Tuesday, February 23, 2010

The economic impact of broadband


Prompted by references in FCC Chairman Julius Genachowski's speech to the NARUC Conference in Washington on 16 February, I thought it would be useful to bring together some links to reports documenting the economic impact of investement in broadband infrastructure. So here goes:
  • The Brookings Institution ("a nonprofit public policy organization based in Washington") - An international look at high-speed broadband, February 2010: "...it is clear drawing on the experience of other nations that high-speed broadband enhances economic development, social connections, civic engagement, and online government. Broadband no longer is just a technology issue, but is creating new applications in areas such as health care, education, energy, and entertainment...Countries with fast and accessible networks are able to fuel innovation and create new types of applications for individuals, businesses, and governments."
  • Massachusetts Institute of Technology, MIT ("The mission of MIT is to advance knowledge and educate students in science, technology, and other areas of scholarship that will best serve the nation and the world in the 21st century") - Measuring the Economic Impact of Broadband Deployment, February 2006: "The analysis presented in this report represents a first attempt to measure the impact of already-deployed broadband technologies...The results support the view that broadband access does enhance economic growth and performance, and that the assumed economic impacts of broadband are real and measurable."
  • The World Bank ("...a vital source of financial and technical assistance to developing countries around the world") - Broadband Infrastructure Investment in Stimulus Packages: Relevance for Developing Countries, June 2009: "In response to the financial crisis, infrastructure expenditure can play a major role as a fiscal stimulus by helping to create new jobs...More importantly, government spending in broadband infrastructure is expected to have impact on long-run productive activities in other sectors of the economy. Network investments are typical examples of productive government investment because of the positive externalities they provide. ICT especially is a General Purpose Technology that facilitates great leaps of innovation and results in substantial restructuring of the economy. It is proven to contribute to virtually every sector in the economy through productivity gains. Therefore, investments in broadband infrastructure may have spillover effects and increase payoffs of investments in other sectors. In addition, broadband infrastructure, like all telecommunications networks, also has network effect (also referred to as positive network externalities) where the overall value of a network increases as the number of consumers goes up."
  • Organisation for Economic Co-operation and Development, OECD ("...an international organisation helping governments tackle the economic, social and governance challenges of a globalised economy") - The role of communication infrastructure investment in economic recovery, May 2009: "Broadband networks are increasingly recognised as fundamental for economic and social development. They serve as a communication and transaction platform for the entire economy and can improve productivity across all sectors. Advanced communication networks are a key component of innovative ecosystems and support economic growth. Broadband networks also increase the impact and efficiency of public and private investments which depend on high-speed communications. Broadband is needed as a complementary investment to other infrastructure such as buildings, roads, transportation systems, health and electricity grids, allowing them to be “smart” and save energy, assist the aging, improve safety and adapt to new ideas."
  • OECD (again) - Policy Responses to the Economic Crisis: Investing in Innovation for Long-Term Growth, June 2009: “Investment in high speed broadband communication networks that are part of economic stimulus packages must be accompanied by regulatory frameworks which support open access to networks and competition in the market. Such investment should also aim at stimulating the use of information and communication technologies (ICTs) to secure economic and social benefits. Linking ICT investment with other large physical infrastructure investment, such as buildings, roads, transportation systems, health and electricity grids, allows them to be “smart” and save energy, assist the aging, improve safety and adapt to new ideas. These infrastructures can also lower the barriers to entrepreneurial activities and provide means for the efficient and “green” delivery of energy, mobility and important social services – training, job search and networking…Besides direct investment in broadband, stimulus packages often have a more indirect but larger impact on ICT deployment and use, for example investment in education, "intelligent" transport systems, greening the economy, smart buildings and grids, health, the environment, and modernising public services. Investments flowing into these areas can often be much bigger in monetary terms than those for broadband alone (e.g. in the US, $19 billion for healthcare ICTs and $100 billion for modern infrastructure, compared with $7 billion for broadband). The fostering of ICT infrastructure and services in, for example, healthcare or underpinning research networks will also provide the technological basis and platform for further ICT-based innovation in other fields as there are, e.g. natural synergies between broadband deployment and making other investments work, e.g. smart electrical grids and transport systems.”
  • DCITA (Department of Communications, Information Technology and the Arts, Australia) - The economic effects of broadband: an Australian perspective, May 2007: "There is no doubt of the importance of broadband to the benefits generated by ICTs in areas where bandwidth hungry activities are significant...care needs to be taken, however, not attribute to broadband benefits that should in part be attributed to other critical factors...What this means for an assessment of the benefits of broadband is that a counterfactual analysis would have to control for the influence of changes to these other critical factors that may change simultaneously with the advent of broadband but not be caused by it. In some areas of e-health, such as case conferencing and the transfer of digital images, for example, the evidence also indicates that broadband has helped to generate economic benefits. Again, however, broadband has not been not alone in generating these benefits...As we move into the future, broadband is likely to generate higher economic benefits than it has to date, whatever that quantum may be."
  • The American Consumer Institute Centre for Citizen Research, ACI ("...a 501(c)(3) nonprofit educational and research institute (that) focuses on economic policy issues that affect society as a whole") - Broadband Services: Economic and Environmental Benefits, October 2007: "According to a number of studies, IT investment, including investment in broadband networks, has provided an important catalyst for operational efficiency in the US...Consistent with the general conclusion that IT investment spurs economic growth and productivity, a handful of studies have made a direct link between broadband investment and consumer benefits...This study has shown that information technologies can produce significant reductions in greenhouse gas emissions and can do so without sacrificing economic growth and productivity.  In fact, a review of the literature shows that broadband investment and use have significant stimulative effects on economic growth and productivity, providing the best of both worlds – improving both environmental and economic welfare."
  • The Benton Foundation ("...works to ensure that media and telecommunications serve the public interest and enhance our democracy") - An action plan for America - using technology and innovation to address our nation's critical challenges - a report for the next administration, 2008: "The qualitative and quantitative evidence is clear and consistent: at the individual, local/community, and national levels, the deployment of fast, reliable, and affordable broadband will stimulate tremendous economic development and create hundreds of thousands – if not millions – of good-paying jobs that might otherwise be lost or go offshore."
  • The Public Policy Institute of California, PPIC ("...a nonprofit, nonpartisan think tank. We are dedicated to informing and improving public policy in California through independent, objective, nonpartisan research") - Does broadband boost local economic development?, January 2010: "Our analysis indicates a positive relationship between broadband expansion and economic growth. This relationship is stronger in industries that rely more on information technology and in areas with lower population densities."
  • Research by the Sacramento Regional Research Institute on behalf of AT&T showed a strong correlation between broadband growth in California and the number of new jobs available, forecasting that even small increases in broadband use could substantially affect the state over the next 10 years - Economic effects of increased broadband usage in California, November 2007: "Overall, SRRI’s analysis demonstrates that increased broadband use (and migration from dial-up to broadband access) within California has had a positive effect on employment and payroll growth."
  • A analysis by the National Economic Council titled Recovery Act Investments in Broadband: leveraging federal dollars to create jobs and connect America that accompanied the announcement of the first awards under the USA's $7.2 Billion Recovery Act Broadband Program in December 2009 reported that "These critical broadband investments will create tens of thousands of jobs and stimulate the economy in the near term. By providing broadband-enabled opportunities to previously underserved communities, these investments will also lay the foundation for long-term regional economic development and foster a digitally literate workforce that can compete in the new knowledge-based economy."

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