Study outlines benefits of high-speed broadband for New Zealanders

Alcatel-Lucent has released a study on the social and economic benefits for New Zealand from the Ultra-Fast Broadband (UFB) and Rural Broadband Initiative (RBI) investments.

A number of studies in the past have suggested a link between access to high-speed broadband and GDP growth. Broadband applications connect people and businesses to information that is useful in their daily lives, improving their efficiency and productivity.

The study showed that through various UFB and RBI initiatives, high-speed broadband is being delivered to 98 percent of New Zealand’s population. However, the questions still remain: ‘What will be the actual impact of these programs on the New Zealand economy?’ and ‘Can anything be done to further improve those benefits?’

For several years, Alcatel-Lucent’s Bell Labs have been developing and applying macro-economic access deployment models. At the request of the World Economic Forum last year, they analyzed and measured the social and economic benefits associated with accelerating ubiquitous access in multiple regions of the world.

The study ‘Building the Benefits of Broadband’ measures the GDP impact of the infrastructure build and determines the consumer surplus from applications UFB and RBI will support.

 “The study shows the investment in UFB and RBI pays for itself, with more than $5 billion added to our GDP over the 20-year life of the build out program," said Alcatel-Lucent New Zealand CEO Andrew Miller. “Perhaps of greater importance is the impact of applications associated with these initiatives that will allow for a higher consumer surplus – that is an economic boost that results from doing things more efficiently.”

The ‘Building the Benefits of Broadband’ study considered a sample of known applications across health, education, business and the dairy sector. Applications considered included: teleworking, high-definition video conferencing, on-line training, online doctors’ visits, remote patient monitoring, remote classes, online herd management and cloud computing amongst others.

It showed the combined consumer surplus of using high-speed broadband applications significantly outstripped the GDP impact of building the UFB and RBI networks.

“The combined consumer surplus of the applications considered in the study reached nearly $33 billion over the 20-year period and continued to grow year-on-year,” Miller said.

Critically, the study identified three factors that if improved could further increase the potential consumer surplus: the availability of relevant applications, the speed of application adoption, and the total level of application uptake.

A sensitivity analysis, for example, showed that by increasing the speed of application adoption by 20 percent over the baseline, and increasing the total level of application uptake by 20 percent over the baseline, New Zealand can turn a $33 billion consumer surplus into almost $48 billion. Miller said this signals an important call to action for businesses.

“Without relevant, compelling and useful high-speed broadband applications, there will be no consumer surplus. The availability of such relevant and compelling applications requires innovation, incubation and collaboration," he said. “There is no doubt some of this innovation will occur in the R&D labs of big global companies. But for a variety of reasons – language, culture, distance, and all the things that make New Zealand unique – many high-speed broadband applications will need to be created, adapted or incubated here.”

Miller also concluded that New Zealand cannot afford to wait. The quickest possible roll-out of UFB and RBI is essential to drive speed of adoption. And businesses have a part to play in thinking of ways to create mass migration over to these new networks to increase the total level of uptake and resulting consumer surplus.