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Study Finds Gigabit FTTH Broadband Communities Have Higher GDP

Friday, September 19th, 2014 (8:26 am) - Score 710

A new study from the Analysis Group, which was conducted on behalf of the American Fibre-to-the-Home Council, has claimed that communities with widely available 1Gbps (1000Mbps) broadband access through FTTH style fibre optic connectivity have per capita GDP that is 1.1% higher than communities with little to no availability of gigabit services.

The research examined 55 communities in 9 states across the USA and found a positive impact on economic activity in the 14 communities where gigabit broadband services are widely available. On average, some 70% of households in these 14 communities had access to gigabit broadband in 2012.

Apparently the 14 communities with widely available gigabit broadband enjoyed over £850 million (approximately $1.4 billion) in additional GDP when gigabit broadband became widely available, relative to communities where gigabit broadband was not widely available.

Heather B. Gold, FTTH Council President, said:

Gigabit communities are empowered communities. The study results suggest that gigabit broadband communities exhibit a per capita GDP approximately 1.1 percent higher than the similar communities with little to no availability of gigabit services. In dollar terms, this suggests that the 14 gigabit broadband communities studied enjoyed approximately $1.4 billion in additional GDP when gigabit broadband became widely available. As we look at these study results, we can clearly conclude that every community should be a gigabit community.”

Admittedly the study itself appears to be quite sparse on detail and crucially it’s unclear what kind of broadband existed in related “gigabit communities” before the new service arrived, or indeed what kind of connectivity was available to the other 41 communities. It’s also unclear whether the reports reference to having “access” concerns availability or actual uptake.

It’s important to understand this factor because adding Gigabit connectivity into a community, such as one where the previous broadband provision was either non-existent or incredibly slow, would perhaps be much more dramatic for GDP than if it were added into one where faster than ADSL2+ style services were already available (e.g. FTTC, HFC).

Similarly there’s no comparison of infrastructure deployment costs in the different communities, which is important because the price of any new service would need to be weighed against the perceived GDP gain. On the other hand ISPs seem to be getting better at doing affordable FTTH service roll-outs in rural areas.

Otherwise the report suggests that related gains are likely due to numerous factors, including the direct effect of infrastructure investment and increased expenditures, as well as early shifts in economic activity (e.g. job creation and occupational changes) and productivity gains.

Leave a Comment
2 Responses
  1. Avatar TheFacts says:

    So the GDP is higher where it is available, even if not taken up?

  2. Avatar Steve Jones says:

    As usual with stories based primarily based on statistical correlation, these all need a health warning (which is ironic, given that correlation studies come up so often in health scare stories).

    Quite apart from the relatively narrow gap, there are any number of possible confounding factors, such as higher local per-head income attracting more infrastructure investment. It would also be interesting to know what other work has been done to make sure the chosen communities are comparable in other aspects such as social make-up.

    It’s also worth noting who commissions these reports. Hardly a disinterested group in this case. Even if they gave no steer (conscious or unconscious) to the analysts doing the study, reports often don’t get published if they don’t fit with the commissioning group’s interests. That’s often why there is a selection bias in published reports. You don’t see those that don’t support the case.

    This is not to say that gigabit level networking isn’t a factor in increased GDP (it’s clearly highly beneficial for some types of businesses), but just that this report needs to be treated with some caution given the narrow margin and potential confounding factors.

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