Broadband Infrastructure Investment Would Have Ten Fold Payoff - $100 billion investment would net trillion dollar economic growth, says analyst
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Broadband Infrastructure Investment Would Have Ten Fold Payoff
$100 billion investment would net trillion dollar economic growth, says analyst
09:52AM Tuesday Jun 03 2008 by Karl Bode
tags: coverage · business · bandwidth · stats
Michael Curri, founder of Strategic Networks Group, claims that every dollar spent on broadband infrastructure results in a tenfold multiplier impact on GDP. In other words, pouring $100 billion into deploying a national fiber network would result in a trillion dollars of economic growth -- particularly in rural areas where businesses leave should they not have necessary connectivity.

I imagine his claims could be inflated somewhat to sell his consultant wares, and obviously dumping money into a rural fiber ring is not an economic panacea. Still, here I was, thinking that actually investing in your infrastructure was akin to satanism and puppy torture. Hey Bear Stearns, can we have that $30 billion back?

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TK Junk Mail @ 3rd Jun 10:03AM:
Take claim with a grain of salt

The person making the claim makes his money by getting consulting contracts hyping expanding broadband. While there is undoubtedly an economic gain to be gotten by expanding broadband, a ten fold increase is doubtful. But you have to consider the source when evaluating claims this outlandish.
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joebear29 @ 3rd Jun 10:09AM:
Say what?

We gave 30 billion to Bear Sterns? You might want to check your facts.
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nixen @ 3rd Jun 10:16AM:
I Like Broadband, But...

This kind of logic reminds me of the FCC episode of Family Guy...
quote:
FCC Suit 1:
Gentlemen, we got 20 calls about the David Hyde-Pierce incident. And as you know, one call equals a billion people, which means 20 billion people were offended by this. Needless to say, something must be done.


I mean, yeah, broadband investment undoubtedly has a return. But to make that kind of linear/blanket statement...
--
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt. -- Bertrand Russell

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pnh102 @ 3rd Jun 10:32AM:
Re: I Like Broadband, But...

said by nixen :

This kind of logic reminds me of the FCC episode of Family Guy...
One of my personal favorites... it was good to see Cobra Commander find a new line of work.
--
This isn't fair! I was only supposed to hate just ONE presidential candidate!

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major marco @ 3rd Jun 10:35AM:
That's A Good One

I am laughing uncontrollably over the very idea of investing in the infrastructure because that would never happen in the U.S., especially where infrastructure is concerned. The way it works here is that kind of moohlah, as evidenced by the Bear Stearns bailout, only goes to wealthy corporations and their gullible marks.

BTW, the actual bailout amount was $3.2B, which could have been much better spent elsewhere.
--
The Toll

Shit on Pitt. Let's go Wings!

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satellite68 @ 3rd Jun 10:46AM:
Re: That's A Good One

LOL-the "let the market fix everything" crowd must've jizzed in anger over the government bailing out Stearns. What happened to "freemarketeering"?? "Less government"?

What a crock. Hypocrisy knows no boundaries, I suppose.
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swhx7 @ 3rd Jun 10:47AM:
Re: That's A Good One

You're basically right. It's important for people to understand the reason.

The estimate is of total benefits to society. But the benefits to the ISPs would be negative: it would cost them more to upgrade than it would bring in revenue. They find it more profitable to increase rates or decrease service (by throttlling, etc.). Building more capacity only makes them more of a commodity, while squeezing customers is cheap and monetizes their monopoly or oligopoly position in each local market.

Thus we have a market failure: a situation where the economically rational course for a company is adverse to the interests of society and its own customers. This can happen only when markets are distorted by anti-market conditions, in this case the local monopolies and oligopolies.
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CylonRed @ 3rd Jun 10:57AM:
Re: Take claim with a grain of salt

I would say to take it with not a grain of salt - but a entire salt lick. :)
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jester121 @ 3rd Jun 11:48AM:
Re: Say what?

