Broadband Could Add $500 Billion to Economy, Study Says

Baldwin Louie — Mon, 16 Jul 2001 15:00:00 -0700

WASHINGTON, July 16 (Reuters) - Widespread use of high-speed
Internet service by Americans could contribute as much as $500
billion annually to the U.S. economy, a new study funded by
Verizon Communications released on Monday found.

Consumers would benefit from online home shopping,
entertainment, traditional telephone and health care services, as
well as reduced commuting, adding $200 billion to the economy if
half the country has the high-speed service or $400 billion if
almost all Americans have it, the study said.

Plus, the higher consumer demand will also provide a boost to
manufacturers of computers, software and entertainment products,
which would add another $50 billion to $100 billion to the
economy, according to the study done by economist Robert Crandall
and engineering consultant Charles Jackson.

"The impact of broadband by any measure -- in terms of GDP,
jobs, U.S. productivity and efficiency -- will be profound," said
Jackson. "We're looking at a transformative technology: one that
doesn't just crate change at the margins of an economic system,
but at its core."

The study comes as the U.S. economy is slowing, in part
because of the fallout in the technology sector with the
telecommunications industry suffering much of the pain. Several
providers of broadband services have gone belly-up, including
NorthPoint <NPNTQ.O> and WinStar Communications Inc. <WCII.O>

The study included all types of high-speed Internet service
offered, digital subscriber line (DSL), cable modems, satellites
and wireless devices, among others.

Industry estimates project 8 percent of American homes have
high speed Internet service, known as broadband, and local
telephone companies like Verizon Communications <VZ.N> and SBC
Communications Inc. <SBC.N> are pushing for legislation that
would increase their incentives for deployment.

Reps. Billy Tauzin and John Dingell have proposed legislation
that would eliminate requirements that dominant local telephone
carriers open their networks before they can offer long-distance
data services.

At present, Verizon, SBC, BellSouth Corp. <BLS.N>, and Qwest
Communications <Q.N>, all created from the 1984 breakup of AT&T,
must prove their local networks are open to rivals before they
can sell long-distance voice and data services.

The Tauzin-Dingell measure would also eliminate requirements
that the Bells unbundle certain network elements and line-sharing
necessary for competitors to gain access to the local network but
would require the Bells to deploy high-speed Internet service in
hard-to-reach and rural areas.

While analysts expect the measure to pass the House, key
lawmakers in the Senate have made it clear the bill will not pass
in its current form.

Correction:
A previous version of this story attributed the study incorrectly. It was funded by Verizon Communications.

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Broadband Could Add $500 Billion to Economy, Study Says