Study says broadband impacts on GDP

Newly released study has indicated that by doubling the broadband speed for an economy increases the Gross Domestic Product (GDP) by at least, 0.3 per cent.

The research conducted by Ericsson, Arthur D. Little and Chalmers University of Technology confirms that increased broadband speed contributes significantly to economic growth.

The study also posited that positive effects come from automated and simplified processes, increased productivity as well as better access to basic services such as education and health.

Media and Public Relations Manager at LM Ericsson Nigeria, Ms Omasan Ogisi who disclosed this to ITRealms Online noted that

According to her, the new study quantified the impact of broadband speed at a 0.3 per cent GDP growth in the Organisation for Economic Cooperation and Development (OECD) region at equivalent of $126 billion.

She quoted the Head of Business Unit Networks, Ericsson, Johan Wibergh, as saying that the study underlined as corresponding to over one seventh of the average annual OECD growth rate in the last decade.

Also, he said, the study showed that additional doublings of speed could yield growth in excess of 0.3 per cent, that is, quadrupling of speed equals 0.6 per cent GDP growth stimulus

Emphasising that both broadband availability and speed are strong drivers in an economy, just as last year, Ericsson and Arthur D. Little concluded that for every 10 percentage point increase in broadband penetration GDP increases by 1 per cent.

This growth, they said, stems from a combination of direct, indirect and induced effects, even as the direct and indirect effects provide a short to medium term stimulus to the economy.

The induced effect, he said, include the creation of new services and businesses, which is the most sustainable dimension and could represent as much as one third of the mentioned GDP growth.

Wibergh further said that broadband has the power to spur economic growth by creating efficiency for society, businesses and consumers.

“It opens up possibilities for more advanced online services, smarter utility services, telecommuting and telepresence. In health care, for instance, we expect that mobile applications will be used by 500 million people,” Wibergh said a recent Broadband World Forum 2011 in Paris.

He expected a huge increase from the current estimate of around 1 billion people with broadband access to about 5 billion in 2016, most of whom will have mobile broadband.

“Connectivity and broadband are just a starting point for new ways of innovating, collaborating and socializing,” he said.

Remmy Nweke

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