High-Speed Internet Deployment Can Boost Cash-Strapped States, No Government Spending Required

With states facing historic budget problems and dramatic revenue shortfalls, a new study shows that a wide rollout of high-speed Internet access by private industry can create jobs and drive economic growth, helping state governments, businesses, and consumers.

Copies of the study are available here.

The report, “State Economies Can Benefit From Broadband Deployment,” was released today by Citizens for a Sound Economy’s Freedom Works Foundation (CSE Freedom Works Foundation), a grassroots educational organization promoting common sense economic policies.

“Every state in the country stands to benefit—170,000 new jobs in California, 90,000 in New York, and 80,000 in Texas, just to name a few—and encouraging widespread broadband deployment will restore many of the jobs that were lost in the burst of the technology bubble,” said Dr. Wayne Brough, chief economist for CSE Freedom Works Foundation and author of the study.

The study explains how widespread deployment of broadband technologies to residential customers will create demand for the production of fiber optic lines, its installation and support, and will create “spillover” jobs in other industries spurred by an expanded broadband consumer base. Analysis of the data shows that the total of these new jobs will be 1.2 million—enough to replace every lost job in the sector twice over.

“The information technology revolution drove national economic growth and productivity in the 1990s. Yet, state-by-state, the telecommunications industry that made this possible is struggling. Broadband deployment will revive the telecom and technology sectors and help put our states on a sound financial footing,”

The telecommunications sector—the key to widespread broadband access—has suffered dramatically since the year 2000, losing 683,000 jobs and $2 trillion in market capitalization. In November alone, more jobs were cut from the telecom sector than any other economic sector—the second time in 2003 that telecom has set the benchmark for job loss.

This bad news also helps explain why the United States now trails countries such as Korea, Canada, and Sweden in broadband deployment and why three of six fiber optic manufacturing plants in the U.S have recently closed.

“While the FCC is moving in the right direction to promote wider broadband access, more work is still needed to remove barriers to deployment,” said Dr. Brough. “Remove the regulatory barriers and the technology revolution will begin again—boosting the state economies as well as the national economy,” he said.

State benefits from widespread broadband deployment are not only economic, but social as well. With the availability of the high-speed Internet, hospitals can provide the latest technologies in health care to patients located in rural areas with little access to local health care. Schools can provide new opportunities for students with few local options to further their education. And, in an aging society, the Internet provides the elderly greater opportunities for independent living.

The study cites statistics showing less than a third of American households now have high-speed Internet access. According to the study, a consistent regulatory playing field for broadband will encourage deployment and invigorate an industry that is critical to economic growth and job creation, and whose effects ripple outward to numerous other industries.

Copies of the study are available here.