Broadband is good for the U.S. economy. Rural America needs broadband. Most people instinctively know this. Most rural areas that have installed fiber optic connections can point to community and business successes. But until recently, most of the evidence has been anecdotal. Economists have found it difficult to prove conclusively if, when and how broadband connections have had positive economic effects. A recent study, however, finds that data collected between 2010 and 2020, begins to reveal the truth.
“If broadband adoption and speeds had remained at 2010 levels, in 2020 the US GDP would have been $1.3 trillion lower [$19.6 trillion, rather than $20.9 trillion]. This is equivalent to almost $4,000 annual dollars less for the average American,” concludes “The Contribution of Fixed Broadband to the Economic Growth of the United States,” published by Telecom Advisory Services LLC.
In addition to broadband networks having wider coverage, adoption and faster speeds, the economy has gained from consumer use of a larger number of applications, especially in the areas of communications, entertainment and information. “Aggregated consumer surplus at the national level increased to over $186 billion in 2020 [up from $81.6 billion in 2010] as a result of increased connectivity,” the report concludes. “And an additional $186.2 billon of consumer surplus is realized, when considering the significant improvements in average broadband speeds.”
The report also reviews past research on broadband’s economic effect that tended to avoid stating definite conclusions. For example, a 2010 focusing on rural broadband deployment found that “the technology had not had yet a significant impact on [rural] economic development [as measured by employment, payroll, and the number of business establishments] possibly because not enough time had elapsed for the impact to happen.” But more recent studies have gradually been more definitive on broadband’s effect.
So, is this positive influence on the economy justification for tens of billions of dollars in new spending on federal and state broadband construction and affordability programs? Will it pay for the drive to make broadband available in every home? Maybe we’ll know in another 10 years.