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Broadband is like a river (but not the way you think)

Richard Adler | May 4, 2015
Just as rivers were the engines of prosperity for the U.S. as it emerged as a superpower, so now is broadband an engine of innovation. We need to tune that engine to stay ahead.

Perhaps the most dramatic example of the power of a platform is the Internet itself, which is arguably the biggest of all disruptive innovations. One of the Internet's essential features is its openness: anyone who agrees to conform to the technical standards that define the Internet's operation can plug into it and use it without requiring consent from anyone else -- a process that has been described as "innovation without permission." Owned by no one and controlled by no one, the Internet has become the most pervasive global communications infrastructure ever created.

The Internet has accelerated innovation in a number of ways: It provides virtually instant access to information and to computing resources that can empower research, lower transaction costs and make markets more efficient. By enabling e-commerce, the Internet has allowed even small companies to operate globally. And perhaps most importantly, it has promoted innovation by connecting people and enabling them to share ideas and to collaborate in new ways.

Amplifying the impact of the Internet are broadband networks that extend and increase the ease of access to Internet-based resources and enable the Internet to deliver much richer, more complex content. In fact, it is the combination of the Internet and broadband that has created an unprecedented engine for innovation and economic development on many different scales.

The economic importance of broadband was highlighted in the National Broadband Plan that was published by the Federal Communications Commission (FCC) in 2010:

But precisely what has been the economic impact of broadband?

Measuring broadband's impact
Attempts to understand the value of information and communication technologies are not new. In fact, efforts to determine the impact of the telephone on economic growth go back at least 50 years, to the early 1960s.

More recently, studies have focused on the impact of broadband deployment. One early study, published in 2005, looked at whether economic growth was higher in communities that had deployed broadband compared to others that had not yet done so. The authors found that communities with broadband had indeed experienced more rapid growth in terms of employment and the overall number of businesses. They also found that simply having access to the technology was not enough to stimulate growth; in order to realize the full benefits of broadband, it has to be integrated into companies' operations and be used to support new, more efficient business processes.

A more recent study, by the International Telecommunications Union, affirmed this result, concluding that "broadband only has an economic effect in combination with the adoption of information technology and the implementation of organizational and process changes in enterprises." The ITU's 2012 study, titled Impact of Broadband on the Economy, explored several different ways in which this impact happens and summarized what we have learned about the magnitude of its financial impact.

 

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