We don't do that here.
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jester121 @ 3rd Jun 11:49AM:
Re: That's A Good One

said by major marco :

BTW, the actual bailout amount was $3.2B, which could have been much better spent elsewhere.
hehe yeah, and when the markets tanked and everyone's retirement accounts lost hundreds of billions of dollars, that 3 billion would be so much piss in the wind.
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rit56 @ 3rd Jun 12:22PM:
Infastructure Investment

Well I'm sure you all agree then it's a good idea we've been "investing" all that money in rebuilding Iraq's infrastructure.
"repair it there so we don't have to repair it here" is that it? oh no it's "fight them there so we don't have to fight them here.." silly me. boy one of those 100 billion dollars spent there could have wired our whole country. it doesn't matter because we now have a stable Middle East right? money well spent........... oops!!!
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Transmaster @ 3rd Jun 12:32PM:
Economic Impact of National Infrastructure investments

I have no idea how much bovine scatology is in Curri's claims but there is certainly a track record to refer to when it come to national infrastructure investments. Two that come to mind is the New Deal Rural Electrification program, and the National Defense Interstate Highway System. The economic return on these investment was and continues to be massive.

Rural Electrification was such a big deal in the 1930's simple things like electric lights, electric washing machines, and a Dairy farmer being able to refrigerate his milk to keep it fresh for the market.

The National Defense Interstate Highway System had even a larger impact. Having a well maintained highway facilitated the movement of goods across the country giving farmers, ranchers, and manufacturing companies access to national markets. It made tourism an important part of state economies because of the ease of travel across the Continent.

I have no doubt that such an investment in a national broadband carrier system would pay off in a similar way. Like the REA, and the NDIHS the returns will take awhile to show themselves but in the long run they will pay off handsomely.

»www.tahg.org/research/Bob%20Brousek.doc
»www.interstate50th.org/docs/techmemo2.pdf
--
Send a prayer to Allah, eat Beans.

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chronoss2008 @ 3rd Jun 01:24PM:
yes , give them less make them pay more

yes , give them less make them pay more
if they could 1kbyte would cost a buck
then you could get a million fold on your investment prob is only guy able to afford it would be billy gates
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DataDoc @ 3rd Jun 01:48PM:
This is just the "Multiplier effect"

With a vigorous spin.
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anon @ 3rd Jun 04:07PM:
Re: Economic Impact of National Infrastructure investments

Well said and I agree. One can smirk at the numbers a consultant throws out and there is no way to know how accurate that number will or won't turn out to be.

As you state, however, there is plenty of evidence that the payoff in basic infrastructure investments is huge and infrastructure facilitates growth in ways that can't be predicted at the outset. The biggest long term benefits could be in ways that we can't even conceive of yet.
It would cost a considerable amount of money to get really first rate communication infrastructure to everyone in this country but previous experience says that the long term benefits would dwarf the costs.
Unfortunately this age seems to lack the vision and everything today demands a short term payoff.
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anon @ 3rd Jun 04:40PM:
good idea

he has a point, aslong as it isnt some company who gets the contract for it all.

if you could deploy fibre and allow many companies to utilize it to provide voice, data, and video then you could have a trtue free market.

The government could deploy the fibre or have cities pay for it and they could charge rental fees etc to have companies rent the fibre.

That way old telco's cant keep justifying raising prices for copper......

This also gives other a chance who cant just go around deploying fibre everywhere.

By creating a true free market like that the guys who want to traffic shape and cap are going to have to move on.

Personally i think a system where the city or government owns the fibre and charges private companies to use it would be awsome.

You could have a docsis type system where the provider would provision your mac etc so you would get a specific provider. Now you can have multiple voice,data, and video providers and prices will come down. Consumer wins companies lose.

Telco's have had it way to easy. The cost of starting keeps everyone else out. Look at the pc hardware market prices are falling like crazy. In that business there is no monopolies or oligopolies.

