Want to increase GDP? Adopt broadband faster

Stan Beer
Thursday, 05 March 2009 15:42

Opinion and Analysis

Faster broadband adoption would usher in an age of renewed prosperity if a new European study is to be believed. Furthermore, the economic benefits would be felt the most in the recession strapped first world countries where ICT skills are high.

A new econometric study commissioned by Nokia Siemens Networks and conducted by economic consulting firm LECG under the direction of Professor Leonard Waverman, shows significant economic benefits from broadband if overall ICT access and skills are high.

The study explores the economic benefits from the wave of broadband diffusion that occurred in Europe and the United States over the last 10 years. In countries where ICT diffusion and usage were at medium or high levels, not only had broadband technology spread rapidly but the economic benefit from improved broadband penetration was significant.

As an example, the study predicts that adding 10 more broadband lines per 100 individuals across the US (30 million new broadband lines) would raise US GDP by over US$110 billion.

However, the study finds that in countries where ICT diffusion was relatively low, broadband has generally been adopted more slowly and has not had a measurable impact in improving economic productivity.

In these countries, while it may simply be a matter of time before the productivity benefits of broadband are fully evident, governments should take a more active role in helping to speed up broadband adoption and in helping businesses and consumers make deeper and more economically effective use of broadband.

One of the conclusions that the study reaches is that there is a significant role for policies which create incentives for, or lower the costs of, adopting broadband and computing technologies.

Governments and businesses could look at providing training in using ICT and raising awareness of the potential benefits to firms and consumers from being able to effectively use broadband and Internet technologies.

“Many countries are looking at how to provide universal access to broadband as an assumed driver of economic productivity,” said Professor Waverman.

“But far too little attention is being given to other key factors. For instance, a US stimulus package that addresses affordable access would have a far greater impact when complemented by emphasizing access to computing devices, ICT training and education."

The study supports the findings of the Connectivity Scorecard: ”Useful connectivity” depends not just on the number of people connected to a network or infrastructure, but how well those connected people utilize the network or infrastructure.

Although it is convenient for governments and the telecommunications industry to focus on the “supply side” (access) of the broadband industry, ultimately policy makers cannot ignore usage, skills and technological savviness among businesses and consumers.