NCPA - National Center for Policy Analysis

Looking For Stimulus? Think Broadband

February 27, 2002

Deregulation advocates say that if Congress truly wants to stimulate U.S. economic activity, it has an opportunity right under its very nose. It's called the Tauzin-Dingell bill and it would allow the currently embattled telecommunications sector to bring high-speed Web service to nearly every U.S. home over the next decade.

It could transform the Web from a device for exchanging e-mail and checking stock quotes into a tool that will link all businesses in an e-commerce Web, let users quickly download video or music on demand and give rise to products and applications we can only dream of today.

But until now broadband has been stifled by government regulation. Industry hasn't been willing to invest in broadband because federal regulations require that companies which spend their money to wire homes and businesses to open their networks to competitors at money-losing government-set rates.

  • Brookings Institution economist Robert Crandall calculates that accelerating broadband deployment would mean a $500 billion jolt to the economy each year.
  • But because of the government rules, telecom investment last year contracted by $75 billion -- a 15 percent decline.
  • That explains why the industry shed over 317,000 jobs in 2001 -- the largest job loss for any industry ever recorded in a single year.
  • By some estimates it will cost telecom companies around $200 billion of added broadband investment to lay down the cables to bring this technology into most homes and businesses.

Experts say Congress must let businesses write off their mega-investments the year they are made. It must also create a fair minded regulatory structure that allows firms to make investments to reap financial rewards. This means eliminating free-riding competitor access without fair payment.

Source: Stephen Moore (Club for Growth), "Got Stimulus? Broadband Bill Would Beef Up Frail Economy," Investor's Business Daily, February 26, 2002.


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