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Tickers in this Article: IIH, BDH, EMIF, IGN, FTR, OCNW, INFN, BRCM, GLW
When investors tend to think about infrastructure opportunities, they generally focus on the electrical grid, roads and bridges, and pipelines and water needs. As such, they tend to place their infrastructure bets in funds such as the iShares S&P Emerging Markets Infrastructure (Nasdaq:EMIF). However, equally as important is upgrading communications infrastructure, both in the United States and in developing countries. High-speed internet is no longer considered a luxury and wireless networks are a prerequisite in order to compete on a global level. The United States currently ranks 25th in the world in terms of broadband penetration, with 50% of homes having access to high-speed internet. A generalized broadband and wireless communications build-out across the globe is needed. Governments around the world are starting to take notice of this fact and have been acting accordingly.

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Another Round of Stimulus
Recently, the Obama administration announced another $800 million in loan guarantees and grants for the build-out of broadband networks to reach homes, schools and businesses. Private investors have matched nearly $200 million for the project. This latest round of broadband stimulus comes on the back of more than $2.7 billion in grants and loans awarded to more than 260 projects across the country since December 2009. These grants for broadband improvements, according to industry group Connected Nation, will have dramatic and direct effects on the economy. For every 7% increase in penetration, nearly 2.4 million jobs are created and the economy receives $134 billion in direct impact.

This phenomenon is happening around the world. Australia recently unveiled its plans for a $43 billion National Broadband Network (NBN) that will reach 90% of homes and workplaces with an internet connection speed of 100 megabits a second. Construction of the NBN will take place over eight years. In South Korea, after a 10-year broadband binge, nearly 94% of the population has access to high-speed internet, with speeds nearly 75% faster than the United States.

A Broadband Portfolio
The $3.5 billion pledged from the United States is a drop in the bucket compared to the estimated $23.5 billion need to complete the broadband build-out in rural America, but it is a start. Increased worldwide government spending on communication infrastructure will benefit the companies involved. Investors wanting to play the trend have a few options. Both the Internet Infrastructure HOLDRs (NYSE:IIH) and the Broadband HOLDRs (NYSE:BDH) offer a broad spectrum of companies involved in networking. For investors uncomfortable with the HOLDRs security type, the iShares S&P North America Tech-Multimedia Network ETF (NYSE:IGN) makes a perfect choice. However, some of the best gains can be had with individual companies within the sector.

One of the biggest components of the U.S. plan is making sure rural America has access to broadband. Companies that produce equipment for Tier 2 and Tier 3 carriers such as Frontier Communications (NYSE:FTR) should greatly benefit. Communications equipment manufacturers and middle-mile companies such as Occam Networks (Nasdaq:OCNW) and Infinera (Nasdaq:INFN) should see the lion's share of stimulus money.

Semiconductor companies that specialize in communications chips are another way to play the build-out. Chip makers such as Broadcom (Nasdaq:BRCM) have their hands in almost all communications equipment; more routers and switchers boils down to more semiconductors.

Although Corning (NYSE:GLW) has branched out into many different avenues over the years, it still remains the leader in fiber optics. Its cables and optical fibers will be in great demand communications networks are augmented worldwide.

Bottom Line
Infrastructure remains one of the best long-term investment ideas around. However, investors shouldn't just think of the obvious roads and bridges. The communication and broadband build-up will need to be just as big for nations to stay competitive. As both developed and emerging nations increase high-speed internet penetration, companies involved will see increasing revenues. Investors may want to think about adding some exposure to this segment. (For more, check out Dialing Up Choice Telecom Stocks.)

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