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June 14, 2009

Studies that Connect Really Fast Broadband with Economic Boost

So FTTP (fiber to the premises) can boost the US economy by at least $440 Billion. Full Broadband (higher percentage adoption) rollout can boost $110 billion/30 million people. More from Peer to peer applications from 100 mbps symmetrical capability can provide a further increase. There is about a 15% productivity boost from broadband. Various studies calculate over 10 times GDP return from each dollar invested in broadband. Scaling to Gigabit access could increase GDP by about an extra 3% per year. [Gartner study] This is an expanded aspect of the case this site was making for a national broadband initiative for multi-gigabit symmetrical internet access via fiber and wireless. This site will follow up with some specific recommendations in regards to using policies for increased competition, the government using the broadband investment to also buy more openness and rights for consumers [no bandwidth caps, allow other companies to use the national fiber at low cost etc...] and paying for super-highspeed access via more prizes instead of paying up front to specific companies.

Some studies of the effect of Korea's broadband on its economy.

Carlton University study for the Canadian government. 10X GDP return for broadband investment.

In August 2002 Dataquest forecast that ‘true broadband (greater than 10 Mbps) could incrementally increase US GDP by up to US$500 billion for each of the next 10 years.’

In 2002 the Momentum Group and Brookings Institution forecast that ‘business and government efficiencies from broadband had the potential to produce US$500 billion in savings in the US by 2010’.


A $376-billion upside in gross state product (GSP/ California along going to gigabit internet speed the benefit would be over ten years. Increase GDP so that in the tenth year the boost is $376 billion but have increases all along the way. 35% more GDP growth than if you did not do it) by 2010 is made possible with the implementation of a focused One Gigabit or Bust broadband initiative. Moreover, 2 million new jobs could be created.


Gigabit access would increase the GPD by about 35% over ten years. Adding 3% per year. The $376 billion figure in year 2000 dollars is for California alone and would be eight times higher if applied across the United States.


Most benefit to retail trade, then manufacturing, health and social assistance, public education, business services.



A new econometric study commissioned by Nokia Siemens Networks and conducted by economic consulting firm LECG under the direction of Professor Leonard Waverman explores the economic benefits from the wave of broadband diffusion that occurred in Europe and the United States over the last 10 years. The study finds that 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.

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.


Broadband may increase productivity growth by up to 15%

The 48 page study by Nokia Siemens Networks and conducted by economic consulting firm LECG under the direction of Professor Leonard Waverman.

100 page pdf analyzing broadband in 2008 for North Carolina

In July 2001, Criterion Economics released a Verizon-sponsored study finding that “[b]roadband access to the Internet in all its forms – ADSL, cablemodems, and various wireless services – will bring enormous benefits to our economy.” The authors calculated that widespread adoption of broadbandby 2013 would result in a net present value of more than $500 billion.

In February 2002, TeleNomic Research published a study concluding that a national broadband network would result in the addition of 1.2 million
permanent jobs, broken down as follows:
*166,000 jobs would be created directly in the telecommunications sector
* 72,000 manufacturing jobs would be generated by the direct purchase of network plant and equipment and customer premise equipment, and
* 974,000 indirect jobs would be created if a high-capacity network were built

In September 2002, the U.S. Department of Commerce (DOC) issued a seminal report on broadband demand in the United States.The DOC reviewed the Criterion Economics and TeleNomic studies cited above as well as numerous other then-existing studies and concluded that widespread broadband deployment and adoption was critical to “promoting jobs, productivity, and sustained growth,” to “enabling anywhere, anytime, student-appropriate learning,” to “transforming health care,” to upgrading the military to cope with “the global war on terror,” to “securing the home front” by enhancing homeland security, and to “bringing new possibilities and hope” to disabled persons and senior citizens. The DOC then set forth numerous actions that all levels of government, business leaders, and innovators and entrepreneurs could take to stimulate broadband demand.

Notably, after reviewing what it called the “U.S. Supply of Current Generation Broadband (Cable & DSL),” the DOC cautioned: It is important to note here that the current generation of broadband technologies (cable and DSL) may prove woefully insufficient to carry many of the advanced applications driving future demand. Today’s broadband will be tomorrow’s traffic jam, and the need for speed will persist as new applications and services gobble up existing bandwidth.

