By Michelle Choi, an insider at Lease Advisors
With the growing demand for data coverage, the need for infrastructure development, especially in terms of cellular networks, can fuel infrastructure investments and lead to greater productivity, job outlook, and innovations within the telecommunications industry. International Telecommunications Society (ITS) studies have shown a correlation between economic growth and productivity and the level of infrastructure investment that supports it.
According to the Telecommunications Industry Association (TIA), U.S. wireless service providers currently spend $36 billion on infrastructure and equipment, an 8% growth from the previous year. They forecast that spending will rise to $39 billion in the coming year, and will total $323 billion within three years from 2014 to 2017. Companies at the forefront of cell tower infrastructure receive revenue from carriers such as Verizon, AT&T, and Sprint who service the demand for data coverage.
As this spending enters an existing system and funds development within it, the spillover between neighboring industries allows for advances that benefit the industry as well as experiencing benefits from other industries. For example, a study by Atkinson, Castro, and Ezell predicted that a $10 billion investment in broadband networks would support 498,000 US jobs from manufacturing, construction, additional equipment, and new back-office functions. A $10 billion investment in the smart grid that employs digital information and communications technology to produce and distribute electricity efficiently would not only create 239,000 jobs, but improve the cell tower infrastructure that it supports.
Infrastructure investment within the telecom industry and beyond sees a burgeoning future—the Build America Infrastructure Investment Summit in September of last year gathered investors, asset managers, construction companies, and other players together to discuss intentions to deploy more than $50 billion in U.S. infrastructure. With the private sector exceeding the public sector in infrastructure spending, policy makers could also create regulatory incentives to encourage investment. The resulting efficiency, sustainability, and reliability of developed systems as outputs would far outweigh the inputs in this kind of an investment.
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