While sitting in an underground auditorium in Washington, D.C.’s Federal Triangle recently and listening to a visionary panel of policy wonks and geeks discuss the future of American communications, I was struck by how much Abraham Lincoln would have appreciated—and supported—the Federal Communications Commission’s new National Broadband Plan. The high-speed wired and wireless communications system it envisions will revolutionize the communication business and the fabric of American society on the order of magnitude that railroad and telegraph lines did in Lincoln’s day.

In 1862 President Lincoln signed the Pacific Railway Act, authorizing construction of the transcontinental railroad, which opened the West to immigrants and industry as hundreds of railroad towns sprouted up along the line. Ralph Waldo Emerson correctly imagined the power of the railroad as “a magician’s rod, in its power to evoke the sleeping energies of land and water.” And so too, the telegraph ushered in radical changes, rendering the cumbersome Pony Express obsolete for delivering long-distance information quickly. Lincoln enthusiastically would come to rely on “T-mail”—telegraph messages—to communicate frequently with his commanders in the field. Soon thereafter the cascading possibilities that the telegraph opened up would change government operations and, eventually, business and personal life. It was no coincidence that the railroads and telegraph lines followed the same routes into emerging territories.

Today the expanded communication system proposed by the FCC envisions new cybercommunities and jobs, echoing the creation of opportunities that arose in the towns alongside railroad rights-of-way and telegraph lines. Akin to developments in the late 19th century, the broadband evolution will encourage the creation of professions dedicated to expanding the value of the new infrastructure technologies. The FCC’s proposal, which calls for enhancing the telecommunications system and creating socially valuable applications, is formally entitled “Connecting America” (www.broadband.gov/download-plan). It promises to open up the airwaves and stimulate new systems for entertainment, business, health care, and education.

For decades the FCC and the U.S. Department of Commerce have acted as the traffic cops of the airwaves and wireline communications. The FCC regulates and sets policies for communications technologies, including use of the airwaves or “spectrum,” for services ranging from TV and radio broadcasting to wireless and mobile phones and the newest ventures into WiFi, WiMAX, and an alphabet soup of applications. Since the 1930s it has licensed access to the spectrum to keep various technologies from interfering with each other’s signals. TV and radio bandwidth has been allotted “for free” under a policy of public benefit stewardship. In recent years, as the demand for airwaves has grown from the explosive expansion of cell phones and other mobile devices, the FCC has managed the congressionally mandated auction of airwaves to telecommunications services, which contributed nearly $20 billion to the federal coffers in 2008.

So now the debate has begun about how broadband services should evolve and who should run them. The FCC’s plan offers an omnibus road map for new regulations and services. About half of its 376 pages outline more than three dozen proposed regulations that the FCC itself could implement to encourage and support broadband development. The rest of the report suggests strategies for expanding broadband services that would have to be adopted and funded by Congress, federal or state agencies, or the private sector. There is no specific timetable or budget, although the team that wrote the report speculates optimistically—some say unrealistically—about how many of their ideas might be implemented by 2020.

There’s a lot at stake in the ill-defined world of “broadband.” The term essentially describes how many bits of electronic data can flow through wires or airwaves and how fast they can move. As the digital age unfolds, the telecommunications industry has adopted ever faster standards—such as 256 kilobits (256,000 bits) per second (kbps), then 756 kbps, and more recently 10 megabits (10 million bits) per second (10 Mbps)—to serve the growing appetite for graphics and video with almost instantaneous delivery.

Cisco Systems recently predicted that, through 2013, Internet data traffic will grow at a 131 percent compound annual growth rate to a stunning two exabytes (one quintillion, or a billion billion, bytes) per month. Of that total, nearly two-thirds of the content will be video—ranging from business teleconferences, educational lessons, and medical consultations to entertainment such as streamed movies and YouTube videos.

