Thursday, 18 September 2014

Gigabit Enthusiasm: an economic reality

Ed. Note: we’re often asked about the economic impact of fiber networks — what does a gig really do for a local economy? To help answer your questions, we have a guest post from Heather Burnett Gold, President of the Fiber to the Home Council Americas, and Dr. David Sosa, a Principal at the Analysis Group. Today they are sharing the findings of a first-of-its-kind research report on the economic impact of fiber-to-the-home networks in U.S. communities.

While many people think of gigabit internet as essential to the future of the Web, others have wondered if these fiber networks just might be too fast, too soon. Based on early evidence of the economic impact of fiber-fed, gigabit services, we believe that the time for gigabit skepticism is over.

Today the Fiber-to-the-Home Council Americas (FTTH Council) released a first-of-its-kind study — Early Evidence Suggests Gigabit Broadband Drives GDP — which looked at 55 communities in 9 states and found a positive impact on economic activity in the 14 communities where gigabit Internet services are widely available. In fact, these gigabit broadband communities exhibited a per capita GDP approximately 1.1 percent higher than the 41 similar communities with little to no availability of gigabit services.

This may not sound like much but consider this: in dollar terms, our research suggests that the 14 gigabit broadband communities studied enjoyed approximately $1.4 billion in additional GDP when gigabit broadband became widely available. (That’s enough money to buy the Buffalo Bills — if you wanted to).

Our study suggests that as gigabit services become available in more communities, the impact on economies and consumers is likely to be substantial. Indeed, if the 41 communities in our study without gigabit broadband were to adopt the new service, they could expect as much as $3.3 billion in incremental GDP. And we are not alone in this perspective; the ratings agency Fitch underscored this point when it upgraded Kansas City, Missouri’s bond ratings, noting that the gigabit to the home fiber network “[…] has the potential to make a significant economic impact.”

The deployment of widespread ultra-high bandwidth broadband offers great promise for our economic future, similar to the way that access to abundant electricity transformed the country, lighting up factories to produce affordable consumer goods and automobiles for transportation. The availability of electricity spurred an era of high productivity and economic growth. And now, we are beginning to see that access to abundant bandwidth is likely to have a similarly positive impact on our economy.

Widespread gigabit availability contributes to the economy in multiple ways. Investment in physical infrastructure and labor creates jobs and increases expenditures into inputs like electronics and fiber optic cable. But next generation broadband infrastructure can also shift economic activity, sparking local tech scenes and the relocation of businesses. Claris Networks moved its data center operations from Knoxville to Chattanooga to take advantage of its fiber network. Lafayette's network attracted Hollywood special effects company Pixel Magic to the community, because the high performance gigabit network lets Pixel Magic move computer files back and forth between Lafayette and California quickly. And from the Hacker House in Kansas City to Fargo’s Startup House in Fargo, North Dakota, local entrepreneurs are using gigabit networks to develop new applications and services, bringing in new investment and talent along the way.

In the last several years, communities, their leaders and several private companies have made moves to stimulate and support our economy by upgrading our networks to gigabit capabilities. They, and we, remain gigabit enthusiasts, willing to welcome the skeptics to help us make gigabit communities a priority.

Posted by Heather Burnett Gold, the FTTH Council and Dr. David Sosa, the Analysis Group

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