The populairy of smart phones like Apple Inc.'s (AAPL) iPhone or Palm Inc's (PALM) Pre will put a crunch on wirless capacity when the government is looking for wireless services, in addition to cable and fiber optic lines, to expand high-speed Internet services.

Blair Levin, a well known telecom analyst who is leading the FCC's broadband plan effort, said Wednesday current spectrum holders will have to justify their holdings or risk losing some to make room for suppliers of high-speed Internet.

Companies and agencies that hold licenses to frequencies tend to want to hang onto it, but Levin warned that licensees should be prepared to justify their ownership.

"I want you to be worried," he told the executives. "I'm worried. My way of coping with it is to make other people worry. That's actually the intellectual process we should go through."

The FCC is collecting volumes of written and oral comments on Internet access, and spectrum availability has emerged as a clear necessity.

"There's pretty much consensus in the record, there's not enough of it, Levin told telecom executives and lobbyists at their regular Udwin Breakfast Group.

Smart phone users generally eat up far more cellular minutes and bandwidth than people with more traditional cell phones.

Levin's comments should be good news to wireless companies like T-Mobile USA or smaller competitors to giants like Verizon Wireless or AT&T Inc. (T), who have been angling for access to more airwaves.

Verizon Wireless is a joint venture of Verizon Communications Inc. (VZ) and Vodafone PLC (VOD.) T-Mobile is a unit of Deutsche Telekom ADR (DT).

It isn't clear where the needed airwaves will surface. The U.S. government, namely the Defense Department, holds a sizable chunk. Industry insiders say the government's airwaves could be more efficiently used in the private sector.

Legislation is pending in Congress to catalogue how all the wireless airwaves are being used.

Companies and agencies that hold licenses to frequencies tend to want to hang onto it, but Levin warned that licensees should be prepared to justify their ownership.

Meanwhile, two other government agencies - the U.S. Department of Agriculture and the Commerce Department - are reviewing thousands of applications for some of the $7.2 billion in stimulus money set aside by Congress to build out new high-speed Internet lines and services.

Levin has already stated that $7.2 billion won't be nearly enough to blanket the country with Internet access, but the hope is that the grant money can encourage companies to seek Internet subscribers in areas they wouldn't go on their own.

The FCC is drafting a plan, due in February, that will detail just how the government can ensure that everyone in the country has some way to wire up.

The FCC has held dozens of meetings seeking input from representatives of all facets of the telecom sector and government. Field meetings will be held outside Washington this fall.

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