In 2003, Criterion Economics refined its research and found that, over the next 19 years, ubiquitous adoption of current-generation DSL and CMS would result in a cumulative increase in gross domestic product (GDP) of $179.7 billion and in 61,000 new jobs a year. Criterion also found that introducing next-generation fiber-to-the-home (FTTH) technology at a reasonable pace would increase cumulative GDP to $440 billion and new jobs to 140,000 a year

In April 2005, Applied Economic Studies published a study focusing on a municipal broadband deployment in Lake County, Fla. The study concluded that “Lake County has experienced approximately 100% greater growth in economic activity-a doubling-relative to comparable Florida counties since making its municipal broadband network generally available to businesses and municipal institutions in the county.”

In February 2006, Massachusetts Institute of Technology and Carnegie Mellon University published the results of a study that they had performed for the U.S. Department of Commerce, to measure the impact of broadband on economic growth. The MIT/CMU team found that “between 1998 and 2002, communities in which mass-market broadband was available by December 1999 experienced more rapid growth in employment, the number of businesses overall, and businesses in IT [Information Technology]-intensive sectors, relative to comparable communities without broadband at that time.”
They also found that broadband’s impact on the number of jobs and business establishments “was particularly large relative to our expectations.”

In June 2007, a study sponsored by the Brookings Institution found that, for every one percentage point increase in broadband penetration in a state, employment increases by 0.2-0.3 percent per year. For the entire U.S. private non-farm economy, the study projected an increase of about 300,000 jobs a year, assuming that the economy was not already at full employment.

In February 2008, Connected Nation issued a report estimating that if broadband adoption were to increase an additional 7 percent in every state, the United States would experience aggregate economic benefits of approximately $134 billion a year. This would include $92 billion from 2.4 million jobs produced or saved; $662 million in reduced health-care costs; $6.4 billion in savings from reduced driving; $18.2 million in carbon credits associated with 3.2 billion fewer pounds of carbon dioxide emissions; and $35.2 billion in the value of saving 3.8 billion hours by accessing broadband from home.

Most recently, Strategic Network Group concluded, based on a study of the effects of fiber deployments on a total of 223 businesses in three communities, that The real benefits of FTTP (fiber to the premises) are more than about doing the same things faster. The most significant gains from FTTP occur after 2 years of use once organizations have adopted new business models to realize new revenue streams and to transform their business operations for cost avoidance. While the greatest gains are realized when moving from dial-up to FTTP, there continue to be significant gains for businesses that move from other forms of broadband access. In addition to these direct benefits, there are economic multiplier effects (increases in GDP, jobs, tax revenues) that can be calculated. In SNG’s research since 2003, we have found significant increases in local economic activity attributable to broadband. In fact, the increase in local GDP is more than ten-fold the value of the investments in broadband infrastructure.

The difference between the 5-10 Mbps and the 100 Mbps is not simply one of moving data faster. It is, rather, an economically crucial difference that causes a profound shift in how the medium is used. For example, a study in Japan of the effects of widespread, near-symmetric 100 Mbps (as opposed to the asymmetric download-priority model that dominates in the U.S. and elsewhere), found a dramatic increase in the use of peer-to-peer applications of various types, as well as in the creation of a whole new class of creative “heavy hitter” users who take advantage of such applications.

In other words, affordable access to high-bandwidth capacity results in a surge of applications and of both content users and content creators that does not – and cannot – exist in an asymmetric, low-capacity environment.
There are two important lessons to be gleaned fromthe experience in Japan. The first is the crucial importance of robust upstreamconnections, enabling users to produce and distribute their own content and applications. The second is that “big” broadband, as opposed to puny broadband at DSL and CMS speeds, makes not only a quantitative difference, but also a crucial and economically significant qualitative difference.

So FTTP (fiber to the premises) at least $440Billion. Full Broadband rollout $200 billion. More from Peer to peer applications from 100 mbps symmetrical capability. 15% productivity boost. 10+X GDP return from broadband investment. Scaling to Gigabit access could increase GDP by about an extra 3% per year. [Gartner study]

High speed broadband is not a cure all and a plus one or two percent per year to GDP may not completely overcome the effects of an aging population and a lingering financial mess.

South Korea's growth has been pretty solid over the last several years and about half of that growth is from IT and broadband effects.

40% of Japan's GDP growth over the last several years has been from ICT (information communication technology)

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