Early Evidence Suggests Gigabit Broadband Drives GDP

Our study suggests that communities where gigabit broadband was widely available enjoyed higher GDP, relative to similar communities where gigabit broadband was not widely available.

The 14 communities with widely available gigabit broadband that we studied enjoyed over $1 billion in additional GDP when gigabit broadband became widely available, relative to communities where gigabit broadband was not widely available.

Over the past several years, new services using fiber-to-the-home (FTTH) technology that offers speeds up to 1,000 Mbps (gigabit) have been deployed in several communities across the U.S. These services, which represent the next generation of broadband, deliver Internet speeds more than 100 times faster than what is available today to most Americans. These dramatically higher speeds allow users to access higher quality data intensive services and will enable the next generation of new technologies.

As broadband has become an important factor in economic growth and job creation, the quality of broadband services, including availability and throughput speeds, has become a major topic of discussion. Now we are faced with the question of the macroeconomic impact of the deployment of optical fiber and gigabit connections.

Using a fixed effects panel data regression model that controls for idiosyncratic differences across MSAs and over time, we found that in MSAs where gigabit broadband service was introduced between 2011 and 2012, GDP per capita levels were significantly higher. More specifically, our model suggests that for the MSAs with widely available gigabit services, the per capita GDP is approximately 1.1 percent higher than in MSAs with little to no availability of gigabit services.

These gains are likely due to numerous factors, including the direct effect of infrastructure investment and increased expenditures, as well as early shifts in economic activity (e.g., job creation and occupational changes) and productivity gains. As more communities adopt gigabit broadband and the economy adapts to this new technology, economists will be able to extend the research on the economic impact of gigabit broadband.

Source: Analysis Group

Early Evidence Suggests Gigabit Broadband Drives GDP

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