Doubling Broadband Speed Adds $3.9 Billion To Aus GDP

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Ericsson has released findings that indicate doubling Australia’s broadband speeds would result in a $3.9 billion increase for its GDP, according to an ITWire calculation.The study included 33 OECD economies (including Australia) and found that the doubled broadband speed would result in the economies GDP increasing by 0.3 per cent.

According to Ericsson’s findings, “This [growth] corresponds to more than one seventh of the average annual OECD growth rate in the last decade.” 

The study also noted the growth was linear: “A quadrupling of broadband speeds produced a 0.6 per cent increase in GDP.”

The study was conducted by Ericssion, Arthur D Little and Chalmers university of Technology for the second consecutive year, and “had a geographical scope and covered more than 120 academic reports and business papers published between 2001 and 2010 [and concluded that] for every 10 percentage point increase in broadband penetration, GDP grows about one per cent [and] or every 1000 additional broadband users, roughly 80 new jobs are created.”

Across the 33 sampled countries, Ericsson said the average broadband speed rose by 5Mbps, from 6Mbps in 2008 to 11Mbps in 2010.

They also said the GDP growth was the result of combining 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.”

 

Director of Arthur D Little, Erik Almqvist, believes the research findings will aid governments in times of decision making.

“Until now there has been an absence of hard facts investigating the effects of broadband speed on the economy. This unique empirical study may help governments and other decisions makers in society make more correct tradeoffs and policy choices,” he said. 

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