Broadband fulfilling its promise

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• Broadband,
• Life,
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• Operations

John Borland and Jim Hu CNET News

Published: 27 Jul 2004 11:50 BST

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A matter of economics
Despite the recognition of broadband as an important issue across the political spectrum, not everyone agrees that it merits federal involvement. Sceptics and fiscal conservatives say the government should not provide funding or tax breaks to develop broadband networks, arguing that such financial incentives are unfair and could disrupt natural competition in the marketplace.

To be sure, much of the push for faster networks comes from high-tech companies that stand to benefit directly from equipment sales. These businesses have lobbied heavily and consistently for greater national investment, particularly since venture capital for telecommunications dried up with the dot-com bust.

At the top of the scale are giants such as Cisco Systems and Nortel Networks, which provide the routers and other technologies that send data across networks. Smaller companies would also benefit, such as OneEighty Networks, which last month helped create a 100-block-wide public Wi-Fi hot spot in its hometown of Spokane or Tropos Networks whose equipment helped Garland create a public safety network based on Wi-Fi.

But economists say the positive effects of broadband will be felt far beyond the networking industry and could add between $300bn and $500bn a year to the US economy. One widely cited study, led by a Brookings Institution researcher, predicts that ubiquitous broadband access could create 1.2 million jobs in the United States.

New employment could come from such companies as Visicu, which provides the equipment that Berg's hospital in Hawaii uses to monitor intensive care unit operations in Guam. Within information technology alone, expanding businesses would range from small companies such as CyberTech Media, which digitises video for presentations inside corporate networks, to industry stalwarts like Intel, which sees broadband wireless components as a new market.

Many economists view broadband as a vital part of the next technology wave that they believe will drive growth and improve productivity. Although no one is predicting anything on the scale of the 1990s high-tech gold rush, broadband could make real many theoretical uses of the Internet touted in the early days of its development as a mainstream medium.

Such prospects have prompted rural development agencies into making plaintive calls for broadband investments, to avoid being left out of another digital economic boom.

"We see broadband as a key, key component for economic development in this region," said Marc DeFalco, who heads the telecommunications programme for the Appalachian Regional Commission, a 13-state economic development agency. "We look on broadband as a means of opening up rural areas to the same opportunities that people would have in urban areas."

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