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The Obama Administration is Spending Over $400 Million on New Wireless Tech — Here's Who Benefits


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On the heels of a Federal Communications Commission (FCC) vote to open up additional bands for 5G wireless use, the Obama Administration recently announced a $435 million initiative to expand the new wireless standard, along with other wireless technologies. 

5G is the next installment of mobile wireless technology, and will offer speeds much faster than the current 4G LTE networks -- but there still isn't a clear definition of 5G, and standards for the tech have yet to be set.

But the Administration is specifically setting aside $85 million for advanced wireless testing platforms, and an additional $350 million in academic research for the platforms. The press release called for a "city-scale" testing of the next-generation wireless technologies, which could be used to provide faster download speeds for consumers, enhanced sensors for first responders, and public access to gigabit download speeds in public areas, along with a myriad of other uses. 

The White House press release said next-generation wireless technologies could bring smartphone and download speeds up to 100 times faster than current 4G speeds.

The government's recent interest in 5G and other wireless technologies could be good news for Verizon Communications (NYSE: VZ) and AT&T (NYSE: T), which have both been ramping up their 5G initiatives.

What the companies are doing in 5G 

Verizon was the first of the U.S. wireless carriers to jump into 5G wireless testing, and AT&T soon followed. 

Verizon has already tested the technology, and was able to achieve speeds of 10 Gbps, 10 times faster than Google's ultra-fast Fiber network.

Verizon says it'll have a limited commercial rollout of 5G some time next year, with a bigger launch coming some time in 2020. Verizon's CEO, Lowell McAdam, has also said that he doesn't see reason why his company wouldn't bring a fixed 5G wireless connection into homes as well, which could eventually replace traditional cable internet connections.

It's the fixed 5G connections like this that are likely to spur growth for AT&T. The company's CTO, Krish Prabhu, has said that most of technology related to 5G (like home Internet through via 5G wireless) will start with providing 5G fixed connections over the next few years.

AT&T was hesitant to talk about 5G technologies as late as this past February because standardization hasn't been set, but the carrier was listed on the Obama Administration's list of 20 technology and telecom companies backing the recent government initiative. 

Why Verizon is likely to benefit

5G is shaping up to be a major market for all wireless carriers. Juniper Research estimates that global 5G service revenue will reach $65 billion by 2025, which would be just 7% of total service revenue for that year. 

Verizon is still benefiting from its early adoption of 4G wireless, and still ranks as the top overall performing network according to RootMetrics. The carrier's recent 5G initiatives are already ahead of those of its competitors, and I think this initial jump start, along with its dominant position in the number of wireless customers, gives the carrier the upper hand in 5G.

With the government now investing in 5G technologies, investors can bet that Verizon will start focusing even more of its attention on its future 5G plans.

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Chris Neiger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Verizon Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.