Local Broadband News

Faster broadband spurs economic growth, new study shows

19th September 2013
Faster broadband spurs economic growth, new study shows

A new study has linked faster broadband speeds to increased households earnings.

The study from Ericsson looked at eight developed countries, including UK, USA, Japan, France and Germany and found upgrading broadband from 0.5 Mbps to 4 Mbps could increase incomes by up to £200 per month.

There are several reasons as to why households benefit from increased broadband speed, the study carried out in conjunction with management consultancy Arthur D Little and Chalmers University of Technology explains.

Firstly, gaining access to more advanced services, like videoconferencing, enables more effective, productive ways of working. Increasing broadband speed also boosts personal productivity, and teleworking and telecommuting allow for more flexible work arrangements, according to the research.

Secondly, several previous studies have shown that broadband enables people to become more informed, better educated, and enriched – ultimately leading to a faster career path.

However as 
ICT maturity increases, participants without broadband or with slow broadband at home will find it harder to stay competitive in the
labor market – reducing their chances of finding a job and building capital.

The level of broadband speed required to gain a competitive advantage in the labor market is likely to be raised over time, the study says.

Sebastian Tolstoy, VP Radio Business development and Strategy, Ericsson, said: "Results are in line with our previous study that quantified the impact of broadband speed increases on the gross domestic product of 33 countries, as well as a slew of other studies we reviewed. All indicate that broadband access has a positive effect on the economy.

“We know that speed matters and that upgrading broadband speed has a positive impact. Now we have shown this quantitatively using large data samples in both OECD and BIC economies, even at the household level."

Martin Glaumann, Partner at Arthur D. Little, added: "The evidence is building for broadband speed as a driver of economic growth. Yet in many countries, not least in the EU, regulatory developments are holding back the full growth potential.

“Regulators need to rethink and recognize high-speed broadband as a national imperative for BIC countries. Broadband gives households the means to improve skills and productivity through e-learning and business services, but also to gain access to new venues for consumption."