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Broadband as an Economic Driver

What Are the Economic Benefits of Broadband?



Broadband Economy


Broadband for Economic Development

Impact of Broadband

Impact of Broadband

There is little debate that increasing broadband access spurs economic development, but can this be quantified? There have been numerous studies by economic and telecommunications analysts which study the correlation between broadband access and number of jobs created, as well as measuring the economic impact of broadband. There are multiple economic factors that could affect the results, as well many facets of providing broadband Internet access, which have the potential to significantly affect the results.

For example, what is the economic impact of increased broadband adoption? At what levels of broadband availability do local communities realize the highest rate of new jobs? Does the type or speed of the broadband connection affect the economic impact?

These questions all have even more significance as President Obama implements an ambitious broadband plan for America. As national broadband policies are driven from the nation’s Capital, State and local leaders try to close gaps in broadband availability and adoption. When deciding where to invest broadband dollars, broadband providers try to prove where funding would provide the most benefits. With the state of the economy the lowest it has been in years and unemployment rates in double digits, putting money into broadband projects can definitely spur economic development and increase jobs. The only question is quantifying how much, and how many jobs does each broadband dollar add.

There have been numerous studies completed on the economic effects of broadband. The following formulas and statistics represent a compilation of some of the leading research:

• ITIF Estimates A $10 Billion Investment In Broadband Would Produce Nearly 500,000 New Jobs. "These investments will create new jobs up and down the economic food chain, said Robert Atkinson, president of the Information Technology and Innovation Foundation. Those include the construction workers and telecommunications technicians who must dig up streets, lay down fiber-optic lines and install wireless towers, as well as the engineers and factory workers at companies that make the fiber, electronics and computer equipment needed to build the networks. Much of that equipment is made overseas now, but Atkinson’s projections exclude jobs that would go abroad." Source: Joelle Tessler, "Broadband Funding In Stimulus Plan Sparks Debate," The Associated Press, 2/6/09)

For every one percentage point increase in broadband penetration in a state, employment is projected to increase by 0.2 to 0.3 percent per year. Source: The Effects of Broadband Deployment on Output and Employment: A Cross-sectional Analysis of U.S. Data. Robert Crandall, William Lehr and Robert Litan, the Brookings Institution

An increase in the broadband penetration rate by 10 percentage points raises annual growth in per-capita GDP by 0.9 to 1.5 percentage points. Source: Broadband Infrastructure and Economic Growth, 2009. Nina Czernich Oliver Falck, Tobias Kretschmer and Ludger Woessmann

Measuring Economic Impact of Broadband: Does Speed Matter?: UK Report Challenges Benefits of Higher Broadband Speeds

• According to the U.S. Department of Commerce, between 1998 – 2002 communities that gained access to broadband service experienced an employment growth increase of 1% to 1.4%, a business establishment increase of 0.5% to 1.2%, and a rental value increase of 6%.

The SRRI, in California, estimates that for every one percentage point of the adult population using broadband, the employment growth rate rises by 0.075 percentage points and the payroll growth rate also grows by up to 0.088 percentage points.

• It is estimated that for every $1 million granted for broadband development, 15 jobs would be created. Source: U.S. Department Of Commerce, Bureau Of Economic Analysis, Regional Input, Output Modeling System Regional Multipliers: A User Handbook For The Regional Input Output Modeling System (Rims Ii), At 8 (Mar. 1997).

• A 2001 Study From The Brookings Institution Predicted 1.2 Million Jobs And As Much As $500 Billion Per Year Could Be Added To The U.S. Economy If All Homes Had Basic Broadband Services. Source: Carol Ellison, "U.S. Needs Muni Wi-Fi To Plug Broadband Wireless Gap," eWeek.com, 5/4/05)

The Internet Employs 1.2 Million People Directly and a Total Of 3.05 Million Jobs. "The Internet employs 1.2 million people directly to conduct advertising and commerce, build and maintain the infrastructure, and facilitate its use. Each Internet job supports approximately 1.54 additional jobs elsewhere in the economy, for a total of 3.05 million, or roughly 2 percent of employed Americans. The dollar value of their wages is about $300 billion, or around 2 percent of U.S. GDP." Source: John Quelch, Quantifying The Economic Impact Of The Internet,"

U.S. Investment In Broadband And Related Information Technology Has Driven 1/3 Or More Of The Productivity Growth Of This Decade.The Ongoing Productivity Impact On GDP Growth Could Exceed $200 Billion Annually. USTelecom Analysis

• Connected Nation Reported National Broadband Would Provide A $134 Billion Economic Stimulus Nationwide."Using the state of Kentucky’s experience with its aggressive rollout of broadband, Connected Nation reported that a similarly accelerated national broadband push would provide a nationwide economic stimulus of $134 billion while creating 2.4 million new jobs. Connected Nation said a 7% boost in national broadband adoption would also result in $662 million in savings in health care costs, $6.4 billion in annual mileage savings, 3.2 billion fewer pounds of carbon dioxide emissions annually, and 3.8 billion hours of time saved by U.S. consumers. Source: (W. David Gardner, "2.4 Million Jobs, Economy Boost Seen From National Broadband Push," InformationWeek, 2/22/08)

• Commissioner Michael Copps: "Ubiquitous Affordable Broadband Would Quickly Add $500 Billion To The U.S. Economy And Create 1.2 Million Jobs.By some estimates, ubiquitous affordable broadband would quickly add $500 billion to the U.S. economy and create 1.2 million jobs. Another study recently concluded that every percentage point increase in broadband penetration would mean 300,000 more jobs and increased national output. I think these estimates are too conservative. And this is to say nothing of what broadband can do to improve healthcare, education, and public safety in our country." Source: FCC Commissioner Michael J. Copps, Remarks At Pike & Fischer’s Broadband Policy Summit IV, 6/12/08)

• Sen. Dick Durbin (D-IL): "Adoption Of Current Generation Broadband Would Increase The Gross Domestic Product By $179.7 Billion, While Adding Approximately 61,000 Jobs Per Year Over The Next Two Decades."Durbin said broadband is critical to community and economic development, as it encourages investment, creates jobs, improves productivity, fosters innovation, and increases consumer benefits in every corner of our nation. A recent study found that adoption of current generation broadband would increase the gross domestic product by $179.7 billion, while adding approximately 61,000 jobs per year over the next two decades. The study also projected 1.2 million jobs could be created if next generation broadband technology were rapidly deployed." Sen. Richard J. Durbin, "Durbin Bill To Encourage High-Speed Internet Access In Rural Areas Sent To President," Press Release, 10/1/08)

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