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Summary:

Faster broadband isn’t just something to brag about, it gives you an economic edge. Data from Ericsson suggests a boost from 4 MBps to 8Mbps leads to a $120 rise in monthly income.

It Will Be The Year Of ‘Interactive TV’

Boosting broadband speeds is correlated with a higher income in developed countries according to Ericsson, which makes telecommunications equipment. A bump from 4 Mbps, which is the U.S. definition of broadband to 8 Mbps is tied to an increase of $120 per month in OECD countries.

In Brazil, India and China — countries with a less developed broadband infrastructure — speeds boosts of 512 kbps to 4Mbps offers a $46 monthly increase in income. The greatest boost in those countries comes from going from no internet access to 512 kbps which is correlated with a $70 increase in household income per month.

ericssonspeedIn OECD countries the biggest benefit from a speed boost comes when homes go from no broadband to 4 Mbps, gaining about $322 per month. Importantly, the study notes that the benefits of broadband speed increases vary by country and also increase in a step progression. They are not linear, which can make it hard to track. Also here is a minimum broadband access and speed level required in order to gain any benefit, and that benefit will likely require higher speeds over time.

While Ericsson clearly has an economic incentive to push faster broadband (generally that leads to equipment expenditures) the company has made an effort to explain why broadband matters for citizens and countries in a series of research projects over the last several years. For this study, conducted in 2011, Ericsson looked at 33 countries and worked with Arthur D. Little and Chalmers University of Technology.

It makes intuitive sense that boosting broadband speeds and access to broadband should drive up income. Broadband offers people more access to information — be it lower prices for goods or more job listings. While not everyone can save money by telecommuting, the ability to connect with loved ones over cheaper connections is a plus as is the ability to gain access to knowledge that might someone advance in their profession.

Plus more and more government services, a variety of bills, employee benefits programs and even children’s homework are all moving online. To not have access means you can’t keep up. Ericsson breaks down the benefits of broadband into short, medium and long-term benefits, and cautions policy makers that they should focus on expanding penetration before focusing on speed, but that speed does matter.

  1. Also works the other way, I guess.

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  2. You are making a causality error, me thinks.

    http://en.wikipedia.org/wiki/Causality

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  3. The more likely explanation is, the more wealthy you are, the faster broadband you can afford.

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  4. Correlation != causation. Think a bit before you write…

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  5. Statistics is hard

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  6. Glad I didn’t go to the Chalmers University of Technology. Otherwise, I may not understand the difference between correlation and causation, either.

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  7. The faster the speed of the internet, the more likely you are to read illogical articles like this.

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  8. Post hoc, ergo propter hoc?

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  9. I mean, by this logic we should all go out and buy super yachts so we can become immeasurably rich.

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  10. In Romania you can get 50Mbps for €10 a month… That’s a huge jump from their past 512kbps…. Checkout their income over past years and try to corelate… I don’t think your hypothesis will hold up…

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