High Speed Broadband Matters, But "Why?"

Policy advocates are right to argue that broadband access matters. But “what” matters is likely more than simple matter of making high speed access widely available and affordable. What really matters is whether people and businesses figure out ways to use broadband in a productive way.

Faster broadband, and affordable broadband is important, most would agree. The issue is why faster broadband brings benefits, what the benefits are, and how they can be realized. “The other half of the story is usage, the extent to  which people are active with digital technologies and applications, incorporate them into their lives and work,  and gain benefit from them,” Booz & Co. analysts have said.

In other words, how broadband changes life and work is the issue, not simply the fact that broadband is available.  

That is not to say studies do not show a correlation. Some studies of broadband deployment have estimated that a 10 percent increase in broadband penetration (adoption by people)

contributes a per capita GDP gain of just 0.16 percent to 0.25 percent.

The Booz & Company Digitization Index, which measured both the direct and indirect economic impacts of “digitization,” found that an increase in the “Digitization Index” score of 10 percent correlates with a 0.50 percent to 0.62 percent gain in per capita gross domestic product. Note that the phrase is “correlation,” not “causation.”

But that is largely beside the point. The consensus is virtually unanimous that broadband is an “essential” sort of infrastructure, without which an economy cannot grow as fast. Whether the relationship is causal or only correlational cannot fundamentally be ascertained.

But it doesn’t really matter. People act as though broadband does matter, and people will act on that belief. What probably matters is the way the “acting” takes place.

If people use broadband to watch TV, that’s a rather trivial reason to invest too much in broadband access, especially when there are other compelling places to invest capital. Also, the history of technology innovations suggests it can take quite a long time for people and organizations to learn how to use new technology effectively.

In fact, studies of  productivity are a hazardous undertaking. Some would note, for example, that U.S. productivity growth has been in long term decline since the early 1970s. You might argue that application of computing slowed the rate of decline, but that is not what people generally think.

In fact, studies of productivity in the 1980s, when computers first became ubiquitous in U.S. businesses and organizations, do not show positive changes in productivity. The Internet, on the other hand, does arguably seem to have changed the productivity curve.

On the other hand, some might point to a productivity gain from 1996 to 2006, and there is some thinking that a shift to Internet processes might explain the temporary gain in productivity rates.  

In fact, the value of high speed broadband might be overstated, as an economic development driver.