The socio-economic imperatives of achieving broadband for all

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Title: The socio-economic imperatives of achieving broadband for all Forum Europe Conference Every European Digital: the Challenge of Bridging the Broadband Gap Session 3: The Importance of Broadband for Regional Development 31 May 2011

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The socio-economic imperatives of achieving broadband for all:

The socio-economic imperatives of achieving broadband for all Chris Doyle Apex Economics and Department of Economics Warwick University Forum Europe Conference Every European Digital: the Challenge of Bridging the Broadband Gap Session 3: The Importance of Broadband for Regional Development 31 May 2011

Broadband for all – An enabler:

Direct economic benefits – GDP and productivity goals Always online and faster speed enable at least three types of effects: Lower costs and higher quality services Retailing Banking, credit card management, other financial services, etc. Software distribution Process improvements in production and services Music, films, TV programmes Improved and shared information/experiences about products and services Advertising Blogs Review sites Gains in public service management lower tax burden eHealth Online education initiatives eGovernment Broadband for all – An enabler

GDP and productivity goals: Evidence:

“ 10 percentage-point increase in broadband penetration raises annual per-capita growth by 0.9-1.5 percentage points . ” Nina Czernich, Oliver Falck, Tobias Kretschmer, Ludger Wössmann “Broadband Infrastructure and Economic Growth ” The Economic Journal , May 2011 “Studies from Canada, the United Kingdom, and the United States find that broadband connectivity has a positive economic impact on job creation, community retention, retail sales, and tax revenues (Ford and Koutsky 2005; Kelly 2004; Strategic Networks Group 2003; Zilber, Schneier, and Djwa 2005 ).” Mohsen Khalil, Philippe Dongier, and Christine Zhen-Wei Qiang for The World Bank, “Extending Reach and Increasing Impact”, page 5, 2009 We observe $39 billion of total revenue in Internet access in 2006, with broadband accounting for $28 billion of this total. Depending on the estimate, households generated $20 to $22 billion of the broadband revenue . Approximately $8.3 to $10.6 billion was additional revenue created between 1999 and 2006. That replacement is associated with $4.8 to $6.7 billion in consumer surplus , which is not measured via Gross Domestic Product (GDP). Shane Greenstein and Ryan C. McDevitt “The Broadband Bonus: Accounting for Broadband Internet’s Impact on U.S. GDP” Kellogg School of Management and Department of Economics, Northwestern University , respectively 2009 GDP and productivity goals: Evidence

Productivity goals: Evidence at the regional level:

“Two regional broadband development programmes were investigated, in Cornwall (UK) and Piedmont (IT). Both programmes focus on the adoption of value-added broadband services in companies and in public services. Four years after the start of the actnow programme, 10% additional yearly growth and 7% additional productivity increase per year in the business services sector can be observed in Cornwall as compared to the rest of the country . Two years after the start of the WI-PIE programme, the regional IT observatory recorded progress of 9% per year on average in the regional broadband-related economic indicators .” Martin Fornefeld, Gilles Delaunay, Dieter Elixmann “ The Impact of Broadband on Growth and Productivity ” A study on behalf of the European Commission (DG Information Society and Media ) 2008. “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 .” William H.Lehr, Sharon E. Gillett, Marvin A. Sirbu “Measuring Broadband’s Economic Impact” Broadband Properties , 2005 see http://www.broadbandproperties.com/2005issues/dec05issues/Measuring%20Broadband%20Eco%20Impact,%20Lehr,%20Gilett,% 20Sirbu.pdf Productivity goals: Evidence at the regional level

Broadband for all – externalities:

Indirect economic benefits – externalities and happiness (WTP) goals Always online and faster speed enable at least three types of effects: Broadband provides a superior service and spillover effects Broadband purchases stimulates economic activity elsewhere (equipment such as WiFi) Increases consumers willingness to pay (WTP) not captured in GDP Non-pecuniary benefits (happiness) Social inclusion effects Participation in debates and plurality Broadband for all – externalities

Externalities and Happiness: Evidence:

“Our analysis suggests that IT has an enabling and empowering role in people's lives, by increasing their sense of freedom and control, which has a positive impact on well-being or happiness . ” BCS Chartered Institute of IT survey reported May 2010, see http://www.bcs.org/ “ The biggest uplift in life satisfaction is achieved by people getting online for the first time. In their first couple of years online the difference that the internet makes in improving life satisfaction is most noted. The BCS [see above] research also found the biggest benefit to wellbeing from being online would be achieved by providing access to those on low incomes and with fewest educational qualifications. ” The digital divide and happiness – a presentation of the evidence, UK Online Centres, April 2011 Externalities and Happiness: Evidence

Reaching out – Satellite a key element in closing the Gap:

Governments in striving to connect the last few and supporting wider coverage should consider a raft of initiatives including raising awareness of satellite services Reaching out – Satellite a key element in closing the Gap

Finland leads the way in extracting socio-economic benefits:

Finland has become the first country in the world to make broadband a legal right for every citizen Since 1 July 2010 every Finn has the right to an access speed of 1Mbps for broadband Finland has vowed to connect everyone to a 100Mbps connection by 2015 Finland leads the way in extracting socio-economic benefits

Satellite to close the gap in Finland:

Satellite to close the gap in Finland 23 May 2011 Eutelsat Communications announced a distribution agreement between its Skylogic subsidiary and TeliaSonera to provide the new-generation Tooway(TM) satellite broadband service in Finland TeliaSonera will use the Tooway(TM) service to help close the digital gap by providing high-speed broadband services beyond reach of terrestrial or wireless networks Download speeds of up to 10 Mbps and upload speeds of up to 4 Mbps Tooway will be delivered via Eutelsat's innovative KA-SAT satellite, launched December 2010 and went into full commercial service 31 May 2011 Total capacity of more than 70 Gbps, KA-SAT ranks as the world's most powerful spacecraft and, as Europe’s first High-Throughput Satellite (HTS), will usher in a new era of competitively-priced satellite-delivered services for homes and small businesses across Europe and the Mediterranean Basin

Reach out Satellite’ll be there:

Now if you feel that you can't log on (can't log on), Because all of your line is slow (all your line is slow ), And your line is filled with much congestion (much congestion ), Until happiness is just an illusion ( happiness is just an illusion), And your world around is slowing down, darlin', (Reach out) Come on girl reach on out for me, (Reach out) Reach out for me, Satellite ’ll be there always on and full of speed Reach out Satellite ’ll be there

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