UBS: Details emerge on Obama's $40B broadband stimulus
President-Elect Barack Obama is likely to direct up to $40 billion in grants and loans toward improving broadband availability and speeds as part of broader economic stimulus efforts, according to UBS analysts.
In a research note this morning, UBS analysts said they expect Obama’s economic stimulus plan to include two main provisions for broadband: $5 billion to $10 billion in grants to expand broadband to unserved areas (at a minimum speed of 768 kilobits per second) and $30 billion in interest-free loans for boosting broadband speeds – to 50 megabits per second downstream and 20 Mb/s upstream for wireline networks and 10 Mb/s downstream, 2 Mb/s upstream for wireless networks.
A draft of the proposed $825-billion economic stimulus bill circulating on Capitol Hill today lists $6 billion for expanding broadband "so businesses in rural and other underserved areas can link up to the global economy," adding, "For every dollar invested in broadband the economy sees a ten-fold return on that investment."
The grant money will likely be used by telcos and municipalities to bring broadband to the 10% to 15% of American homes (about 13 million homes) that can’t get it today, UBS said, adding that this provision could well aid the job-creation goals of the larger economic stimulus effort.
The loans will likely be used to speed rollouts of 4G wireless, fiber-to-the-premises (FTTP) and DOCSIS 3.0, rollouts major cable companies slowed last fall amid a broad slowdown in carrier purchasing.
“While we would not expect AT&T to change its strategy, we believe Verizon could be more aggressive with its current FTTP rollout,” UBS analysts said.
In a presentation at an investor conference last week, Verizon Chief Executive Officer Ivan Seidenberg said the company would wait until next year, when it expects to reach its goal of passing 18 million homes with FTTP, to determine what to do next. At least one analyst expects Verizon to overbuild FTTP in adjacent areas outside its local service footprint.
At an industry event this week, Blair Levin, a key member of the Obama transition team, cautioned listeners not to confuse the broadband component of Obama’s economic stimulus plan – which is focused largely on rapid job creation – with Obama’s longer-term plans to address broadband availability, which will continue independently of the economic stimulus efforts he is expected to introduce as soon as possible once his term begins next week.
According to UBS, the equipment vendors best positioned to benefit from these broadband stimulus plans are Adtran and Arris, as they have the highest exposure to US capital spending. Other beneficiaries could include Ciena, Commscope, Juniper Networks and Tellabs to a lesser extent, UBS said.
Want to use this article? Click here for options!
© 2014 Penton Media Inc.
In this Webinar you will learn how to create a real-time relationship with your customers, how to proactively improve the customer experience, and how to successfully target and cross-sell services to boost incremental revenue.
- Megabytes to Megabucks, Bandwidth to Business Models: How 4G Is Changing Everything
- How to Unplug Your Redundant Telco Apps To Save Money and Improve Efficiency
- When IaaS Isn't Enough: Service Provider Business Models to Drive Growth and Build Margin
- How to Transform Your Aging Telco Voice Network to Drive New Profits and Revenue
- Creative Licensing Approaches for Telcos & Their Network Equipment Vendors
- Smart Home Opportunity: Balancing Customer Data & Privacy
This paper discusses the rise of Diameter and benefits of Diameter Protocol.
- Conducting The Orchestration – Order Management at the Speed of Business
- Toward a Converged Network Edge
- Beyond Spam – Email Security in the Age of Blended Threats
- 6 Important Steps to Evaluating a Web Filtering Solution
- The Expertise to Protect You from Botnet and DDoS Attacks
- Seeing is Believing – Bridging the Order Visibility Gap
Service providers are under tremendous pressure to turn up new services faster then before and, at the same time,
to do it at less expense - and intra-office fiber is one of the biggest challenges in terms of both cost and service
From the Blog
Join the Discussion
Get more out of Connected Planet by visiting our related resources below:
Connected Planet highlights the next generation of service providers, as well as how their customers use services in new ways.Subscribe Now