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 Thursday, September 29, 2011

Doubling the broadband speed for the economy of an OECD country increases its GDP by 0.3 percent, according to a report conducted jointly by Ericsson, Arthur D. Little and Chalmers University of Technology in 33 OECD countries. The report quantified the isolated impact of broadband speed. A 0.3 percent GDP growth (one-directional, isolated effect) in the OECD region is equivalent to USD 126 billion.

This corresponds to more than one seventh of the average annual OECD growth rate in the last decade. The study also shows that additional doublings of speed can yield growth in excess of 0.3 percent (e.g. quadrupling of speed equals 0.6 percent GDP growth stimulus). Both broadband availability and speed are strong drivers in an economy. Last year, Ericsson and Arthur D. Little concluded that for every 10 percentage point increase in broadband penetration GDP increases by 1 percent. This growth stems from a combination of direct, indirect and induced effects. Direct and indirect effects provide a short to medium term stimulus to the economy.

The induced effect, which includes the creation of new services and businesses, is the most sustainable dimension and could represent as much as one third of the mentioned GDP growth. The study quantifies the economic impact of increases in broadband speed in a comprehensive scientific method using publicly available data. The economic impact of average attained broadband speed, both fixed and mobile, has been analysed using panel data regression analysis with quarterly data points from 2008-2010 for 33 OECD countries. The average achieved broadband speed data was provided by Ookla.

Source: Telecom Paper