Will You Benefit From This Government Handout?
President Obama this week signed an executive order that could cut broadband deployment costs by as much as 90% in some cases.
Timing and access are the keys. The White House edict requires agencies to adopt a uniform set of standards for using federal lands for broadband construction and requires the Department of Transportation to allow carriers to tag along and bury new cabling during street-improvement projects. The latter idea, known as the "dig once" rule, should cut deployment costs considerably.
The order also creates what the White House is calling "US Ignite," a partnership of communities and campuses connected on a network operating at a top speed of 1 gigabit per second. The idea? Create a test bed for new public-interest applications that take advantage of a superfast Internet.
"Building a nationwide broadband network will strengthen our economy and put more Americans back to work," Obama said in a statement issued by the White House. "By connecting every corner of our country to the digital age, we can help our businesses become more competitive, our students become more informed, and our citizens become more engaged."
Investors appreciate Uncle Sam's newfound aggressiveness. Shares of Comcast (NAS: CMCSA) , AT&T (NYS: T) , and Verizon (NYS: VZ) -- combined, three of the nation's top four broadband suppliers -- are up more than 2.5% since Wednesday's announcement, beating the S&P 500's 1.5% gain over the same period.
Chances are all three will receive some funding as a result of the order, but the White House says "over six" carriers are due some proceeds for "expanding their broadband networks." What that means exactly is up for debate. But one thing is for sure: Thanks to Uncle Sam, the major telecom carriers are about to get a boost right when they -- and their shareholders -- need it most.
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At the time this article was published Fool contributorTim Beyersis a member of theMotley Fool Rule Breakersstock-picking team and the Motley Fool Supernova Odyssey I mission. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim'sWeb home,portfolio holdings, andFoolish writings, or connect with him onGoogle+or Twitter, where he goes by@milehighfool. You can also get his insightsdelivered directly to your RSS reader.The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.
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