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On Monday, President Obama backed plans by regulators to nearly double the spectrum available for wireless devices, paving the path to opportunity for wireless providers, wireless infrastructure companies and other technology giants.

More specifically, in the President’s memorandum, he ordered federal agencies to identify and free up nearly 500 megahertz of spectrum of private entities controlled by the government to be freed up, primarily for mobile broadband use, to answer the uptick in consumer demand for laptop computers and smartphones. Of the 500 megahertz the president wants to make available, 220 megahertz, or 44 percent, is controlled by federal agencies such as NASA, the Federal Aviation Administration and the military, which use it for various kinds of communications systems.

Although the spectrum proposal mirrors a plan unveiled by the Federal Communications Commission (FCC) earlier this year, the president’s endorsement will likely bolster the FCC’s proposal and could play a significant role in finalizing the proposal.

If holders of spectrum give up their current positions and support both the President and FCC, the following ETFs are likely to feel the benefits:

  • Broadband HOLDRs (NYSE:BDH), which boasts digital wireless communications giant Qualcomm (NASDAQ:QCOM) and wireless infrastructure companies Alcatel-Lucent (NYSE:ALU) and Tellabs Inc. (NASDAQ:TLAB) in its top holdings. BDH closed at $10.42 on Monday.
  • Technology Select Sector SPDR (NYSEARCA:XLK), which allocates 11.27% of its assets to Apple (NASDAQ:AAPL), 6.87% to AT&T (NYSE:T) and 2.67% to Qualcomm. As spectrum increases and becomes more readily available, the number of dropped calls will likely decrease and web connections on devices like the iPhone will likely become faster, benefiting both Apple and AT&T. XLK closed at $21.52 on Monday.
  • PowerShares Dynamic Networking (NYSEARCA:PXQ), which boasts infrastructure software giant VMware Inc. (NYSE:VMW) and broadband communications company Broadcom Corporation (NASDAQ:BRCM) as its top holdings. PXQ closed at $19.36 on Monday.

Although an opportunity seems to exist in these ETFs, it is important to be mindful that the current holders of spectrum are likely to not give up their spectrum without a fight, which could put a damper on returns. To help mitigate the effects of this, the use of an exit strategy which idenitifies specific price points at which an upward trend could come to an end is of importance.

According to the latest data, such price points are as follows: BDH at $10.36; XLK at $21.02; PXQ at $18.84. These price points change on a daily basis and are reflective of market conditions and volatility.

Disclosure: Long XLK

Source: Three Tech ETFs to Play Obama's Spectrum Stance