March 5, 2010

MARCH 5, 2010 -- A $19 billion proposal to use tax-credit bonds to fund the deployment of competitive next-generation, high-speed networks to 80 percent of U.S. homes would create 200,000 jobs annually over the next five years and add $150 billion to the nation's GDP, according to a new study commissioned by the Fiber-to-the-Home (FTTH) Council North America in Washington.

 

The study, prepared for the FTTH Council North America by the international consulting firm Navigant Economics, calculated the capital investment required to expand current generation broadband to all U.S. homes, as well as to also extend competitive next-generation networks - those delivering connectivity of at least 50 megabits per second downstream and 20 mbps upstream - to 80 percent of the country by 2015. It concluded that achieving both these objectives would require $77 billion in additional capital expenditure and result in an annual increase of 290,000 jobs and $236 billion in additional GDP over the five year deployment period.

 

A cost-effective way to achieve a large measure of this outcome, according to the study, would be for the federal government to make available tax-credit bonds to fund investment in very high speed, 50/20 megabit-per-second networks. Doing that would result in $50 billion in additional capital expenditure, leading to the creation of 200,000 jobs annually over the five-year period and addition economic output of $156 billion - at a cost of $19.1 billion in foregone revenues to the government.

 

"Compared to other stimulus packages, the broadband tax credit would be a relatively efficient use of taxpayer money," say the study's authors.

 

On the eve of the release of the Federal Communications Commission's National Broadband Plan, FTTH Council President Joe Savage said the study points the way to an efficient means for turning ambitious broadband goals into real deployment activities that connect homes into high-speed networks while spurring job creation and economic activity.

 

"What this study shows is that with a relatively small investment in foregone tax revenues, the government can help set in motion a wave of network expansion that will produce a million jobs over five years and add $150 billion to our GDP," Savage says. "While we are delighted that the NBP will likely set ambitious goals for high-bandwidth networks, here is a way to actually meet those goals in the near term and, at the same time, deliver huge economic benefits to the nation at large."

 

The full study, Economic Effects of Broadband Infrastructure Deployment And Tax Incentives For Broadband Deployment, authored by Hal J. Singer and Jeffrey D. West of Navigant Economics, is available at the FTTH Council's website.

 

Fiber-to-the-Home Council: www.ftthcouncil.org