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The economic benefits of faster broadband should be obvious

To say that faster broadband doesn’t translate into economic growth is like saying faster computers don’t either.

(Photo: Patti McConville/Getty)

Does high-speed broadband increase economic growth? It does, but unfortunately it’s a question that’s still being asked, for example by a Forbes writer the other day. We can’t be too harsh, though, since the question’s lingering nature means those of us who follow this stuff closely have obviously not done a very good job at answering it.

How fast a country’s broadband connections are is about more than just bragging rights (woo hoo, Canada is faster than Monaco!). Simply put: the faster the speeds, the better the economic benefits.

There’s no shortage of studies and white papers that show this. The Forbes story points to a recent one:

A new report, conducted jointly by Ericsson, Arthur D. Little and Chalmers University of Technology in 33 OECD countries, quantifies the isolated impact of broadband speed, showing that doubling the broadband speed for an economy increases GDP by 0.3%.

A 0.3 percent GDP growth in the OECD region is equivalent to USD 126 billion. This corresponds to more than one seventh of the average annual OECD growth rate in the last decade.

The study also shows that additional doublings of speed can yield growth in excess of 0.3 percent (e.g. quadrupling of speed equals 0.6 percent GDP growth stimulus)

Many such white papers, like this particular one, are sponsored by network equipment makers, so they should rightly be viewed with some skepticism. But that’s where common sense comes in.

As loathe as I am to use a physical world analogy because they often prove to be incorrect—potatoes at a buffet, anyone?—one particularly good one does come to mind in this circumstance. Everyone has, at one time or another, been stuck behind a slow-moving truck on the highway. Now, imagine those trucks—whether they’re hauling television sets, chickens or toxic chemicals—could safely motor along at 200 km/hr. How much time and money would they save their respective owners by doing so? Heck, imagine how much time (and therefore money) you’d save if you could zip along at the same speeds.

The Internet is no different. Faster downloads and uploads mean less time waiting for stuff to happen and more time spent doing other, more important stuff. To say that faster broadband doesn’t translate into economic growth is like saying that faster computers don’t either.