NBN 101: The Economic Argument

The economic benefits of faster broadband should not be discounted or neglected in discussions around the NBN

Quantifying the costs of no-investment or delay

From the above examples it is easy to understand why organisations like the World Bank and OECD along with many Governments around the world say higher-speed broadband can be a considerable contributor to economic growth and competitiveness.

They also say early adopters of broadband technologies will have significant advantages in international trade, if they are able to appropriately harness the necessary skills and adequately work through regulatory and policy issues.

The World Bank’s Tim Kelly noted, however, that it is tough to say what the impact would be of waiting to invest or not investing at all in broadband, as might happen in Australia should the Federal Government change in the upcoming election.

“It is probably worth differentiating between impacts that would be slowed and other impacts that might not be realised at all,” he said. “In terms of impacts that would be delayed, this would include the benefits related to GDP growth. World Bank research has indicated a relationship between a 10 per cent increase in the penetration of broadband and a 1.4 per cent increase in GDP. If infrastructure investment is slowed, then it would take longer to achieve the ten per cent increase in penetration, in which case the increase in GDP would also be achieved more slowly.

“Eventually, Australia would catch up, but it would clearly happen much more quickly if a public/private partnership were in place. In terms of impacts that might disappear, here one would look at commercial opportunities that might be seized by companies in other countries where broadband is already better developed.”

Conclusions

This article really just scratches the surface of the potential economic benefits to be realised on the back of faster broadband infrastructure and we encourage those interested to read about the examples in more detail in the reports referenced, particularly if you are interested in specific examples in economic sectors. Alternatively, post your own thoughts or suggestions for other areas that could be of interest in the comments below.

What we can see from the above, however, is there is an emerging body of research that clearly shows a strong link between the adoption of faster broadband - in particular fibre optic-based connections - and economic growth across a vast range of market sectors.

Indeed, the economic boost FTTH infrastructure provides across key market sectors can be enough to justify investments by governments when the private sector is unwilling to put up the cash, regardless of the debate around direct or commercial returns to the entity responsible for overseeing the network’s deployment and maintenance.

In other words, the economic benefits argument is one that should not be discounted or neglected in the public discourse on Australia’s NBN.

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