Broadband roll-out to aid economy’s ills, study finds

As service providers continue their efforts to make broadband

service as commonplace as regular telephone service, the U.S.

economy will benefit from more than $100 billion in investments

by ISPs and the creation of tens of thousands of jobs, according

to a recent study issued by the New Millennium Research Council.

By Carolyn Duffy Marsan

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In the past I have shared my opinion that focused encouragement of deployment of broadband connectivity to Missoula’s citizens-either by the private sector or the public sector-as a matter deserving the attention of Missoula’s elected officials. This article provides a discussion of some of the economic development issues that relate to that opinion. Which is not to say that article is totally unbiased, but the issues are worth being informed about.

Geoff Badenoch, Director

Missoula Redevelopment Agency

123 West Spruce Street

Missoula, MT 59802

Tel. (406)-258-4607 (please note new exchange)

Fax (406)-327-2132

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Criterion Economics conducted the study, which was paid for by

Verizon.

The study outlines two scenarios for universal broadband

adoption: one where it takes until 2021 for broadband to reach

95% of U.S. households and the other where it takes until 2013

to reach this goal. Today, approximately 20% of U.S. households

have broadband service while an additional 40% have dial-up

Internet service.

"If you accelerate the broadband roll-out so that consumers are

getting it sooner rather than later, the economy will benefit by

about $500 billion," says Allen Hepner, an advisory board member

for the New Millennium Research Council.

Under the slower roll-out scenario, the study estimates that

ISPs will spend $146 billion on new network and customer premise

equipment to support DSL, cable modem, fiber to the home and

other advanced Internet access services through the year 2021.

This level of capital expenditures by ISPs would increase the

nation’s economic output by $414 billion and create 140,000 new

jobs sustained per year, the study claims.

Under the rapid adoption scenario, the study estimates that

broadband providers will spend a total of $164 billion on

capital equipment over the next decade. The study claims that

this higher level of investment would boost the nation’s gross

domestic product by $465 billion and create 271,000 new jobs

sustained per year.

The study’s authors claim that these new jobs would replace all

of those lost in both the communications services and

communications equipment sectors from December 2000 to January

2003.

"Across these two sectors of the communications industry, over a

quarter of a million jobs were lost over the 25-month period,"

the study says. "We estimate that the capital expenditures by

broadband providers would more than restore those job losses by

the end of 2008 if residential adoption follows this faster

growth scenario."

The study goes further with its claims that widespread broadband

adoption will create a ripple effect in other industries such as

education, healthcare, hospitality, manufacturing, electronics

and retail. Altogether, these industries would receive an extra

$66 billion in consumer spending and create another 665,000 jobs

from the accelerated adoption of residential broadband.

"More than 1.2 million jobs may be created due to the ubiquitous

residential adoption of broadband," the study concludes.

The New Millennium Research Council and the authors of the study

have an agenda: they hope it encourages Congress and the Federal

Communications Commission to deregulate broadband and encourage

incumbent carriers to invest in new equipment and services.

"We’re in the third year of a recession, and the recovery is

very weak at the bottom," says John Rutledge, chairman of

Rutledge Capital and a supporter of the study. "Deregulating

telecommunications is one way to stimulate growth and

productivity and also make the deficit shrink…It is the free

lunch that economists have all been looking for."

RELATED EDITORIAL LINKS

The Effect of Ubiquitous Broadband Adoption on Investment, Jobs and the U.S. Economy http://www.newmillenniumresearch.org/archive/bbstudyreport_091703.pdf