A new study published by the International Telecommunication Union (ITU), the United Nations specialized agency for information and communication technology (ICT), analyses in detail the positive economic impact of broadband, digitization and effective ICT regulation on national economies.
The study The economic contribution of broadband, digitization and ICT regulation states that an increase in both fixed and mobile broadband penetration has a positive impact on the economy.
Turning to digital transformation, the study shows that the economic impact of the digital ecosystem is greater than that resulting from fixed broadband and similar to that produced by mobile broadband penetration. The study also finds that effective policy and regulatory frameworks can drive growth in the digital ecosystem.
“With this landmark study, we can now quantify the impact of broadband and digital transformation on economic growth,” said Houlin Zhao, ITU Secretary-General. “Investment in ICT infrastructure is an absolute priority to expand access to broadband services, and to help accelerate achievement of the Sustainable Development Goals.”
The study also presents, through the framework, models and formulas it includes, a blueprint for assessing the economic impact of broadband, and enabling a full-blown data analysis of digital transformation and evidence-based policy-making.
“This study builds on years of robust and reliable data resources,” said Brahima Sanou, Director of the ITU Telecommunication Development Bureau. “The findings will make the case for broader adoption of digital technologies and digital policies across the globe and be instrumental in evidence-based decision/making across ITU members.”
The economic impact of fixed and mobile broadband:
The study finds that fixed broadband has had a significant impact on the world economy in the past seven years. The economic impact of fixed broadband is found to be higher in more developed countries than in less developed, while the economic impact of mobile broadband is found to be higher in less developed countries than in more developed countries. Overall, an increase of 1 per cent in fixed broadband penetration yields a 0.08 per cent increase in Gross Domestic Product (GDP), while an increase of 1 per cent in mobile broadband penetration yields a 0.15 per cent increase in GDP (this translates into an increase of 10 per cent in fixed or mobile broadband penetration yielding an average increase of 0.8 per cent and 1.5 per cent respectively in GDP).
The economic impact of digital transformation:
The study reveals that the economic impact of digitization is higher than that of fixed broadband and similar to that of mobile broadband. According to the study, achieving broadband penetration is only one aspect of required policies; maximization of the economic impact of digitization can only be achieved through the adoption of a holistic set of policies ranging from Internet access and computing to electronic commerce. It also recognizes that the digital ecosystem has an economic impact on productivity.
The impact of policy and regulatory frameworks:
The study provides further evidence of the importance of regulatory and institutional variables in driving growth in the digital ecosystem. It states that connectivity for digital services is significantly correlated with the level of advancement of ICT policies and regulations, as well as the competition and market power regulatory set-up. Further, investment in the digital ecosystem is directly and positively influenced by the maturity of ICT regulatory frameworks and by ICT competition frameworks.
This new study builds on the first ITU research on this topic The impact of broadband on the economy, published in 2012, which provided initial evidence on the positive economic and social impact of broadband and underlined the importance of data gathering to refine impact measurement. The study has become an authoritative reference and has informed policy-makers across the ITU Membership.