Why the Stimulus Bill Discounts Broadband

BusinessWeek just published my analysis of why broadband has so far been dissed by Washington in the stimulus bill. Good news is I got top Obama tech policy advisor Blair Levin to talk to me about the topic and explain what’s been going on behind the scenes. Here’s the top of the story.

Why the Stimulus Bill Discounts Broadband
Congress is concerned that technology spending may not create jobs as quickly as traditional investments

By Spencer E. Ante

Barack Obama made sophisticated use of technology during his run for the White House. And throughout his campaign, the BlackBerry (RIMM)-addicted candidate stressed the transformative power of technology, making a high-profile promise to provide high-speed Internet access to all Americans.

But when the House unveiled a preliminary version of the economic stimulus plan, crafted with some input from President Obama’s advisers, the amount of money allocated for broadband Internet development was much lower than experts had anticipated. In the $825 billion proposal, only $6 billion was aimed at broadband, far short of the $12 billion to $30 billion that industry experts estimate it would cost to wire the nation. The House bill allocated the same amount of money to weatherizing the homes of low- and moderate-income people.

The stimulus proposal still has to make its way through the Senate and may be changed substantially before it’s signed by the President. But many in the tech industry are contemplating some tough questions: Why did broadband get slighted? Will the technology get more government funding in the future? And does the debate over broadband foreshadow how the technology community will be treated in the future by the Obama Administration?

More Money in the Future?

Blair Levin, a former senior official at the Federal Communications Commission, was a top technology policy adviser on the Obama transition team. In an interview with BusinessWeek, he says that more money could be allocated to broadband in the future. “Did we leave the door open to additional money?” asked Levin. “I think the answer is the door is open and should be open.”

Levin and other technology leaders say there are several reasons that broadband got less money than expected in the stimulus bill. For starters, there is no track record of the federal government funding broadband networks. That made it harder to garner support for a larger subsidy in a Congress trying to accommodate numerous claims from more established constituencies. “When it comes to building roads, that is a clear government project,” says Levin. “Building rural broadband is clear, too. But with other parts of broadband there is not a consensus.”

There’s also an information gap. There are no clear, comprehensive data on which regions need broadband investment, which fueled concerns that it would be difficult to spend money quickly and wisely. “We were concerned that the money would be used effectively and appropriately,” says Levin. “You have to have the strategy before you determine where the money is sent.”

Then there were economic questions. While most economists acknowledge that communications boosts the productivity of the economy over time, there are concerns about the job-creation potential of broadband investment in the near term—the primary objective of the stimulus package. Some economists have noted that compared with some other infrastructure projects, such as road or bridge construction, broadband construction would not generate as many jobs. It takes many more people to build a four-lane highway than to dig a trench and lay a fiber-optic cable. Other economists have pointed out that a lot of the equipment that goes into the network is manufactured overseas—further diluting the employment gains in the U.S. economy. Many telecom components such as computer chips are also manufactured in other countries.

Read the rest of the story here.

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