Broadband Stimulus Could Drive Job Growth


WASHINGTON — With Congress debating President-elect Obama’s massive economic stimulus package, the IT industry is angling for its share of the roughly $800 billion involved.

And by predicting an almost immediate return on taxpayers’ investment, supporters think they make a pretty good case.

Here at the National Press Club, the Information Technology and Innovation Foundation (ITIF), a Washington think tank, said it sees widespread job creation as a key payoff for stimulus investment in broadband, a smart electric grid and health IT.

The group’s economists projected that an investment of $10 billion in each of the three sectors would lead to the creation or retention of 949,000 jobs within one year.

“I think this is a once-in-a-generation opportunity for our country to get an awful lot of digital infrastructure built,” Robert Atkinson, ITIF’s president, said at the event.

The promise of a quick and accountable payout could go a long way toward moving the bill through Congress, as lawmakers are loathe to repeat the blank check model of the first recovery bill, which became branded in the public eye as a bailout.

The ITIF is just one of many groups calling for the government to get involved in spurring high-speed Internet deployment on the heels of several reports indicating that the United States is falling behind its competitors in broadband access and adoption. Citing those competitive concerns, coupled with the potential for immediate job creation, broadband advocates say stimulus investment could advance the nation’s Internet economy.

Atkinson likened the government’s role in spurring the broadband economy to the interstate highway project undertaken by the Eisenhower administration. Atkinson pointed out that while serious construction didn’t begin until the late 1950s, bills authorizing upgrades to the highway system had been passed in the 30s and 40s — only they languished for lack of funding.

“The lesson to me of that is that we can use this as an opportunity to really accelerate the important transformative infrastructure, in this case digital infrastructure. And there’s really no need to wait,” Atkinson said.

Through a combination of tax credits and grants, the ITIF is proposing that the government move to encourage network operators, utility companies, healthcare providers and other firms to upgrade their infrastructures, which would usher in a wave of new high-tech jobs.

Most immediately, tax credits to broadband providers to expand or upgrade their networks in rural or low-income areas would create a host of so-called “shovel-ready” jobs — the workers and technicians required to build the network infrastructure.

[cob:Special_Report]Infrastructure projects would also see a wave of “indirect” job creation, where the companies throughout the supply chain — the firms that produce the circuit boards that power routers, for instance — would increase production.

Then there is the effect of so-called “induced job creation,” where the newly employed spend a portion of their incomes at restaurants and stores.

More difficult to quantify is a unique facet of the digital economy, which economists term the “network effect.” The reasoning goes that new investments in digital infrastructure will bring more people online at higher speeds, which in turn will lead to innovative new applications and technologies that would create an untold number of jobs. Essentially, government investment in broadband infrastructure could give rise to the next eBay or YouTube.

In broadband alone, the ITIF estimates that its arbitrary figure of $10 billion in government investment would create 498,000 jobs in one year.

In health IT and the smart grid, the group sees the potential for 212,000 and 239,000 new or retained jobs with a similar investment.

Broadband advocates divided

The ITIF’s plan bears some similarities to a proposal from Free Press, a Washington media-reform advocacy group. Free Press called for $44 billion in combined spending and tax breaks over the next three years to spur broadband deployment.

Atkinson sees merits in the Free Press plan, but criticized it for insisting on principles such as open-access and network neutrality. Those ideas are worthy of debate, he said, but not in the context of an urgently needed stimulus bill that lawmakers hope to complete by mid-February.

Free Press and others, including Anna Eshoo, one of the House Democrats leading the charge for government action on broadband stimulus, have called for incentives for providers that deliver connection speeds of 100 megabits per second (Mbps), a blazing fast data rate made possible by fiber-optic cable that runs directly to the home.

To Atkinson, including those provisions in the stimulus bill could have the unintended effect of lowering the amount of network expansion providers were willing to undertake. Without the stimulus, Atkinson’s group projects that capital expenditures in broadband deployment, smart grid and health IT would each decline in the next year.

“My worry is that if you put a lot of conditions on these packages, what you’re going to end up with is a quite-reduced amount of stimulus,” Atkinson said.

“We all would like a hundred megs to the home,” he continued. “It’s a wonderful thing to have, but if you hold up the standard so high that only a hundred megs to the home or only fiber to the home qualifies, essentially you’re going to limit stimulus and you’re going to limit investment in a dramatic way. Most companies just don’t have that as their business model right now.”

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