Broadband rollout pitched as a recession-buster

A high-speed broadband infrastructure project is probably the only way the government can use public money effectively in the recession, an audience of top tech execs is told

Now could be the right time for governments to spend money on a high-speed broadband rollouts, an audience of top UK technology executives heard on Tuesday.

Jon Moulton, a managing partner at private equity firm Alchemy Partners, said at London's Regent Conference that at this stage in the economic downturn, an infrastructure project is one of the few ways in which public money can be effectively used.

"A broadband rollout is a useful way to put money out there fairly quickly," Moulton told delegates at the economic prospects conference, which is run by the UK's technology-industry trade association, Intellect. "It's probably the only area where we can do something substantial at this point in the recession."

The UK government has never explicitly said it will fund the introduction of next-generation broadband access. In fact, before the current economic crisis, it was decidedly against the idea.

However, communications minister Lord Carter said in the recent interim version of his Digital Britain report that the government would, by the time of the release of the final version of the report, "have considered the value-for-money case for whether public incentives have a part to play in enabling further next-generation broadband deployment, beyond current market-led initiatives".

Moulton's limited enthusiasm for such state stimulus projects was not shared by John Gantz, the chief research officer at IDC. Speaking about technological projects in the US's proposed stimulus package — healthcare technology, the electricity smart grid and green technology — Gantz said that "any one of [those] initiatives isn't going to do very much for the IT sector".

"Maybe all of them together might do some good, [but] we're discounting their impact on IT markets," Gantz said.

Gantz, like most speakers at the event, was tentative about predicting the economic situation for the IT industry over the next few years. However, he identified software and services as areas that would outperform other sectors, saying they were "a little harder to slow down". He gave a particularly downbeat assessment of the PC and server markets in 2009. He predicted that spending in the two markets would drop by 6.8 percent and 8.6 percent respectively, but suggested that both might recover slightly in 2010.

"We also have a new geography — emerging economies will bring in more than half of total IT spending between 2009 and 2011," Gantz said, identifying the Asia-Pacific region as a particular growth area.

Gantz also said traditional IT companies would see 4.4 percent growth between 2009 and 2012, but newer sectors such as data and IP voice services would see twice as much growth.


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