$7.2B in Broadband Funds: Who Gets What?

President Barack Obama’s 2009 economic stimulus bill includes $7.2 billion for broadband network construction, but details remain fuzzy. For instance, how many new jobs will the infusion really create? Estimates range from upwards of 400,000 to less than 10,000 — a disparity so wide that the bill’s full impact won’t be clear for years. Meanwhile, investment banks want to know how they might benefit, say, by shepherding clients through the grant-writing and application process. Other advisers wonder whether the broadband grants and loans will only go to established companies, or if startups get to vie for the money as well. And then there’s the concern that $7.2 billion — almost nine times less than what AT&T Inc. (T) alone has spent on capital expenditures since 2003 — won’t really go very far.

“It’s a good start but it’s definitely not getting us to ubiquitous broadband for the whole country,” said Ed Vilandrie, director of consulting group Altman Vilandrie & Co..

Josh Silver, executive director of the advocacy group Free Press Action Fund, agreed: “It will take billions more to finish the job.”

Others are more optimistic, because it’s not just residential or rural carriers that stand to benefit from the broadband provisions in the stimulus package. Rather, providers that want to reach businesses in remote areas and equipment makers specializing in backhaul or towers, for example, also could see substantial new funding. Whether $7.2 billion is enough is irrelevant, at this point — but it will push the United States, which lags behind many developed economies in Western Europe and East Asia in terms of broadband penetration, in the right direction. And no one wants to miss out.

How Many Jobs?

The whole point of the $787 billion American Recovery and Reinvestment Act is to create jobs and pump money back into a stalled financial system. President Obama has stated that his plan will create or save up to 4 million jobs. In January, the Information Technology & Innovation Foundation (ITIF) predicted $10 billion for broadband alone would generate approximately 498,000 jobs. That number sounds exaggerated. High-tech consultancy inCode told VON the best guess looks more like 10,000. The conservative view, said Jorge Fuenzalida, vice president and general manager of inCode, is just 3,000-4,000 jobs created over the next four or five years.