This essay is part of a package of articles that examines the US stimulus broadly and explores its impact on three sectors in particular: health care, energy, and broadband.

The United States ranks an unflattering 15th in global broadband penetration—behind many of its competitors. The American Recovery and Reinvestment Act (ARRA) will sink $7.2 billion into improving the US broadband infrastructure. In parallel, the Federal Communications Commission is defining a national strategy that could set formal US broadband targets. In the near term, however, the stimulus plan’s goal is clear: improving access among unserved and underserved US communities.

This spending could have complex and powerful effects on the companies that broadband technology touches, including large telephone carriers, cable operators, and wireless providers. It represents a significant part of projected telecom capital spending over the next few years (exhibit)—perhaps as much as 50 percent if the downturn continues to crimp private-sector spending severely. The choice of wireline rather than wireless technologies as the preferred delivery vehicle, for example, will have major competitive implications for service providers. In all likelihood, the impact will spill over to consumer electronics, because wireless access favors handhelds and smart phones, while wireline access...