Is the Broadband Stimulus All That Stimulating?

The Broadband Stimulus program has received a lot of attention in the Telecom industry, and it will no doubt be highly beneficial to those who reap its benefits.  But what will its impact be on the broader economy?  Has the government dedicated enough money to the broadband stimulus to make a difference?

TIA provides a breakdown of where the money is going for the  Broadband Stimulus.  Out of the total $787B , RUS gets $2.5B and NTIA gets $4.7B for its Broadband Technology Opportunities Program or BTOP for a total of $7.2B.  So, broadband gets (according to my old college calculator), less than 1% of the total stimulus funding.   Of this total, at least 10% will not be spent on deploying broadband services but on things like computer centers, programs to encourage broadband adoption, and on developing a map of broadband inventory.

The Yankee Group is reporting that total capex spending in 2009 for telecom carriers is expected to be $66B in 2009.  AT&T by itself plans $17B, but much of this will not be spent on broadband.

So, the broadband stimulus program intends to distribute a bit more than $6B over the next year and a half compared to the over $100B carriers will already be spending in this timeframe.  While $6B is a not a drop in the bucket and is a substantial increase to broadband capital spending, it does not fundamentally change the impact of telecom capital spending on the economy.

For a bit more perspective, the US Bureau of Economic Analysis states that the annualized GDP for the US in 2Q09 was $14.149.8B.  Not all of the broadband stimulus money will be spent on US products (probably most will, however), but assuming all will pegs the broadband stimulus at 0.05% of US single year GDP, and its impact is less since it is to be spent over the next year and a half.

The more difficult calculation is how this additional broadband spending will affect the economy beyond just the immediate impact.  What does providing broadband service to underserved and unserved markets do to the larger economy?  That is a much tougher question.  Please provide your comments.

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