Broadband access does matter to the economy, just as common sense would say it should

MIT and CMU have released a study that shows empirically that access to broadband networks “does enhance economic growth and performance.”

The essence of this study’s design is to differentiate geographic areas by their availability and/or use of broadband, then look at economic indicators for these areas over a long enough period to see if consistent deviations from the secular trend are observable, controlling for other factors known to distinguish among the areas.

This report is a must read for any policy-maker or person interested in why competitive broadband and municipal networks are important. After careful data analysis, “The results support the view that broadband access does enhance economic growth and performance, and that the assumed (and oft-touted) economic impacts of broadband are real and measurable.”

We find that between 1998 and 2002, communities in which mass-market broadband became available by December 1999 experienced more rapid growth in (1) employment, (2) the number of businesses overall, and (3) businesses in IT-intensive sectors…. The magnitude of impacts estimated by our models are larger than we expected.

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Policy makers who have been spending their time or money promoting broadband should take comfort that their efforts and investments are not in vain. Many significant public policy reforms and programs are in place or under consideration at the federal, state, and local levels to ensure competitive availability of broadband to all U.S. citizens, stimulate ongoing investment in broadband infrastructure, and facilitate the education and training that small business and residential customers need to make effective use of broadband’s capabilities. Such policies are indeed aimed at important goals. Broadband is clearly related to economic well-being and is thus a critical component of our national communications infrastructure.

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Once broadband is available to most of the country, however, differences in economic outcomes are likely to depend more on how broadband is used than on its basic availability. The implication for policy makers is that a portfolio of broadband-related policy interventions that is reasonably balanced (i.e., also pays attention to demand-side issues such as training) is more likely to lead to positive economic outcomes than a single-minded focus on availability.

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