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ONS Re-examines Impact of Telecoms Services on the UK Economy

Friday, January 19th, 2018 (4:18 pm) - Score 459

The Government’s Office for National Statistics is to re-examine how they assess mobile, fixed broadband and phone services in terms of their impact upon the UK economy, which follows concern that the influence of such services may have been historically underestimated.

Contrary to what some newspaper reports may have suggested, the ONS does not expect this to have a big impact upon their overall assessment of economic growth. Part of the reason for that is because they’re focusing their efforts toward the price of business services and how those have changed (i.e. they’re NOT looking at consumer services, which use a different measure).

The initial research, which was produced by the Economic Statistics Centre of Excellence (ESCoE), found that between 2010-2015 the ONS’s current estimates for telecoms prices charged to businesses were broadly unchanged. However, while businesses were being charged the same price, the bandwidth they had access to and the data they downloaded had significantly increased (service speed and data allowances).

The ONS suggests that such customers are thus “getting more for the same price … effectively the price had fallen,” although the challenge is in how they account for this. “Is 40Mbps broadband twice as valuable as 20Mbps broadband? Probably not. So our next task is to work out exactly how we should account for these changes in our figures,” said the ONS.

Richard Heys, ONS Deputy Chief Economist, said:

“The really important point to note as this will have little or no impact on our overall estimate of the size of GDP; if we increase the estimate of how much ‘output’ the telecoms sector had, we will deduct this from the overall output the industries consuming telecom services by an equal amount, so the overall size of the pie will be unchanged.

The new work on telecoms is likely to affect our view of the relative importance of different sectors of the economy. So it is important to get this right, but overall GDP is likely to be unaffected.

The work we are undertaking is complicated and will take some time to reach a firm conclusion. We need to draw in a wide variety of experts to help us, which is why we publish papers as our work develops.

We are working hard to ensure we are able to produce the best estimates we possibly can of Britain’s fast-changing, modern, digital economy.”

Anybody who has attempted to quantify the economic impact of things like faster broadband and bigger data allowances will agree that it’s incredibly difficult to create an accurate model, particularly so for businesses that tend to have many varied and different needs.

Not to mention that the quality of online content is always improving, which in simple terms means that every video stream or page browse tends to suck up more data than it did a few years ago and that may impact such calculations. We look forward to seeing what conclusions the ONS reaches.

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By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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1 Response
  1. 40Mbps isn’t twice as valuable, no. But it is better. You can probably stream 4K from Netflix over 40Mbit while doing other things, which might be infeasible with 2OMbit. Or have three people watching in HD (two on apps, one on the TV).

    That speed probably also means FTTC or low-end cable, with ~6-8Mbps upload – enough to broadcast a 720p or even 1080p stream, which is useful for artists and performers. On ADSL, you’d be lucky to get 2Mbps up; pushing it even for 480p.

    Similarly 40Mbps should cut the time for those huge game and OS updates in half. (Of course you could get 200Mbps and cut it in ten, if you’re impatient.)

    But there’s a simple solution: just look at how much more ISPs are charging for ~40Mbps (i.e. Infinity 1 FTTC / low-end cable) vs. ~20Mbps (ADSL2 or 18/2 FTTC), subtracting line rental from b oth. That gives you a reasonable idea of how much more the upgrade is “worth”, because it’s the premium we’re willing to pay for it.

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