[CAnet - news] Measuring Broadband's Economic Impact

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[Here is a paper with excellent methodology from a couple of researchers at
MIT and Carnegie-Mellon on measuring the economic impact of broadband.
Thanks to Susan Estrada of FirstMile.US for this pointer.  Some excerpts
from the paper published in Dec 2005 Broadband Properties--BSA]

http://www.broadbandproperties.com/2005issues/dec05issues/Measuring%20Broadb
and%20Eco%20Impact,%20Lehr,%20Gilett,%20Sirbu.pdf

The analysis presented in this paper represents a first attempt to measure
broadband's impact by applying controlled econometric techniques to
national-scale data. The results support the view that broadband access does
enhance economic growth and performance, and that the assumed (and
oft-touted) economicimpacts of broadband are real and measurable.

We find that between 1998 and 2002, communities in which mass-market
broadband became available by December 1999 experienced more rapid growth in
employment, number of businesses overall, and businesses in IT-intensive
sectors.

This analysis is of course preliminary; additional data and experience are
needed to more accurately address the fundamental question of how broadband
affects the economy. Nevertheless, the magnitude of impacts estimated by our
models are larger than we expected.

The present study has several clear implications for policy-makers. The most
obvious and important implication is that broadband does matter to the
economy.

Policy makers who have been spending their time or money promoting broadband
should take comfort that their efforts and investments are not in vain. Many
significant public policy reforms and programs are in place or under
consideration at the federal, state, and local levels to ensure competitive
availability of broadband to all U.S. citizens, stimulate ongoing investment
in broadband infrastructure, and facilitate the education and training that
small business and residential customers need to make effective use of
broadband's capabilities.

Broadband is clearly related to economic well-being and is thus a critical
component of our national communications infrastructure.

Local policy-makers in particular may wish to understand whether the
economic advantages conferred by broadband are temporary (i.e. growth in the
early have communities came at the expense of the early have-nots) or
longer-lasting (i.e. broadband stimulated growth of the overall
economic pie). If the advantages are temporary, then the benefits to be
gained from local public investments to speed broadband availability will be
muted once neighboring communities catch up.

On the other hand, if broadband affectsthe base growth rate of the local
economy, then the benefits from getting it sooner will continue to compound
into the future. Because the present study only looks at one time period, it
cannot address this important question directly. The results of our study
can be seen as consistent with either hypothesis. Once broadband is
available to most of the country, differences in economic outcomes
are likely to depend more on how broadband is used than on its basic
availability.

The implication for policy makers is that a portfolio of broadband-related
policy interventions that is reasonably balanced (i.e., also pays attention
to demand-side issues such as training) is more likely to lead to positive
economic outcomes than a single-minded focus on availability.

Finally, the present study highlights the fundamental role that government
data plays in shaping our understanding of how communications technologies
and policies relate to national economic performance.
As discussed above, public data about broadband focuses primarily on the
supply side (availability), especially at the local level. Economic
performance, however,also depends on demand-side factors
such as broadband adoption and use. Such factors are of course competitively
sensitive.

Given how important broadband appears to be to the economy, however, the
time has come for policy makers to engage in a dialogue with industry and
develop reasonable ways to measure more of the broadband indicators that
matter. BBP



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