With these faster speeds and larger capacities—akin to adding lanes or tracks as well as larger vehicles to a transportation system—comes the opportunity to expand the entire communications system, the core theme of the FCC’s plan. The agency’s chairman, Julius Genachowski, put out a call for a broadband goal of “100 squared”: 100 megabits per second to 100 million U.S. homes—basically 10 times faster than anything now generally available. Genachowski calls the plan a “once-in-a-generation transformation” and believes that the goal can be reached within a decade through public-private collaboration; independent financial analysts expect that it would cost a daunting $350 billion.

The FCC’s plan encompasses a “national purpose” checklist of applications to be built upon the broadband infrastructure—services ranging from public safety and homeland security to improved energy and environmental systems. It is laced with ideas for economic development and high-minded proposals, such as modernizing the delivery of government services to “enhance democratic processes and ensure that they are accessible to all Americans.”

A fully realized broadband system could change the economics of hundreds of services, generate entirely new ways to live, work, and entertain, and kindle entirely new entrepreneurial ventures and business opportunities. For example, health care via broadband networks—ranging from mobile monitoring of vital signs to digital health records—could shave 15 to 50 percent off today’s medical costs. For patients who require regular maintenance, a remote monitoring system could report blood pressure and heart, lung, and vascular system activity several times a day.

In education, broadband could give students the chance for customized learning plans that could be monitored by specialists. While such visions for distance learning have been bandied about for decades, a comprehensive broadband system would at least render them affordable.

Where energy and environment are concerned, broadband technology would provide the long-discussed “smart grid” system, which would enable households and utility companies to manage power consumption, avoid brownouts, and control costs. “Smart transportation” systems would not only improve fuel efficiency but also offer navigation and safety benefits.

The plan pays special attention to public safety and homeland security issues, including digital measures that would alert citizens to emergencies and disasters, as well as systems that would reduce cyberthreats to e-commerce and other Internet-based processes.

Manipulating broadband service as outlined in the FCC plan is as important but also as controversial as was all the deal making surrounding the early railroads. Unveiled in mid-March, the plan quickly triggered complaints about the role of government in supporting specific technologies and the companies that provide them. Inevitably, legacy providers—broadcasters among others, today’s equivalent to the riverboat operators of the 1850s—feel threatened by the landscape changes ahead.

Opposition to the technical as well as “national purpose” portions of the broadband plan is simmering throughout the economy. Protective factions—such as state licensing authorities or professional associations—may challenge broadband’s ability to let doctors or teachers practice their crafts across state lines. It’s about taking jobs away from local practitioners.

Another overriding concern is about “industrial policy.” Many foes see the National Broadband Plan as a federal blueprint to reinforce a business process, one that may particularly benefit incumbent communications supergiants such as Verizon, AT&T, Comcast, Google, and other corporate behemoths. Conspiracy theorists draw a dark analogy to the railroad finance debacles of the late 19th century, notably the Union Pacific Railroad and its Crédit Mobilier of America scandal, in which members of Congress were paid off to keep support funds flowing and to ensure that insiders could grab the best land along the railroad routes they selected.

Today’s process won’t offer such direct payoffs. But skeptics fret that the broadband plan prioritizes wireless spectrum, then orchestrates a “spectrum grab” to allot the airwaves to services blessed by the FCC. Hence the beneficiaries—wireless phone companies and mobile data providers—may wind up with preferred locations in the new “ecosystem,” much as friends of Crédit Mobilier got the best land near the tracks.

Supporters of the FCC’s vision wave off such implications of favoritism, emphasizing the nurturing atmosphere that will spur creative new businesses—the blooming of the next Amazon or WebMD—and foreseeing “ripple effects” of innovation and invention.

The eminent Harvard Business School historian Alfred Chandler Jr. has observed that railroad expansion enabled the rise of other big corporations, which could sell into much larger markets thanks to greatly increased ease of delivery. The Internet and broadband systems similarly can expand innovative ways of doing business (usually doing the market good), empowering entrepreneurs as well as those legacy providers who can change their business models.

The FCC’s Broadband Plan—despite all the criticism it has generated—presents a transformative map for the digital era, in much the same way that the 1860s evolution of railroad and telegraph lines spurred previously unimagined ventures into work, life, entertainment, and education. Lincoln would have been smiling.