A just released study conducted jointly by Ericsson (News - Alert) (NASDAQ:ERIC), Arthur D. Little and Chalmers University of Technology that evaluated publically available data in 33 OECD countries, quantifies the isolated impact of broadband speed. It shows that:

• Doubling the broadband speed for an economy increases GDP by 0.3 percent, roughly the equivalent of US $126 billon and more than one seventh of the average annual OECD growth rated in the last decade.
• 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).

It comes on a day when Alcatel-Lucent CEO Ben Verwaayen (News - Alert), in an interview on CNBC, stated that most countries’ economies, including those in the developed world, are being constrained by insufficient access to and the limited speeds of broadband. He said that given the need for job creation there are few things as compelling for stimulating economic activity than universal deployment of high-speed broadband infrastructure.

The press release of the joint study highlights both points:

"Broadband has the power to spur economic growth by creating efficiency for society, businesses and consumers," says Johan Wibergh (News - Alert) (News - Alert), Head of Business Unit Networks, Ericsson. "It opens up possibilities for more advanced online services, smarter utility services, telecommuting and telepresence. In health care, for instance, we expect that mobile applications will be used by 500 million people."

The release also provides interesting insights from each of the study sponsors. During a keynote speech at Broadband World Forum 2011 in Paris, Wibergh said, "We expect a huge increase from the current estimate of around 1 billion people with broadband access to about 5 billion in 2016, most of whom will have mobile broadband. Connectivity and broadband are just a starting point for new ways of innovating, collaborating and socializing."

 Erik Almqvist, Director at Arthur D. Little, is quoted as saying, "Until now there has been an absence of hard facts investigating the effects of broadband speed on the economy. This unique empirical study may help governments and other decisions makers in society make more correct tradeoffs and policy choices."

And, Erik Bohlin, Professor at Chalmers University of Technology stated that, "These results have been derived using rigorous scientific methods where the direction of causality, data quality and significance levels have been appropriately tested… The results of this study support governmental policies that recognize and promote the importance of broadband."

Timing of results is propitious

This could not have come at a better time.

Operators and their suppliers are looking to government help in the form of partnerships, subsidies, tax breaks, and loosing of regulations to help them meet the challenges of upgrading national and pan-regional networks to much higher speeds in the face of revenue challenges to fund mandated or stated modernization goals.

Such goals are extant in most of the OECD countries in terms of speeds desired and progress made on achieving universality of access. And, as if to amplify CEO Verwaayen’s point, the opportunity for operators lies not merely giving a jump start to under-developed countries where conventional wisdom has held that communications infrastructure is critical for priming the pump of economic vitality. It also lies in accelerating deployments in the countries examined where the multiplier effect could be just as important. This included evaluation of the current status of broadband in: Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, UK and US.

The study is the first of its kind to quantify the economic impact of increases in broadband speed. Hopefully it will have a favorable impact in the 2012 election cycle now underway in many parts of the world, despite such projects typically lacking the “sex appeal” of other types of economic stimuli. Nevertheless, with job creation currently problem number one globally, the findings provide the industry a powerful tool in their efforts to get traction for support for such massive infrastructure upgrades being given priority. Having the economic validation to back up the imperative behind creating policies that encourage the acceleration of high-speed broadband may be just the ticket to grab entice politicians to both pay attention and act responsively. 

Peter Bernstein is a technology industry veteran, having worked in multiple capacities with several of the industry's biggest brands, including Avaya (News - Alert), Alcatel-Lucent, Telcordia, HP, Siemens, Nortel, France Telecom, and others, and having served on the Advisory Boards of 15 technology startups. To read more of Peter's work, please visit his columnist page.