They have to invest, innovate, and make new products at great prices or lose to one of your many competitors. Our telco's would shutter at the idea of other competition meaning they cant keep charging more and giving less.

The teclo industry is becoming more like the banking industry. You have these mega companies thta just get bigger and buy everyone else up. By doing this smaller local companies would grow and foster local economic growth etc. It would be great to say tons of new isp's and foster some growth.

So my idea would be the government, state, city would pay to lay down the fiber and networks and rent it out to companies who want to use it. Then the big guys are in the same pool as the smaller companies. Also a way for the city to generate some income renting access to the network out.
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supergirl @ 3rd Jun 05:14PM:
Re: That's A Good One

said by major marco :

I am laughing uncontrollably over the very idea of investing in the infrastructure because that would never happen in the U.S., especially where infrastructure is concerned. The way it works here is that kind of moohlah, as evidenced by the Bear Stearns bailout, only goes to wealthy corporations and their gullible marks.

BTW, the actual bailout amount was $3.2B, which could have been much better spent elsewhere.
The $30 billion was in Fed guarantees of their debt. So, yes, it could eventually cost the taxpayers $30 billion.
--
Saving the world keeps me busy. However, I find Earth very primitive from my home planet of Krypton.
-Supergirl

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EPS @ 3rd Jun 10:19PM:
Re: That's A Good One

It was cut down to $29 billion, since JPMorgan raised the price from $2/share to $10/share, and now they have to take the first $1 billion of any losses.

The article linked to in the first post is about Bear Stearns bailing out one of its hedge funds last year and seems rather irrelevant.
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Steve @ 3rd Jun 11:25PM:
Re: That's A Good One

said by satellite68 :

LOL-the "let the market fix everything" crowd must've jizzed in anger over the government bailing out Stearns. What happened to "freemarketeering"?? "Less government"?
Those who believe in freedom are appalled by the bailout - if I am to face the bracing air of my own decisions, why should not Bear Stearns?
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Skippy25 @ 4th Jun 02:08AM:
Re: That's A Good One

It's a double edged sword.

I have the mind set that you make your bed, you sleep in it. The government should not be a charity of any sort regardless of wealth and regardless of whether it is for the poor, children, or healthcare. I believe all that should be done by the people that elect to do it.

However, that is a tough pill to swallow for many and for society in general. There are simply positive effects to society in general in helping those in need.

Should we of let Bear Stearns collapse? I say yes, screw them they made the bad choices. However, what would the bigger impact to our economy and ultimately to us be?

I personally say, ALL government charity should be removed PERIOD. It encourages corruption and simply is not why the government was established. Society will figure out how to manage the needs. We always had done that leading up the the 21st century.

This is of course my personal opinion. Your mileage may vary.
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Skippy25 @ 4th Jun 02:15AM:
Re: Economic Impact of National Infrastructure investments

Those are very good examples. I agree 100% and have always been an advocate for 1 nationwide network that is government owned or overseen. This "utility" is simply too important today and simply has too many barriers to entry and to many monopoly/duopoloy controlled markets.

Broadband is a market failure in virtually every market in the US.
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Skippy25 @ 4th Jun 02:19AM:
Re: good idea

Well said. Another thing that I can't quite understand is why technology gets cheaper and better and yet broadband gets more expensive. You can say increase in speeds justify the cost, but I call BS on that.
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satellite68 @ 4th Jun 09:58AM:
Re: That's A Good One

said by Steve :

said by satellite68 :

LOL-the "let the market fix everything" crowd must've jizzed in anger over the government bailing out Stearns. What happened to "freemarketeering"?? "Less government"?
Those who believe in freedom are appalled by the bailout - if I am to face the bracing air of my own decisions, why should not Bear Stearns?
I agree-I am just pointing out that they did get bailed out, and other industries are not so lucky. Why them, and not housing?
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