'Superfast' U.K. Broadband Won't Change Much, Initially

By Gary Kim November 01, 2012

Despite claims to the contrary, the early returns from fourth generation (4G) mobile networks and faster fixed network broadband ("superfast" networks) will not match the advantages of the earlier switch from dial-up to broadband Internet access, at least in the near term, a study by the Economist Intelligence Unit argues. 

Among the mistakes is a belief that the shift to faster networks will have a meaningful impact on  employment, for example, beyond the short term boost in jobs while the network is being constructed. 

Image via Shutterstock

The study might remind some observers of earlier promised productivity gains from broader application of computing in business, or the new applications 3G mobile networks were supposed to bring. 

You might say such faith in job creation resulting from faster broadband access is a case of hopes, not history. A study from the London School of Economics has argued that investing £5 billion into superfast networks (offering 24 Mbps or faster access speeds) would create some 280,000 new U.K.  jobs, both directly and indirectly. Others have estimated higher returns. 

One recent study conducted in Sweden, which explored the impact of "superfast" broadband on local employment, found that while there was a statistically valid link between high-speed fiber connections and economic growth, it was relatively weak, at between zero percent and 0.2 percent. The study looked at 290 instances of fiber to the home deployments. 

Of course, some of the studied communities moved directly from dial-up access to broadband access, so it is not clear whether the fiber or speed account for the measured upside, or simply vanilla broadband, as compared to dial-up access. Some would suggest that is likely the case. In other words, it is not "superfast" broadband that accounts for the small measured economic impact, but broadband, even at slower speeds.

As some other studies also have suggested, fast broadband is a double-edged sword. Consider the case of a gaming business. If skills exist locally, but adequate broadband does not, then presumably there will be a clear local jobs impact from supplying the broadband.

If, however, the local skills do not exist, then it is likely, even necessary, that a local firm look elsewhere for that talent. That could mean new jobs, but located elsewhere.

Others might note that the mere presence of broadband does not automatically allow most firms to take advantage of e-commerce,  e-marketing or supply chain transformation. The skills and experience to do so must also be present. Broadband, of any speed, therefore is a necessary but not sufficient driver of broader transformation. 

The study also notes that, outside of high-tech businesses, it is difficult to find good examples of how "superfast broadband," compared to "standard" flavors of broadband, actually would make a business difference in a four to five year period. 

To be sure, there arguably are network effects that will kick in at some point. But that, some might say, is the point. 

Such innovations take time to show meaningful impact. The example might be the application of computing to business tasks. At first, what people do is automate existing processes. Though helpful, the real advantages do not occur until the processes are fundamentally redesigned. And that takes time, and human learning.

Edited by Brooke Neuman

Contributing Editor

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