The next gold rush: The frequency boom

Imagine if you could travel back in time to the late 1940s and acquire a federal license for a frequency for the new-fangled TV broadcasting systems.

Back then you would have paid a whopping $22,500 for a license to broadcast TV to all of the New York metropolitan area for 10 years, renewable on the cheap. If you bought a national license, it would have been $82,000.

Although that was real money back then (about the equivalent of $18mil and $65mil today), those licenses would have made you the equal of NBC, ABC and CBS. You’d be a wealthy person today if you had taken shares in CBS at the time – a time when it was all speculation and new “untested� entertainment. Lucy was yet to come.

Turn the clock forward. The Federal Communications Commission has just announced that they want every home in America to be hooked up to the Internet, properly hooked up, by 2020, just 10 years away. It’s 1948 all over again.

That’s 100 million people needing to be hooked up who are not already, and it means changing the connection for every house, business and building in America.

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What do they mean by hooked up? As radio was to TV, so the new connections will be to today’s dial-up. The new speeds will be 100 megabits per second (100Mbps).

The best you are getting if you have cable is about 3 or 4Mbps. At 100 Mbps, you will get HD TV on a 100-inch screen, perfect concert quality sound and no delay. And that is just the beginning. As black-and-white TV was to the 1950s, so what you think you know about Internet programming is about to change. Just as B&W TV changed to “glorious living color,� then HD and now 3-D, once each house in America is hooked up to 100Mbps, the true innovation will begin. And it will be a two-way street; your TV will become your window onto the rest of the world and your pathway to contribute to the rest of the world.

“Broadband for every American is not too ambitious a plan and it is absolutely necessary,� former FCC chairman Reed Hundt told BBC News. “The consequences of not succeeding are heartbreaking. Every nation needs a common medium to gather around.�

The FCC made an opening statement to Congress that is pretty obvious: “Broadband is a foundation for economic growth, job creation, global competitiveness and a better way of life. It is changing how we educate children, deliver healthcare, manage energy, ensure public safety, engage government, and access, organize and disseminate knowledge.�

And then they went on to drop the economic bombshell that has existing communications’ companies scrambling for a larger piece of the pie (especially before you, the small investor, gets a whiff of the profit to be made).

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The FCC will introduce plans to:

• Allocate (note: sell) spectrum to allow network updates for wireless broadband

• Make sure every child is digitally literate before they leave school (which means a massive input into school infrastructure, computers, hook-ups and training – the equivalent of the GI Bill)

• Make sure 90 percent of America is hooked up within five years to present standards, and aim for 100 percent at the 100Mbps by 2020

• Use digital switch-over fund to bring cheap broadband to rural areas

• Provide one gigabit broadband to schools, hospitals and military installations starting from now

• Encourage greater competition among providers to make prices cheaper and deals easier to understand (as if...)

Estimates to implement the plan have been put at $350 billion. Part of that cost will be private funding by commercial companies, some will be tax dollars at work.

“Who pays and how much is the big fight ahead,� said technology industry analyst Rob Enderle of the Enderle Group. “The devil is in the detail and right now it’s all fairy wings and wishes. The Republicans are going to fight anything that is excessively expensive....�

It is known that the FCC will auction off some of the old TV spectrum of frequencies (about 500 megahertz)  to help pay for all this. The estimate for those licenses (Wi-Fi broadband and cell phone frequencies for 4G and higher phones) is estimated to be in excess of $200 billion over 10 years.

And Obama has set aside about $7 billion from the stimulus money to get this started. Where will the rest come from? Some will be economic tax dollar investment (just like roads and air traffic control), but in the end, most will be fees paid by the consumer (like cable connection fees and tax on gasoline).

Well, while some have called this FCC plan a “pie-in-the-sky plan,� FCC chairman Julius Genachowski has the last word (for now), “It’s an action plan, and action is necessary to meet the challenges of global competitiveness, and harness the power of broadband to help address so many vital national issues.�

A former Amenia Union resident, Peter Riva now lives in New Mexico.