Wednesday, January 07, 2009

Study estimates tax incentives for fiber to the premises would create more than half million jobs over 3 years

The Fiber to the Home Council commissioned a study issued this week that concludes tax incentives to spur the deployment of fiber optics to the premises (FTTP) would generate more than 200,000 jobs in each of the next three years (2009-11) and increase economic output by more than $100 billion during the period. The report examines the economic impact of allowing builders of broadband infrastructure to fully depreciate their investments and authorizing private and public entities to issue bonds that feature federal income tax credits to help cover the outlay for the deployments.

The report's release is apparently timed in hopes it will be considered as part of a massive federal economic stimulus and infrastructure construction measure being readied by Congress for President-elect Barack Obama's signature soon after he takes office later this month.

The report cites data compiled by Morgan Stanley estimating the U.S. residential broadband penetration rate at approximately 56 percent of all households, projected to grow to 61.1 percent by 2011. Without the proposed tax incentives, an average of 7.3 million homes (equal to six percent of all households) will lack broadband access from 2009 through 2011 without the proposed tax incentives, the study concludes citing Morgan Stanley estimates.

What's odd about the study considering it was done for an organization promoting the use of fiber is that it also examines the effect of tax incentives directed at upgrading and building out existing metal wire-based cable and telco DSL infrastructure offering throughput of 5 Mbs down and 1 Mbs up.

As this blog recently asserted, federal incentives and funding should be targeted to local private and public sector entities with the specific goal of modernizing telecommunications infrastructure over the last mile. History has shown that tax and other financial incentives put in place as part of the federal Telecommunications Act of 1996 failed to provide adequate impetus for large incumbent telcos to build out broadband infrastructure to serve all homes and businesses, leading to the current problem of widespread and persistent broadband black holes.

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