You can read the story online here: Link to CNNMoney article.

November 05, 2008: 11:44 AM EST

WASHINGTON -(Dow Jones)- President-elect Barack Obama is a fan of technology, but the attention his administration gives telecommunications and high- technology issues will be overshadowed by his head-on confrontation of the global financial crisis and the war in Iraq.

"The incoming President of the United States this January will face the most difficult set of issues in terms of a nation's economic position...since of any president" since Franklin Delano Roosevelt, said Stifel Nicolaus analyst Blair Levin, who worked at the Federal Communications Commission under Democratic Chairman Reed Hundt and was an early supporter of Obama.

Obama is a firm believer in high-speed Internet as a tool of change, which could drive early action in his administration toward blanketing the country with broadband networks.

For example, he favors giving government subsidies to Internet service providers who build networks in hard-to-reach areas. The government currently only subsidizes phone service in rural areas. The idea of expanding eligibility for that money to Internet providers has garnered bipartisan support in recent months, which may make it easier for the administration and Congress to take steps in that direction.

Government funds are tight, but Levin said the cash shortage could work to Obama's advantage when pushing for Internet build-out. "The use of networks is often a cost savings," he said." One reason why the economics of the 1990s were so good was you had the fiscal leadership in the White House. Another was you had two very big things driving investment cycles: wireless and the Internet."

Obama favors more Internet regulation guaranteeing open access, a concept that sends shivers down the spines of large phone company executives. "The thing that scares the industry the most about a Democratic administration is regulating the one real shining star...what's really working really, really well, and that's the Internet," said Sprint Nextel Corp. (S) Chief Executive Dan Hesse before the election.

Hesse and others who oppose "net neutrality" -including phone giants AT&T Inc. (T) and Verizon Communications Inc. (VZ) - say putting restrictions on Internet service providers is dangerous because it thwarts innovation. Advocates for net neutrality, such as Google Inc. (GOOG), say openness rules are essential for tapping the Internet's full potential.

Industry observers believe Obama will push for net neutrality in small steps, largely because inquiries related to it are fact-based, rooted in how individual providers offer Internet service. The FCC, led by Republican Chairman Kevin Martin, took the first step this year when it cited Comcast Corp. (CMCSA) for throttling some large video-sharing files while it was managing its network.

Under the Obama administration, "net neutrality will begin to be expressed in more definitive terms," predicted Douglas Jarrett, an FCC attorney with the law firm Keller and Heckman. But, he added, "You can't fault the commission there for going on a case-by-case basis, because it is really new."

Obama's administration also is expected to pay closer attention to the consolidation of the media and subject merger proposals to harsher scrutiny. Those ideas, combined with open Internet rules, could offer early "kitchen table" wins in the administration, according to telecom attorney Bradley Gross of Becker and Poliakoff.

"He can appoint people to the FCC and say, 'Net neutrality. Working-class Americans, now you have access assured," Gross said. "Mergers and acquisitions get more scrutiny. That's a nice quick hit...You argue that small businesses win."

As with any government agency, it will take some time for Obama to appoint a new chairman of the FCC. Obama also could be calling on others to serve as FCC commissioners, particularly if outgoing chairman Martin decides to leave the agency.

Who Obama appoints as FCC chairman has been the subject of a Washington, D.C., parlor game for months. Many of his closest advisors have worked at the FCC and in the telecom industry, but most aren't openly campaigning for the spot.

"Sen. Obama has the benefit of an extraordinary bench of very smart, able, telecom tech people," said Levin, who is among those considered a possibility for an FCC appointment. All FCC commissioners must receive Senate confirmation.

Obama could tap one of the current Democratic FCC commissioners - Jonathan Adelstein or Michael Copps - to be chairman. Or he could ask one of those two to act as an interim chairman in January while conducting a more thorough search for a permanent FCC head.

-By Fawn Johnson, Dow Jones Newswires; 202-862-9263; fawn.johnson@dowjones.com