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Gigabit Nets Boost GDP, Says FTTH Council

Jason Meyers
9/23/2014

It's early days for gigabit network deployments, but the Fiber to the Home Council Americas is asserting that it already has measured a positive economic impact in regions with gigabit networks.

The Fiber-to-the-Home (FTTH) Council has released a report stating that communities with widely available gigabit access have per capita GDP that is 1.1% higher than communities with little or no available gigabit services. The council's findings are based on studying 55 communities in nine states, using metropolitan statistical area (MSA) data from the National Telecommunications and Information Administration. Of the MSAs studied, the report found a positive economic impact in 14 communities where more than half of households are passed by gigabit fiber -- to the tune of $1.4 billion in additional GDP since gigabit broadband became widely available, according to the council.

"When you look at these MSAs and see their impact on jobs and other economic benefits in local economies, you have a GDP impact as a result of the availability of gigabit services," Kevin Morgan, vice-chair of the FTTH Council Americas board of directors, tells Light Reading.

The council theorizes based on the findings that gigabit networks have a direct effect on factors such as job creation and productivity gains, and that the 41 communities in the study that didn't have widely available gigabit broadband "likely experienced foregone GDP in 2012 of as much as $3.3 billion." Economic development is frequently cited as a major reason for gigabit network deployments, particularly by the municipalities that are either trying to attract investment from network operators or taking steps to deploy gigabit services on their own. (See Minnesota Gets Giant-Sized Gigabit Rollout, North KC Says Free Gigabit for All and Connecticut Cities Crowdsource Gigabit Nets.)

Still, the council's findings are likely to incite skepticism from critics, both because of the FTTH Council's vested interest in proving the economic impact of gigabit network deployments and because deployment of these networks is still in very early stages across the vast majority of the US.


Get the latest updates on the Gigabit Cities trend by visiting Light Reading's broadband/FTTx content channel.


The analyst whose firm conducted the study on behalf of the FTTH Council agrees that it's difficult to forecast the long-term impact of gigabit networks on local economies, but says he expects the long-term effects to be similar to those found in this preliminary study.

"I think it's very difficult to predict what economies look like once gigabit is integrated into economic activity, but it's very reasonable to expect that it will be transformative," says David Sosa, principal for Analysis Group. "We're talking about a technology that is going to be just as transformative as the first wave of connectivity. It's going to change the way individuals and companies do business and interact with each other, because it's such a quantum leap in quality of connectivity."

Morgan takes that sentiment one step further, citing gigabit networks as community saviors -- a theory with which many critics disagree.

"You have areas that were once desolate, dying areas that have found new life with the emergence of gigabit services," he says. "Ultra-high speed networks are serving as catalysts for those communities."

— Jason Meyers, Senior Editor, Utility Communications/IoT, Light Reading

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jasonmeyers
jasonmeyers
9/23/2014 | 4:36:03 PM
Re: Naming names
Yes - there is a link to the release below, at the bottom of which is a link to the study results. The communities studied are listed on the last page of the results.

The regions listed are: Mobile, Ala.; Chattanooga, Tenn.; Fargo, Bismarck, and Grand Forks, N.D.; Rapid City and Sioux Falls, S.D.; Bend-Redmond, Corvallis, Eugene-Springfield, Medford, and Salem, Ore.; St. George, Utah; and Bridgeport/Stamford/Norwalk, Conn.

http://www.ftthcouncil.org/p/bl/et/blogid=3&blogaid=305
mendyk
mendyk
9/23/2014 | 3:59:56 PM
Naming names
Jason -- Did your sources at FTTH point specifically to cities or regions that have seen a turnaround in their economies? That might help quiet the skeptics a bit.
sam masud
sam masud
9/23/2014 | 3:16:25 PM
Re: Fiber-to-the-Home
Only to those deeply impacted.
sam masud
sam masud
9/23/2014 | 3:16:02 PM
Re: Correlation, causality
Mitch,

 

You beat me to it--I think the FTTH Council folks are blowing smoke: Would good would gigabit service do anyone unless they first have need for such bandwidth? This is not a build-it-and-they-will come situation. Seems like the FTTH folks needed something to talk up FTTH.
jasonmeyers
jasonmeyers
9/23/2014 | 11:38:25 AM
Re: Correlation, causality
The correlation issue is certainly a concern. My view is that it will take quite a bit more time to either confirm or dismiss the correlation. 
Mitch Wagner
Mitch Wagner
9/23/2014 | 11:16:10 AM
Fiber-to-the-Home
Is it just me or does Fiber-to-the-Home sound like an organization that delivers bran flakes?
Mitch Wagner
Mitch Wagner
9/23/2014 | 11:13:43 AM
Correlation, causality

This study calls to mind the old saying: Correlation is not causality. If gigabit communities are more affluent that doesn't mean gigabit is the reason. Could be the opposite -- they're more affluent and therefore they have gigabit, not vice-versa. 

Successful companies often offer perqs to employees such as espresso machines in the lounges. Does that mean buying an espresso machine will make my business successful?

cnwedit
cnwedit
9/23/2014 | 11:01:18 AM
Re: Now for the real proof
Of course, the other side always comes out with its own figures. The Advanced Communications Law and Policy Institute claims there's no data that supports government-owned gigabit networks as a "nucleus of renewed economic activity in cities and towns where they have been deployed." The ACLPI is part of the NYU Law School.

I still think it's good to engage in this debate. 
jasonmeyers
jasonmeyers
9/23/2014 | 10:46:03 AM
Now for the real proof
These are interesting (and sure to be controversial) findings that certainly will be helpful to municipalities pushing to bring gigabit connectivity to their communities. But it's going to be the next 5-10 years that will really prove out this economic development theory, and it's up to the munis and their providers to demonstrate the kinds of unique applications and inventive uses of gigabit networks that have the power to truly impact economic growth. 
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