&T, Verizon, and the works oversell their network astronomically and do you really think they are going to deliver 100 Mbits to the middle of nowhere when they can't deliver 10 Mbits to NYC?

We're also back to the concept that the government somehow owns the spectrum. The FCC was charged with administering spectrum, not selling it, they were to license it on a non-interfering basis, not sell it, then ask for it back, and then sell it again. The FCC will sell this spectrum to AT&T and Verizon since they are the two big boys that can bid the most, then when they don't use it as the FCC had in mind they will want it back or cry about it. How about you LICENSE it to them and require that they maintain utilization and good standing. Just like IP addresses, you have to demonstrate usage of them or ARIN won't give you more.

Next we come out with this edict today that they will use LTE or WiMax when both technologies will soon be antiquated. 100 Mbits today will be nothing in 2021 when this is supposedly completed and by that time LTE and WiMax will be like analog bag phones. It was less than 10 years ago that the Nokia 6160 was state of the art, I mean you had a cell phone that actually when in your pocket instead of the seat of your car. Instead of actually helping out the private sector where very mom and pop can start an ISP and drive competition (unlicensed), we sell spectrum to a few massive companies and save a little bit of the spectrum for unlicensed use.

Small ISP's either deliver speed, reliability and a fair price or they are out of business. On the other hand large ISP's can step into an area and become exclusive, deliver whatever they feel like and the people get screwed. There are plenty of WISPs out there right now trying to scrap for customers in rural areas, the largest town around here is 5000 people and there are four WISPs all delivering speeds better than the local telco's DSL. Of course the telco has a lock on the market whereas the WISPs are privately owned and have to compete against each other and the big phone company.

Next let's address the cost of this whole deal, if we believe the numbers thrown around here, we the people are going to drop a "one time" investment of $5B for these 9.2 million Americans. Wait, that works out to $543 and some change per person. I live rural, I am 30 miles from town, last telephone on the exchange, last meter on the power company but I don't expect anyone to step in and spend $550 of their hard earned cash in taxes to give me internet. Next we are going to "modernize" our public safety network, but wait, we spent how many billion dollars to do that less than 10 years ago with 9/11, homeland security, etc where we went to all 800 MHz radios for local police, fire, etc. That was all federal funding to bring our public safety systems up to what was at that time "state of the art".

So is this really one time spending or are we going to do this again in 10 years when we need some more "modernized" equipment? What about the poor saps that get their 100 Mbits of LTE (which won't deliver that by the way) in 2021 when gigabit is the standard. That's like giving someone a 512K DSL today and saying we brought you into the modern age with "broadband". Once again, a small privately owned company will mature as fast as the customers demand or it will be out of business whereas a large company or the government move at a snail's pace wasting money all the way to the end product.

The one part of this entire thing I can get on board with is the USF portion. The problem is they aren't doing away with the USF, they are just reallocating it. The USF program is such a joke it isn't even funny, the abuse of the E-Rates portion is absurd and the funding for rural telephones has long since outlived it's usefulness. Even if 98% of America doesn't have broadband 98% does have cell phones so why are we still spending $1000's per year to support land lines like the one I have that is over 50 miles of copper from the CO and has three people on the last 25 miles of the line. We all only pay our phone bill and keep the service because we know if we dropped off they would abandon the line and it would never be usable again within a year. If I were paying the full cost of the line though it would be gone in a heart beat, get rid of the USF and get rid of land lines like this one, it rarely works for voice anyway and won't even run 9600 baud on a modem. Nobody should be required to take money out of their pocket to deliver a phone line to my house in the middle of nowhere when there are other options.

I'll sum this up in one paragraph. The spectrum will be very poor for broadband applications so quit pushing it so hard. Restructure the FCC to do what it was charged with doing, administer wired and wireless communications, not buy, sell, and trade spectrum. Quit setting standards today that are target for 10 years in the future when you're talking about technology, I mean 640K was good enough for everyone right? The money being spent on this could go to people living in holes without cell coverage to put up a tower or a repeater to get service to them. Give small WISPs an incentive to put up microsites that cover 5-10 houses that are otherwise unserviced instead of dumping billions into government bureaucracy and huge companies. Now for the one sentence summary version: Government isn't the answer.

"Nowadays you can buy a CPU cheaper than the CPU fan." -- Unnamed AMD executive

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