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.

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.”