Broadband increases productivity
The results of a recent study of businesses in New Zealand show that those which utilise broadband are 10% more productive than businesses without broadband.
Although fast internet access is widely considered to enhance productivity, the 18-month study, which used 2006 data, was the first to estimate the productivity impacts of connectivity upgrades using business-level data.
Using an economy-wide survey by Statistics New Zealand, the study selected 6,051 businesses with at least six employees each.
Of the sample, 13% had a fast cable broadband connection and 72% had slow broadband, with the majority of the balance having dial-up.
Among the most interesting findings of the study were that the effect of having broadband compared with not having broadband was very much overlooked; and that businesses associated with tourism were no more likely to have broadband than other businesses.
It was assumed that many of these tourism businesses were motels in rural areas, and were exactly the kind of businesses which would need the internet for bookings. The fact that they were unable to get internet connection pointed to an issue which needs to be addressed.
Although accessibility to broadband these days was changing, rather than much changed from 2006, one of the biggest surprises revealed by the study was the number of firms that didn’t have ADSL. Providing rural firms with access to broadband is one of the remaining issues in New Zealand.
However, the study found no significant change in productivity when a business upgraded from slow to fast broadband. The study estimated that productivity gains could be attributed to the adoption of slow, relative to no, broadband, with no discernable additional effect arising from a shift from slow to fast broadband. But the latter finding should be “interpreted with care”.
There were several explanations for this, including the representation of different internet speeds and, at that stage, the full future benefits of moving to fast broadband being apparent in 2006. However, data from a 2008 survey would soon be available for comparison.
Much has been written in mainstream media about the benefits of the internet revolution and of the even greater benefits that could be achieved by linking businesses and households to the internet through fibre optic cable.
But despite enormous budgets being invested in broadband, especially fibre rollouts, there has been barely any rigorous supporting evidence to show that broadband connectivity resulted in material productivity benefits.
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Tagged in: Australia, New Zealand & South Pacific, New Zealand
