Critics question effectiveness of broadband stimulus

Several groups praised the U.S. Congress for including billions of dollars for broadband deployment in a huge economic stimulus package, but critics questioned whether the broadband provisions will create jobs and bring high-speed Internet access to a significant number of U.S. residents.

Negotiators for the U.S. Senate and House of Representatives late Wednesday approved a compromise bill after both chambers passed huge economic stimulus packages in the past three weeks. The new stimulus package, with a price tag of about $789 billion, includes $7.2 billion in grants and loans for broadband providers to roll out service to rural and other unserved or underserved areas.

Lawmakers released details about the compromise bill Friday, the same day that the House and the Senate are expected to vote on the final package.

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Several groups praised the U.S. Congress for including billions of dollars for broadband deployment in a huge economic stimulus package, but critics questioned whether the broadband provisions will create jobs and bring high-speed Internet access to a significant number of U.S. residents.

Negotiators for the U.S. Senate and House of Representatives late Wednesday approved a compromise bill after both chambers passed huge economic stimulus packages in the past three weeks. The new stimulus package, with a price tag of about $789 billion, includes $7.2 billion in grants and loans for broadband providers to roll out service to rural and other unserved or underserved areas.

Lawmakers released details about the compromise bill Friday, the same day that the House and the Senate are expected to vote on the final package.

The $789 billion compromise bill is down from about $819 billion in the House version and $838 billion in the Senate version. But tech provisions avoided the chopping block; the broadband spending stayed about the same as was in the Senate version and is about $1.2 billion more than was in the House version.

Some critics questioned why broadband was part of the stimulus package, intended to create jobs and boost the U.S. economy out of recession. There's little evidence that the broadband portion of the package will immediately create jobs, or that government spending on broadband was necessary,said Barbara Esbin, director of the Center for Communications and Competition Policy at the Progress and Freedom Foundation, a conservative think tank.

"There is no market failure, there's no lack of private investment in broadband at the current time that warrants government expenditure in this area," Esbin said. "Normally when the government intervenes when there's not a market failure, it does more harm than good."

Other critics supported broadband spending in the bill, but questioned some of the provisions. The bill missed an opportunity to create immediate economic stimulus by dumping tax credits for broadband providers, which had been in the Senate version of the bill, said Rob Atkinson, president of the Information Technology and Innovation Foundation (ITIF), a Washington, D.C., think tank. The money in the bill will go toward grants and loans, but a grant program could take months to set up, he said.

The lack of a tax credit in the final bill is "disappointing because it will mean that there will not be much stimulus effect for the near term," Atkinson said. "It’s too bad that some public interest groups opposed tax incentives since the result of not including tax incentives will be less broadband to Americans who don’t have it now."

Groups against the tax credits "put other agendas ahead of the most important one: using the opportunity presented by the stimulus package to get the most broadband to the most Americans to create the most jobs," Atkinson added. "This is critical because while the $7.2 billion is an important and needed down payment on getting all of America connected to broadband the costs of doing this are much higher, and absent additional public subsidies, the job will unlikely not get finished."

The IDG News Service is a Network World affiliate.