Increase your broadband speed, increase your income says study

Households who upgrade their broadband services can expect to increase their income, according to results of a study conducted by Ericsson (NASDAQ:ERIC), Arthur D. Little, and Chalmers University of Technology.

Sep 18th, 2013

Households who upgrade their broadband services can expect to increase their income, according to results of a study conducted by Ericsson (NASDAQ:ERIC), Arthur D. Little, and Chalmers University of Technology.

The study set out to determine the minimum broadband speed upgrade necessary needed to affect household income in a statistically significant way. The study discovered that these data rate thresholds differed between OECD (Organization for Economic Cooperation and Development) and BIC (Brazil, India and China) countries. The absolute levels of return were found to be higher for OECD economies (the results were adjusted for “purchasing power parity” to reflect absolute level of returns). Ericsson says this fact supports the idea that income gains from broadband increase if more advanced services are available.

Specifically, the study asserts that:

  • The average increase in household income for a broadband speed upgrade from 4 to 8 Mbps is $120 per month in OECD countries.
  • BIC households benefit most by upgrading from 0.5 to 4 Mbps, when income could be expected to rise $46 per month.

"Results are in line with our previous study that quantified the impact of broadband speed increases on the gross domestic product of 33 countries, as well as a slew of other studies we reviewed,” says Sebastian Tolstoy, vice president, radio business development and strategy at Ericsson. “All indicate that broadband access has a positive effect on the economy. We know that speed matters and that upgrading broadband speed has a positive impact. Now we have shown this quantitatively using large data samples in both OECD and BIC economies, even at the household level."

Added Martin Glaumann, partner at Arthur D. Little, "The evidence is building for broadband speed as a driver of economic growth. Yet in many countries, not least in the EU, regulatory developments are holding back the full growth potential. Regulators need to rethink and recognize high-speed broadband as a national imperative for BIC countries. Broadband gives households the means to improve skills and productivity through e-learning and business services, but also to gain access to new venues for consumption."

"This is one of the first studies to address impacts from broadband speed on household income. Based on rigorous scientific methods and comprehensive data, the study can show that increased broadband speed increases income, which has a number of important policy and strategy implications," added Erik Bohlin, professor at Chalmers University of Technology.

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