Broadband Investment Spurs Business Growth and Job Creation, Studies Find

WASHINGTON, July 23, 2009 – Broadband investment, deployment and adoption in the United States will bring significant benefits to the economy, and facilitate business growth and job creation, according to a study commission by the Internet Innovation Alliance, and other groups.

According to the July 2009 study, done by Mark Dutz, Jonathan Orszag and Robert Willig of Compass Lexecon, consumers in the U.S. are receiving “more than $30 billion of net benefits from the use of fixed-line broadband at home, with broadband increasingly being perceived as a necessity.”

The study, titled “The Substantial Consumer Benefits of Broadband Connectivity
for U.S. Households,” [PDF] examined specific ways broadband benefits consumers and it’s overall effect on the economy. The Internet Innovation Alliance is telecom- and technology-industry supported group urging a national broadband policy.

According to the study, the benefits to consumers are “on the order of $32 billion per year,” compared to roughly $20 billion in 2005.

Based on 2009 survey data, the study estimates that a 10-fold increase in broadband speeds would yield an additional $6 billion a year for existing home broadband users.

Further, this data only takes into account the effects of fixed-line internet connections.  “The sizable benefits to households from mobile wireless broadband services,” according to the study, “are additional to our estimates.”

Broadband is becoming an increasing necessity, especially in the current economic downturn, because consumers are using job board and career information sites to seek employment, which is why people are not cutting their broadband, the study found.

“Economic profits and producer surplus generated by the investments of broadband service providers and the providers of value-added services via broadband,” along with other factors, “amount to billions and billions of dollars of additional economic gain to society each year from broadband adoption,” according to the study.

Regarding the importance of broadband to those hard hit by the economic downturn, approximately 88 percent of internet users “have gone online to get help with personal economic issues that have arisen in the recession and to gather information about the origins and solutions to national economic problems,” according to a July 15 statement of the Pew Internet and American Life Project.

Those hard hit by the turn down have not only kept their broadband service, but “are among the most avid and wide-ranging internet users for advice and understanding,” said Pew.

According to the Pew Internet report, “The Internet and the Recession,” the main activities of the “online economic users in the past year” include price comparisons, job searches, seeking advice on personal finances, material on how to improve job-related skills, loans, and unemployment benefits, and checking real estate values, the release said.

Also weighing into the broadband-and-the-economy debate was the Information Technology and Innovation Foundation, a technology think tank, and Speed Matters, the campaign of the Communications Workers of America. For every $5 billion dollars invested in broadband, according to the two groups, 250,000 jobs are created, including “100,000 direct and indirect jobs from telecom and IT equipment spending plus another 150,000 in “network effects” spurring new online applications and services.”

A fact sheet created by ITIF and Speed Matters also stated that “with every percentage point increase in broadband penetration, employment expands by nearly 300,000 jobs,” partly because “broadband networks attract investment to areas that would not otherwise be viable to many businesses such as rural areas and inner-city regions.”

While consumers and the economy as a whole have benefited tremendously from the use of broadband, many parts of the country still have not fully taken part.

Part of the problem, according the fact sheet, is that “many lawmakers still conceive of high speed Internet as an optional luxury instead of a necessary foundation for economic success.”

In order to fix this problem, the fact sheet recommended supporting tax incentives for broadband providers to expand networks with speed requirements “capable of sustaining the business demands of tomorrow,” encouraging efforts to expand high speed networks to economically depressed areas with high unemployment and underserved rural areas, and connecting programs for affordable computer purchase, broadband access and digital literacy linked with job training for low-income and displaced workers.