Broadband provider network capital expenditures declined nearly $1 billion in 2015 to $76 billion, according to USTelecom’s annual broadband investment research report. While the 2015 decline was small when compared to past economic cycles, broadband industry investment is a core component in capital investment spending, contributing to the overall health of the U.S. economy.
The Progressive Policy Institute, which ranks capital spending by top U.S. companies and industries, flagged sluggish growth in the energy and telecom sectors in a report released earlier this year, attributing it to the drop in oil prices and regulatory uncertainty in the telecom sector.
During that period, the steepest investment declines occurred in the 2001-2003 economic slump. Spending picked up in 2004 and has moved in a positive direction most years with the exception of the 2008-09 economic slowdown. More recently, the series showed modest spending increases from 2012-2014 before last year’s drop-off in spending.
Broadband investment, including wireline investment, remains critical to modernizing the nation’s network infrastructure and maintaining strong international leadership. According to the Cisco Visual Networking Index, U.S. Internet traffic, after growing three and a half times over the last five years, is expected to grow nearly two-and-a-half times again over the next five years.
Traffic growth will be driven by consumer and business use of streaming media, faster 5G mobile networks, the growing Internet of Things, and cloud-based applications.
These applications, the Internet connections they rely upon, and the mobile and data center infrastructures that deliver them will require constant broadband investment in ever greater capacity, speed, and reliability.