Related Articles
The wireless carriers’ investment in 4G networks could be the salve that the ailing U.S. economy is looking for.
The carriers could invest between $25 billion and $53 billion in building out their 4G network through 2016, according to a study from Deloitte. That in turn could lead to the creation of 371,000 to 771,000 jobs, and gross domestic product growth of $73 billion to $151 billion.
“Investment in such a powerful form of communication contributes to the economic recovery and provides a job-creating engine for the future,” said Phil Asmundson a consultant for Deloitte.
The rise of 4G networks could provide some support for an economy still struggling to recover, and which some believe is slipping back into a recession. The recent bitter political struggle to raise the national debt ceiling, the sharp declines in the stock market, and the continued high rate of unemployment have many still concerned.
The wide-ranging estimate assumes two different scenarios. The baseline scenario has the carriers deploying 4G technology at a moderate pace with a slow transition from 3G to 4G extending into the middle of the decade. Deloitte warns that under these conditions, the U.S. firms will be vulnerable to foreign competitors looking to jump ahead in the 4G race.
The second scenario predicts a more rapid investment in 4G networks and the creation of 4G-based services before global competitors gain momentum. Deloitte said the demand stimulated by the new services would propel more network investment, “setting off a virtuous cycle of investment and market response.” Cloud services are among the primary catalysts for investment, according to Deloitte.
Telecommunications investment has remained strong over the past few years, with large companies such as AT&T and Verizon pouring money into network upgrades. AT&T has argued that its acquisition of T-Mobile would lead to new jobs and investment because it is able to expand its future 4G network across a wider stretch of the country. Chief Executive Randall Stephenson has long argued that investment in telecommunications technology is crucial to staying ahead in the world.
AT&T plans to launch its first 4G LTE markets later this summer.
Verizon, meanwhile, has spent billions of dollars upgrading its fixed-line infrastructure with fiber-optic lines to deliver television content and faster Internet service. On the wireless side, the company has been racing to build out its 4G LTE network, and recently said that it covers more than half the country.
Clearwire is also switching gears from its current 4G WiMax standard and moving toward LTE, but the company said it plans to spend only $600 million for the upgrade.
Clearwire’s largest customer and shareholder, Sprint Nextel, is planning to unveil its 4G plans in October. The company has already signed a network-hosting deal with LightSquared, which plans to start testing its 4G network with customers next year.
The widespread adoption of 4G services should also help certain segments such as disadvantaged minority groups; rural communities and areas with limited full broadband access; and small businesses, the firm said, adding the advent of 4G could work to bring those groups further into the economic mainstream.
