February 24, 2009, 9:11 AM — Could US$7.2 billion in federal funds committed to boost broadband in the U.S. transform small towns like Truckee, Calif., into the next Mumbai, India, filled with beehives of call centers that employ local residents?
The money won't be a major boon to any one town, certainly not on the scale of Mumbai, a major city famous for its many call centers that handle technical support calls from U.S. computer users.
But the federal money is seen by many broadband analysts as a critical means of building new or completing hundreds of stalled municipal Wi-Fi and other broadband projects nationwide.
The money could definitely breath life back into the old, mostly failed municipal Wi-Fi movement that first came to life in 2004 and deteriorated to a terminal state last year, said Craig Settles, an analyst and president of consulting firm Successful.com.
"Most assuredly, the [broadband stimulus package] could reinvigorate municipal Wi-Fi," Settles said in an interview today. "Lack of money has indeed been a big factor."
The federal money for broadband was contained in the $789 billion economic stimulus package sign into law last week by President Obama.
What's more, with a strong financial shot in the arm, rural towns and suburbs could begin offering broadband to attract companies in addition to offering lower office rents than those demanded in big cities, Settles said.
That kind of economic growth in new locations could lure companies to build in the U.S., rather than moving jobs abroad, Settles said.
Asked whether the stimulus plan could mean call centers such as those in Mumbai could start showing up in central Kansas, Settles said, "It depends on how fast the stimulus works, but there is pent-up demand in the U.S. for broadband. If a company wanted to expand a business, broadband could decide if they go to rural Kansas rather than Milwaukee and would be a driver to get a company to open a business in a smaller community with less overhead. Generally, it might still be cheaper to go abroad, but broadband would help companies afford to build not just call centers but IT service operations."
Opening such businesses in the U.S instead of abroad would certainly lessen "administrative hassles," he added.
The broadband provision of the stimulus package requires governments and entities to use broadband construction funds within two years of receiving a grant under the plan. A big question is how two government agencies, the National Telecommunications and Information Administration of the U.S. Department of Commerce and the U.S. Department of Agriculture's Rural Utilities Service, will set up details for the requests for proposals to get access to the funds. Decisions on those details are expected to be posted on the Obama administration's Recovery.gov Web site in the next 60 days or so.
Broadband has come to mean Internet services with speeds of 2Mbit/sec. Many analysts say Internet service would need to be available at speeds greater than 2Mbit/sec., whether over Wi-Fi, WiMax, fiber, wireless WAN or other technologies.
Faster speeds mean that companies can use networks to transfer video and videoconferencing, as well as data-rich files, such as images used in medical applications. The broadband initiative will dovetail well with federal dollars in another part of the package for health care records, some analysts said. The Institute of Electronics and Electronics Engineers-USA also supported the broadband stimulus package saying it is needed for a wide range of technologies that depend on broadband, including health care.
Meanwhile, there are conservative voices that question the broadband deployment, including the Center for Communications and Competitive Policy at the Progress and Freedom Foundation in Washington.
Barbara Esbin, the center's director, said the broadband market has not failed, meaning government intervention is not merited. "Normally when the government intervenes when there's not a market failure, it does more harm than good," she told IDG News Service recently.
Settles, who has studied the impact of broadband at the local and regional level, said there could be as many as 400 broadband proposals in various communities nationwide that have not reached fruition, including Benecia, Calif., a city with 25,000 residents located 35 miles northeast of San Francisco. In some communities, broadband has already proved to be an economic stimulus, Settle said. For example, a fiber-cable network built in Lafayette, La., has helped attract a 1,000-worker call center to the area. Truckee, east of San Francisco, is a city of 16,000 that could be the kind of community interested in attracting jobs based on broadband, he said.
In Bristol, Va., a broadband network installed two years ago has drawn high-tech companies that hired local labor. Sometimes the labor is skilled in another line of work and needs training for jobs that depend on technology that relies on fast networks, Settles said. In Greene County, N.C., a county initiative for broadband has stimulated jobs as well.
Settles said sprawling Oklahoma City, Okla., would be a prime candidate for broadband stimulus dollars to lure businesses. "Their land mass is so large," he said.
Information from the IDG News Service was included in this report.
