Economic growth, courtesy of high speed internet

The latest Business Week features a cover story on the resurgence of our nation's telecom industry and the role that high speed internet has played in jumpstarting that growth.

Beginning in late 2000, the burst of the dotcom bubble led to an even greater collapse in the telecommunications industry. Over the next three years 655 telecom companies went bankrupt, including WorldCom in the largest bankruptcy filing ever.

But by 2004, the industry was beginning to get back on its feet, fueled by the new possibilities created by high speed internet connections. More recently, it's actually surpassed the level it was before the collapse seven years ago.

Over the past year, however, the telecom industry has roared back to life. Credit a steady rise in appetite for broadband Internet connections, which enable easy consumption of watch-my-cat video clips, iPod music files, and such Web-inspired services as free Internet phoning. Indeed, this year broadband adoption among U.S. adults is expected to cross the important threshold of 50%. Capital spending is on the rise as companies invest to build high-speed networks.

That last bit is crucial – investment in high speed internet infrastructure is essential for all Americans to enjoy the personal and economic benefits of the digital age. Telecom industry profits are expected to reach $72 billion this year – an all-time high – and it's encouraging to hear that a significant portion of that is being invested in new capital.

After all, as the author points out,

A dollar spent on telecom infrastructure produces an outsize impact on the U.S. economy as a whole. Indeed, a growing body of research has found that telecom investment plays a vital role in stimulating economic growth and productivity--more so than money spent on roads, electricity, or even education. Communication assets generate massive benefits by slashing the cost of doing business across the economy. A high-speed data network suddenly makes it easier and cheaper for all kinds of workers to place orders, service customers, and drum up new business.

The article then cited a 2001 study that found "the spread of land-based telecommunications networks in 21 developed nations accounted for one-third of the increase in economic output between 1970 and 1990." That's a huge chunk of economic growth fueled by telecommunications infrastructure.

This ripple effect makes high speed internet investment all the more important. Not only can individuals reap manifold benefits from applications like telemedicine, distance learning, and new entertainment options, but society benefits as a whole from a more robust economy. It's a win-win situation for everyone.

Telecom: Back from the Dead (Business Week)