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Debate Continues Over Broadband Investment

Posted on: Friday, 6 February 2009, 14:45 CST

Among the many components of the economic stimulus plan currently making its way through Congress is a provision for significant funding of a massive expansion of broadband Internet access to every part of the country that depends upon dial-up access or has only one high-speed option.  The premise is that building these new networks will create jobs, and that expanding broadband access would trigger new economic activity.

However, critics disagree with the idea that broadband funding should be part of an economic stimulus plan.  They question how many people would actually sign up for the new service once the networks are built, and how many jobs broadband investments will truly generate.   Even supporters of expanding broadband access are debating whether Congress is approaching the issue in the right way.

Currently, about 57 percent of Americans subscribe to broadband access at home, while 9 percent rely on dial-up service, according to recent surveys by the Pew Internet & American Life Project.  An estimated 25 percent do not use the Internet at all, while others go online elsewhere. 

It is those holdouts, which include many elderly and poor people, which are the hardest to reach, along with residents of rural areas that top broadband providers have abandoned as too costly to serve.  Those are the areas Congress is trying to address in the stimulus bill.

While the broadband provisions are still coming together as Congress debates the stimulus plan as a whole, the ultimate bill will likely contain $6-$9 billion to help fund landline and wireless broadband networks in underserved and unserved areas.  Tax incentives to promote investment in new or higher-speed broadband networks will also likely be included.

Such investments will create new jobs, an Associated Press report quoted Robert Atkinson as saying.  Atkinson is president of the Information Technology and Innovation Foundation, which estimates that a $10 billion broadband investment would create up to 498,000 new jobs.

These positions would include construction workers and telecommunications technicians who would install the fiber-optic lines and wireless towers, as well as the engineers and factory workers at companies that produce the electronics, fiber optic and computer equipment required to construct the networks.  While much of that equipment is currently made abroad, Atkinson's forecast excludes jobs created overseas.

Broadband investments would also create something Atkinson calls a "network effect", which would indirectly produce even more jobs.  For instance, people who adopt broadband are more likely to buy a new computer and purchase services online, he said.  Broadband would also serve as a foundation for companies that otherwise might not exist, he said.  These could include Internet retailers, social networking sites and online entertainment firms.

Additionally, broadband would offer a vehicle for doctors to consult with patients in remote locations, and for students to enlist in online courses at universities across the country and for governments to deliver services more efficiently, according to Jeff Campbell, a senior policy and government affairs director for Cisco Systems Inc., a top maker of networking equipment.

However, not everyone agrees.  Scott Wallsten, senior fellow with the Technology Policy Institute, doubts whether those indirect benefits truly produce the vast number of new jobs that supporters claim.  Instead, he questions whether the broadband provisions contained in the stimulus plan would merely reward telecommunications firms for making investments they would have made anyway.

An Associated Press report quoted John Horrigan, associate director for research at the Pew Internet project, as saying that just because more Americans have the option of broadband Internet access, that doesn't guarantee they will subscribe to the service.

Indeed, a recent Pew study found that just 14 percent of today's dial-up and non-Internet users say they don't subscribe to high-speed Internet access because it is not available where they live.  Many more, 51 percent, say they are simply not interested.

Democrats in the Senate are seeking $250 million to promote broadband adoption, which could also include helping the poor to purchase computers and teaching people how to navigate the Web.

However, if the intent is to increase broadband adoption, "does that belong in a stimulus package?" Horrigan questioned. "I don't know."

However, Atkinson has a different concern, and worries that Congress is adding too many conditions to the grant, creating undue burdens.

Although state and municipal governments, private companies, nonprofits and public-private partnerships would all be eligible for federal support, it is not clear whether major broadband providers would actually be eligible for the grants.

Atkinson said that some proposals under consideration would give substantial amounts money to networks that can deliver Internet connection speeds that might be difficult for most broadband service providers to offer in the next 12 to 18 months.

Furthermore, Congress seems likely to insist many of the grant recipients to comply with "nondiscrimination" and "open access" mandates.   Such mandates are ultimately left to the Federal Communications Commission (FCC) to define, some technology-policy analysts believe the rules could impose "network neutrality" rules that would officially bar broadband providers from prioritizing certain kinds of Internet traffic.

One thing is certain, however:  this is a critical time for supporters of a big government investment in broadband.  Similar to the rollout of the electrical grid and the U.S. highway system in earlier years that helped spur economic growth in rural areas, supporters of government broadband funding say that more widespread and affordable high-speed networks today could spark benefits that otherwise might not occur.

"This is an important recognition by the government that broadband is the infrastructure for the 21st century," Cisco's Campbell told the Associated Press.

"It's not just about roads and bridges anymore."

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On the Net:

• Pew Internet & American Life Project
• Information Technology and Innovation Foundation
• Cisco Systems Inc.
• Technology Policy Institute
• FCC

Source: redOrbit Staff & Wire Reports

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