U.S. telcos and cablecos could start getting stimulus checks, too

Millions of Americans around the country are now seeing $1,400 coronavirus stimulus checks show up in their bank accounts. And there’s a good chance that at least some of that money could find its way into the bottom line of telecom providers, considering the ongoing value of Internet connections amid a pandemic forcing homebound working and schooling.

But that spending might just be the start of a much bigger stimulus bonanza for US telecom and cable network operators and vendors in the near future.

“The Biden administration is likely to be a tailwind, not a headwind, for broadband providers,” wrote the financial analysts at MoffettNathanson in a note to investors earlier this week. “Up to now, almost all of the focus on the new administration has been on regulatory risk, and, in particular, on the prospects for Title II reclassification [for net neutrality] and whether that reclassification could lead to price regulation. Not enough attention has been paid to the upside potential from stimulus spending.”

Stimulating spending

Specifically, the analysts noted that lawmakers have already allocated billions of dollars toward various broadband projects in just the past few months, including:

• The Emergency Broadband Benefit Program allocates roughly $3.2 billion to help poorer Americans pay for broadband services. It provides around $50 per month for services and up to $100 for a device.
• The Emergency Connectivity Fund appropriates around $7.2 billion for communications services and equipment for students, teachers and library patrons at locations other than a school or a library.
• And the Coronavirus Capital Projects Fund dedicates up to $10 billion for items including telecom and cable networks.

The FCC is currently in the process of directing some of this spending, and it appears to be working with both haste and zest. “I look forward to implementing this program, so we can help ensure that no child is left offline,” noted FCC Acting Chairwoman Jessica Rosenworcel of the Emergency Connectivity Fund, in a recent statement.

The MoffettNathanson analysts expressed similar gusto about the potential for so much funding – up to $20 billion – to be directed to cable and telco providers, among others.

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