Internet-savvy Obama makes telecom industry wary

WASHINGTON — President-elect Obama famously made the Web a pillar of his campaign, so it is not surprising that the man called the nation's first "wired" president has championed the idea of an open Internet.

And that is what Sprint Nextel Chief Executive Dan Hesse said recently "should scare" the telecom industry the most.

Republican lawmakers and technology regulators have fought the idea of an open Internet, or net neutrality, calling it a "solution in search of a problem."

But it is expected that Obama will make net neutrality and access to broadband in rural and poor areas a key part of his agenda to close economic divides and help spur job creation.

The task of translating net neutrality — the notion put forth by academics that network operators should be banned from slowing, blocking or degrading Internet content and technologies — could likely fall under the Federal Communications Commission, business leaders and analysts said.

The FCC has been criticized by consumer groups for trailing technology changes by grappling with updating landline programs and falling short on consumer protections and rules for wireless operators.

Under the Obama administration, however, many high-tech leaders and analysts say the agency first formed to hand out broadcast licenses will be more important than ever.

"There is going to be a sea change. Technology has been primarily ignored by the Bush administration but Obama from the beginning made it a central part of his push for change," said Maura Corbett, a partner at Qorvis, a tech public-relations firm. "He understands that technology has a multiplier effect on the economy and that is something we've never needed more right now."

The telecom industry has become more consolidated, with giants AT&T, Verizon and Comcast dominating Internet, landline phone, wireless services.

The U.S. has dropped to 15th place in international ranking for broadband access, according to the Organization for Economic Cooperation and Development.

Obama's technology and innovation plan, put forth in the campaign, addressed providing broadband access to underserved areas. FCC Chairman Kevin Martin has tried to do that by reforming a $7 billion federal program for phone lines so that it would also apply to broadband service.

Yet making changes to the program, which has vocal critics in both parties, has been difficult, analysts said.

"It's the elephant in the room," said Joe Farren, spokesman for CTIA, a wireless trade group. "This is an intersection of the old and new but there may be a unique opportunity to change the fund and refocus it on providing consumers with what they want and need — wireless and broadband."

Net neutrality

On net neutrality, there is pressure from Congress and the FCC to address the issue.

Richard Wiley, a partner at law firm Wiley Rein, said in a panel at a conference Thursday that net-neutrality regulation could include additional guidelines on broadband management that would ban discrimination against technologies that transfer Web content.

The FCC punished Comcast last summer for deliberately slowing the transfer of video files with software application BitTorrent, an order that the cable operator has appealed in court.

Ben Scott, the policy director of public-interest group Free Press, who was also on the panel, said the broadband principles need to include wireless-service providers.

One question is how quickly an Obama administration might tackle these issues and, if as expected, how soon he might replace Martin.

Much of Obama's focus has so far been centered on filling key Cabinet positions and seats at the Treasury and Justice Department, analysts said.

That lends a level of unpredictability about who might lead the FCC, the nation's rule-making body for broadcasters, cable providers and landline, wireless phone and broadband providers.

Tech experts

Obama's campaign advisers included many tech veterans such as Eric Schmidt, chief executive of Google, and former FCC chairmen Reed Hundt and Bill Kennard.

"They've got this very deep bench of people to draw from and a really good group of people doing campaigning and policy advice and fundraising from the telecom world," said Rebecca Arbogast, an analyst at Stifel Nicolaus, an investment firm.