IBM chases stimulus spending on rural broadband

Two articles in the business section of the NY Times discuss rural broadband. In one:

..., I.B.M. piped up to say that it is working with rural electric cooperatives to offer high-speed Internet service, delivered over power lines. Technology to send broadband over power lines has been around for several years, but it typically hasn’t been able to offer enough capacity at a low enough price to beat service from cable and phone companies. But with government subsidies, the approach is starting to be deployed in areas that don’t have access to other forms of broadband. 

IBM will be partnering with rural electric cooperatives to gear up rural power lines because, first, there's "pent-up demand" in states such as Alabama, Indiana, Michigan and Virginia, and second, there's $7 billion in stimulus funding coming out of Washington pretty soon. 

But what will high-speed Internet do for those rural economies?

Not much, according to th

 

Raul Katz, a Columbia Business School professor, admitted the difficulty in counting jobs, but he nonetheless presented a paper that tried to quantify the effect of the broadband stimulus program on employment.

“We know construction will generate jobs,” Mr. Katz said. By his count, the stimulus bill will create 128, 000 jobs designing, building and administering the broadband networks. That figure also includes a multiplier effect that assumes that every 10 people directly hired by these projects will spend enough money to create 8 more jobs in other sectors.

Beyond the construction, things get more than a little fuzzy. There is some research that shows that spending on networks will create new applications — be it “telemedicine” or e-commerce — that will spur more employment. Over the next four years, Mr. Katz allocates 378,000 jobs to these sources.

(snip)

Then there is the John Henry Effect (my term refering to the railroad-building legend who raced against a steam hammer). Technology that helps fewer people get more work done may be good for the economy in the long run, but it makes extra workers redundant. Mr. Katz says bringing broadband to rural areas will eliminate 266,000 jobs.

The biggest question mark, in Mr. Katz’s analysis, is how zippy Internet lines connect the farmers and their families into the global economy where jobs are increasingly outsourced to wherever they can be performed cheapest. Some people may benefit by working for companies like Jet Blue, that hire people to work answering the telephone in their homes. On the other hand, when the general store has broadband, it can send its tax returns to India rather than hiring the corner C.P.A. Mr. Katz published several scenarios that range from a loss of 110,000 jobs to the creation of 164,000 jobs.

Obviously, inquiry needs to focus on factors other than the sheer number of jobs created. What are the relative wages? Are people who are currently unemployable--due to disability, remoteness, whatever--able to get work?

I question, also, to what extent job creation is the appropriate metric for measuring the value of rural broadband. Are there other social benefits, triple-bottom-line kinds of benefits, that result from less miles driven, fewer rural-road accidents, and such? And what are the local factors, the differences between a town in rural Virginia and one in rural Alabama, that come into play in relation to improved social and economic well-being?