Internet
Yet theres some question whether the economy would be more energized by spending that money on other things.
Because Internet access is already widespread and still being expanded even in a shrinking economy, injecting more money for broadband could simply equate to giving more coffee to someone whos already downed three cups.
“From the rural Vermont that we see, broadband is happening, happening fast,” said Michel Guite, president of Vermont Telephone Co., which is based in Springfield.
The company, which serves 21,000 lines, is able to borrow from commercial lenders when it needs to invest in expanding Internet services, Guite said Thursday at a conference organized by the Columbia Institute for Tele-Information.
Although he wouldnt decline cheaper loans from the government, Guite said Congress could help his company better by cutting red tape, particularly when it comes to freeing up spectrum for wireless services.
The stimulus bill provides $7.2 billion for grants, loans and loan guarantees, primarily for areas that lack broadband or are “underserved,” though the term is not defined. Some of that money is set aside to expand Internet access at public centers like community colleges and public libraries.
One reason the money wont likely have much impact is its small size: less than 1 percent of the overall stimulus package, and substantially less per citizen than some countries, like Ireland and Sweden, have spent on improving their networks.
The Obama administration is looking at creating a more comprehensive plan to get the whole country covered by broadband, technology adviser Alec Ross told The Washington Post this week, but its not yet clear if that would mean more subsidies.
A possible point of comparison is phone service for rural areas, which has long been subsidized through a program that has critics, too. A study by Robert Crandall of the Brookings Institution said that the program produces customer savings of about $2 per month for $20 in monthly subsidies. But he conceded that when phone service was being built out, subsidies may have helped.
Larry Sarjeant, vice president of legislative affairs at Qwest Communications International Inc., said the Denver-based phone company could use $3 billion to expand Internet access to 2 million households and small businesses in 14 Western states, many of them thinly populated.
Because Qwest is unlikely to get that large a share of the funds, and the number of households that sign up for service will be smaller still, the net effect would be at most a few hundred thousand new Internet subscribers. Qwest added 236,000 broadband subscribers on its own last year.
In 2007 and 2008, the Pew Internet and American Life Project asked households that lacked broadband why they havent signed up. Lack of availability was ranked fourth, given by 14 percent. Most answered that they didnt need the Internet, that it was too expensive or too hard to use. Many people who dont use the Internet simply dont have computers.
There are signs that the money will do at least some good to rural areas.
A study of 3,000 people in Michigan, Texas and Kentucky found those in areas that received broadband Internet grants from the federal Rural Utilities Service quickly signed up for service, matching the penetration rates in cities. That happened where network investment was coupled with community programs aimed at convincing people about the benefits of Internet access.
Home broadband users were more likely to start businesses or take classes online, and less likely to move away, the researchers at Michigan State University found.
Those positive effects are hard to value.
Raul Katz, a Columbia Business School professor, estimates that the broadband plan will create 128,000 jobs over four years, because it will put installers and equipment makers to work, and those people will then spend the money they make. Hes much less certain how many jobs the Internet access itself will create. It could be as many as 273,000 or closer to zero.
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