The faster your broadband, the higher your income

13 Comments

Boosting broadband speeds is correlated with a higher income in developed countries according to Ericsson(s eric), 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.

13 Comments

Bruce

I think the headline should actually read “The higher your income, the faster the broadband you can afford.”

techkraut

Oh yes – the old causality trap. Everyone who eats carrots eventually dies (100% correllation) does not mean that everyone dies because they eat carrots (causality). Could it simply be that availability of high speed internet is a function of a good infrastructure which is a function of a highly developed economy? Could it further be that most wealthy people live in countries with a highly developed economy? Is it possible that the wealthier people in those countries can afford to pay more to get higher bandwidth connections – whether or not they actually need or use them? Or alternatively is it possible that in countries that practice free enterprise market forces lead to better products being offered at lower prices?

PJ

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…

Joe Newstrom

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

Koushik

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

None

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

Comments are closed.