Mobile-phone companies led by AT&T Inc. and Verizon Wireless may be the biggest winners from a U.S. plan for more high-speed Internet service.

The two largest wireless companies, as well as No. 3 and No. 4 providers Sprint Nextel Corp. and Deutsche-Telekom AG’s T- Mobile unit, would benefit from proposals to make more airwaves available, analysts said. Builders of communications towers, those laying lines to the new towers, and Internet companies reaping more traffic also may profit.

The Federal Communications Commission’s plan to expand high-speed Internet service, or broadband, is due to Congress by March 17. The agency released a summary today, urging industry and government action. Adding airways for mobile use of the Web will be “a core goal,” FCC Chairman Julius Genachowski said in a speech last month.

“More spectrum from the FCC can only be good” for wireless carriers, Paul Gallant, a Washington-based analyst with Concept Capital’s Washington Research Group, said in an interview. “It’s hard to tell which mobile phone companies will benefit most, since it’s hard to predict the outcome of auctions that will be used to allocate newly available airwaves.”

The agency aims to increase the share of those using broadband at home to 90 percent, from about 65 percent today, and having 100 million households with connections of 100 megabits per second, the FCC said. The median speed for broadband customers now connected by fiber or cable is 5 megabits to 6 megabits per second, the FCC said in the plan.

Fastest Network Goal

The roadmap lays out a way for government and industry to “rise to our era’s infrastructure challenge,” according to the FCC summary. Goals include “the fastest and most extensive wireless networks” in the world, according to the summary.

“When it comes to broadband, we have fallen behind,” Genachowski said in a Feb. 16 speech. “No one can argue that we are leading the world.” One survey ranks the U.S. 16th in the world, and more than 20 nations already have broadband plans, Genechowski said.

The broadband plan will set broad policy rather than impose new regulations, Genachowski said in an interview March 2. He said the document will spawn “a significant number of rulemakings,” the months-long proceedings the FCC uses to establish policy.

The FCC has said it will set a goal of providing 500 megahertz of airwaves for use by mobile devices. That would roughly double the spectrum available in the U.S., Amy Storey, spokeswoman for CTIA-the Wireless Association, a Washington- based trade group, said in an interview.

Relinquish Spectrum

The plan will recommend that broadcasters be allowed to “voluntarily” relinquish unused spectrum in return for a share in proceeds from auctioning the airwaves’ use, Genachowski said in a Feb. 24 speech.

Congress will be asked to authorize the sales, according to the plan distributed by the agency today. If that approach fails to free enough airwaves, the FCC should consider having broadcasters “on a voluntary or involuntary basis” change how their transmission towers work, or the agency might require channel sharing, the plan said.

The mobile-phone industry, equipment suppliers, operating- system developers and content providers have endorsed the plan.

“Spectrum is the lifeblood of our ecosystem,” companies including AT&T, Alcatel-Lucent, Google Inc., Microsoft Corp. and Qualcomm Inc. said in a March 10 letter to Genachowski. “You have proposed to lay a spectrum foundation, and we commend you.”

IPhone Demand

Users of advanced phones such as Apple Inc.’s iPhone are clogging available bandwidth as they grow in numbers and tap into online games, video and Web searches.

AT&T, which has exclusive rights to sell the iPhone in the U.S., has dealt with “phenomenal” increases in mobile Web use that “cannot be sustained without bold action to address the looming spectrum crunch,” AT&T Senior Executive Vice President Jim Cicconi wrote in a Feb. 26 blog posting. He called Genachowski’s plans encouraging.

Companies that sell to wireless providers will be among “the clear winners,” said Andrew Lipman, a Washington-based attorney with Bingham McCutchen LLP, in an interview. He identified Cisco Systems Inc., the largest maker of networking equipment, and fiber and cable maker Corning Inc. as among potential beneficiaries.

“You’ll have more people doing searches so that should be a benefit” to Google, Microsoft, Yahoo! Inc. and others, Lipman said.

Mobile-Phone Towers

More mobile-phone towers are likely to be built, benefiting companies such as American Tower Corp. and Crown Castle International Corp., according to Gallant.

The call for broadcasters to give up airwaves in return for cash hasn’t been greeted with enthusiasm by the station owners even after Genachowski said it would be voluntary.

“We’re hopeful that doesn’t suddenly become ‘voluntary’ with a gun to our heads,” Dennis Wharton, spokesman for the Washington-based National Association of Broadcasters, said in an interview.

The broadband plan will also call for replacing a $4.6 billion fund that helps pay for rural telephone service with one to subsidize broadband connections, FCC officials said March 5.

That change could benefit AT&T and Verizon, which now pay more into the fund than they receive, Rebecca Arbogast, a Washington-based analyst with Stifel, Nicolaus and Co., said in an interview.

Wholesale Rate Review

The draft plan also calls for the FCC to review wholesale rates charged by companies such as AT&T, Verizon and Qwest Communications International Inc. for use of high-capacity lines used for voice and data, said a person who saw the document and asked not to be identified in advance of its release.

Renters of the high-capacity lines include the wireless companies, which use them to carry calls from the base of towers, and companies such as Google, Amazon Inc. and EBay Inc., Gallant said. Sprint and T-Mobile have told the agency they pay “inflated” rates to use the lines.

The plan is also likely to recommend that the FCC examine whether to let smaller telecommunications companies such as Cbeyond Inc., TW Telecom Inc. and Paetec Holding Corp. rent fast fiber lines from AT&T and Verizon, which have opposed the idea, Gallant said.

Cbeyond told the agency such a change would help it connect more businesses to broadband. Genachowski said in a March 4 speech the plan would recommend ways “to empower small businesses across America.”

source:Bloomberg