THE COWEN INSIGHT
COVID-19 is elevating the importance of broadband connectivity. We think any Stimulus-4 bill would include significant new funding for broadband buildout.
COVID-19 Elevates Broadband in Washington
(Paul Gallant, Cowen Washington Research Group)
The sudden shift to teleworking and tele-education due to COVID-19 has spotlighted the critical importance of residential broadband to the economy, education, and society. We think this will lead to a more activist telecom agenda in 2020 and beyond.
We think two things in particular are likely. The first is more federal support for broadband expansion — good for telecom equipment companies. But the second is greater risk to ISPs from a potential Biden victory in November based on Democrats’ concerns about low-income and minority broadband subscription levels.
The next stimulus bill will likely focus on infrastructure.
Stimulus-4 Legislation Including Broadband Funds
Negotiations over the telecom piece of Stimulus-4 are still early stage, but here are a few pieces we think will get broad support:
- Rural Broadband Funds
- Funding both for unserved areas and for overbuilding areas “underserved” by existing ISPs
- Vouchers for low-income broadband
If Stimulus-4 fails and Biden wins, fallout from COVID-19 could well lead his FCC to pursue significant new broadband policies independent of Congress
Communications Equipment Beneficiaries (Paul Silverstein and Elizabeth Pate, Cowen Telecom & Networking Equipment Analysts)
As we have previously discussed, any meaningful increase in Rural Digital Opportunity Fund (RDOF) would meaningfully benefit the communications and networking equipment industry, in particular the broadband access equipment sector—specifically fiber-based broadband access equipment—and, to a lesser extent, the optical systems equipment sector.
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