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Geoff Daily

App-Rising.com covers the development and adoption of broadband applications, the deployment of and need for broadband networks, and the demands placed on policy to adapt to the revolutionary opportunities made possible by the Internet.

App-Rising.com is written by Geoff Daily, a DC-based technology journalist, broadband activist, marketing consultant, and Internet entrepreneur.

App-Rising.com is supported in part by AT&T;, however all views and opinions expressed herein are solely my own.

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February 12, 2009 10:45 AM

Turning Billions of Broadband Investment into Trillions of Economic Growth

Wow - Check out this math:

So I've been proposing we put $1 billion of budget authority towards the establishment of a fast-track partial loan guarantee program for deploying next-generation broadband to rural America.

As I've suggested earlier, that $1 billion budget would allow us to distribute $25 billion in partial guarantees, which would enable $50 billion of private capital to be invested in the deployment of next-generation broadband networks.

But it just dawned on me we can take this a step further.

The government seems to have come to agree with the research of my friend Michael Curri, the world's leading broadband economist, that says that for every dollar invested in broadband the economy realizes a tenfold return.

So if we can enable $50 billion in investment, that means the economy will see a boost of $500 billion.

And that number could be higher as that 10x multiplier refers to broadband in general not next-generation broadband specifically. With more capacity businesses, individuals, and institutions can do more things more quickly and more efficiently, so that 10x could be much higher for next-generation broadband.

Also Communications Workers of America has suggested an even higher multiplier for generic broadband of 20x. So $50 billion in broadband investment could create $1 trillion in economic growth.

Taking this one step further, if we were to create a $5 billion fast-track partial loan guarantee program for which all communities were eligible we could distribute $125 billion in partial guarantees enabling $250 billion in investment, enough to wire the whole country with at least one next-generation broadband network.

We're now talking about $2.5-5 trillion of economic growth.

Back to my opening statement - WOW!

And these multipliers are only taking into consideration the way we use broadband today. Assuming that our ability to utilize broadband to drive efficiencies and create opportunities will only increase over time, it suggests that this multiplier effect will also increase over time.

So for $5 billion of government dollars, we'd open up the potential of realizing $5 trillion+ of economic growth.

Talk about a good investment!

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Comments (1)

You are proposing to make loans with 25:1 leverage?

Do you work for Countrywide?

And can you cite quantitative evidence for a 10:1 return on residential broadband investments.

Posted by Andrew Schmitt on February 13, 2009 6:00 PM

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