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Broadband Impact: The Macroeconomic Benefits

By Howard Baldwin, Contributing Columnist

Last June, the Broadband Commission for Digital Development, a joint project of the International Telecommunications Union and UNESCO, issued a report about the impact of broadband globally. It contained enlightening estimates — variations of which we’ve discussed frequently — about the value of broadband for business. For instance:

  • Europe: Broadband can create more than two million jobs and an increase in GDP of at least €636 billion by 2015
  • Brazil: Broadband has already added up to 1.4% to the employment growth rate
  • China: Every 10% increase in broadband penetration contributes an additional 2.5% to
  • GDP growth
  • Thailand: Even though only some 3% of households and 12% of individuals had broadband, broadband promotion could add 2.4% to the country’s GDP growth rate.

Ancillary Benefits – Beyond Business

But interestingly, the UN report also cites ancillary issues beyond the value of business, regarding the importance of broadband — specifically those relating to health, energy, and education.

Health: The report cited the UN’s Millennium Development Goals, which include the eradication of poverty and hunger, the reduction of child mortality and other diseases, and environmental sustainability. It noted that broadband, through better communication, could more quickly and reliability collect and transmit health and climate information, allowing authorities to respond more quickly to potential problems and solve them sooner.

Energy: Broadband could support a smart grid for monitoring electrical and energy supplies.

Education: Under the rubric of “knowledge societies,” the UN has listed four key principles: freedom of expression; universal access to information and knowledge; respect for cultural and linguistic diversity; and quality education for all. Broadband supports these areas by not only providing access to educational materials, but also providing access to other cultures, even within developing countries.

Tipping Point: the Cumulative Effect of Broadband

The inventor of Ethernet, Robert Metcalfe, postulated that there is a “network effect” in technology, such that the value of a network is proportional to the square of the number of connected users of the system. That’s potentially happening in developing countries.

The UN report sees that network effect approaching a tipping point at which “the penetration rate of broadband services within a nation becomes large enough to begin to rapidly influence all sectors in a significant and highly productive way.”

In other words, the advantages that broadband brings in individual areas creates a momentum similar to a virtuous circle.

This essentially creates a win-win scenario for the global economy — one in which both developed and developing countries benefit from broadband. In developing markets, it’s a much needed catalyst that can spark the beginning of a new socioeconomic advancement movement. In developed markets, it can provide a multiplier effect that helps to accelerate policies and projects that are already underway.

But the larger point is that while broadband may initially benefit business, it can also simultaneously benefit other facets of a country’s growth, health, and infrastructure, and ultimately spawn even more advantages for a standard of living than initially anticipated.

If you would like to learn more about how broadband is being applied in community economic development projects, then you may find the Broadband Commission’s “Sharehouse” of interest. They have compiled a publicly-accessible repository of broadband-related materials that you can search, and/or subscribe to their ongoing updates via an RSS feed.

In addition, previously in 2010, Cisco IBSG released a “Broadband Dynamic Value Assessment” model that will help decision makers and stakeholders collaborate on a shared vision of how broadband services can contribute to a country’s socioeconomic development.

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