Home Headline News Economic Impact of Closing the Digital Divide

Key takeaways

  • Additional broadband coverage, adoption, and speed is accretive for incremental growth of U.S. jobs and GDP, making the case for investment
  • A 10 percentage-point increase in broadband penetration in 2016 would have resulted in more than 806,000 additional jobs in 2019, or an average annual increase of 269,000 jobs.
  • More than 875,000 additional U.S. jobs and $186 billion more in economic output would have occurred in 2019 had there been a 10 percentage-point increase in broadband access in 2014.
  • Adding 10 Mbps to average download speeds in 2016 would have resulted in 139,400 additional jobs in 2019; however, the analysis also indicates diminishing returns with the rate of job growth slowing as speeds continue to increase.

Why this matters
The COVID-19 pandemic forced much of the U.S. population to trade classrooms, offices and conference rooms for at-home screens. Many Americans were left stranded by inadequate or unaffordable access to internet connectivity or mobile devices. This reality has resulted in a pivotal moment for the U.S. economy, with financial prosperity, educational opportunities and personal/professional productivity, depending on reliable, affordable and fast internet connectivity for all. More than $100 billion of infrastructure investment has been allocated by the U.S. government over the past decade to address this issue; however, the digital divide still presents a significant gap.

Deloitte today released a new report titled, “Broadband for all: charting a path to economic growth,” that uses economic models to evaluate the relationship between broadband and economic growth. It proposes a geographic segmentation that distinguishes the specific needs of different under-served geographies, better reflecting their unique challenges. The report also provides insights into the benefits associated with various broadband speeds and adoption rates in order to optimize economic and social benefits, while reducing inefficiencies.

Investment doesn’t always equate to outcomes
Optimism over the past 10 years that billions of private and public investment in underserved geographies for broadband access and adoption would help close the digital divide has waned as outcomes have often disappointed. Previous programs increased the number of people with access to the FCC’s definition of broadband by less than 1% (<1%; 1.6 million people) between 2014 and 2019, partially as a result of the changing definition of broadband. The report notes:

  • Between 2010 and 2020, federal programs including USAC and Rural Digital Opportunity Fund, among others, spent approximately $107 billion.
  • In 2014, the last year of the 4 Mbps downlink benchmark, 16 million Americans (approximately 5% of the U.S. population) did not have broadband services that met that standard.
  • In 2019, after five years and approximately $54 billion, 14.4 million Americans did not have broadband that met the new FCC speed threshold (25 Mbps downlink).

Key quote
“The pandemic hastened the pace of a decades-long trend in which innovative applications are increasingly essential to enhancing educational opportunities, organizing our lives, connecting with colleagues and friends, improving workplace productivity and enriching the quality of lives. If large segments of our population lack the necessary communications infrastructure to participate, progress will be increasingly difficult.”

−        Dan Littmann, principal, technology, media and
telecommunications, Deloitte Consulting LLP

The digital divide has significant economic impact
For years government, industry and academics have discussed the societal impact produced by closing the digital divide. To better understand the relationship between broadband and the U.S. economy, Deloitte developed economic models using publicly available information. The report’s economic models confirmed three hypotheses:

  1. Increased broadband penetration leads to economic growth: Deloitte’s analysis indicates that a 10 percentage-point increase of broadband penetration in 2016 would have resulted in more than 806,000 additional jobs in 2019, or an average annual increase of 269,000 jobs. The report notes that broadband can allow for greater access to formal education, as well as expand the types of jobs available in a region, thereby raising the level of skills.
  2. Greater broadband availability leads to economic growth: Deloitte found a strong correlation between broadband availability and jobs, as well as GDP growth. The report notes that a 10 percentage-point increase in broadband access in 2014, would have resulted in more than 875,000 additional U.S. jobs and $186 billion more in economic output in 2019. That is an average of 175,000 jobs and $37.2 billion in output per year.
  3. Greater penetration of higher speed broadband leads to economic growth: Deloitte’s analysis also shows that adoption of higher speeds drives noticeable improvements in job growth. Adding 10 Mbps to average download speeds in 2016 would have resulted in 139,400 additional jobs in 2019 or about 46,500 additional jobs per year. While the analysis shows that increasing speeds lead to greater job growth, it also indicates diminishing returns, with the rate of job growth slowing as speeds continue to increase. The report notes that this is a significant consideration. Diminishing returns should be considered when evaluating future speed mandates.

Key quote
“When it comes to the public or private broadband investments to close the digital divide, the economic benefits are clear, but will require stakeholders to navigate potentially competing priorities across emerging technologies that can meet needs in the near-term, the long-term desires for faster speeds, and financial support for devices and in-home equipment.”

−        Jack Fritz, principal, technology, media and
telecommunications, Deloitte Consulting LLP

Connect with us on Twitter @DeloitteTMT, or on LinkedIn: @DanLittmann  @JackFritz.

About Deloitte
Deloitte provides industry-leading audit, consulting, tax and advisory services to many of the world’s most admired brands, including nearly 90% of the Fortune 500® and more than 7,000 private companies. Our people come together for the greater good and work across the industry sectors that drive and shape today’s marketplace — delivering measurable and lasting results that help reinforce public trust in our capital markets, inspire clients to see challenges as opportunities to transform and thrive, and help lead the way toward a stronger economy and a healthier society. Deloitte is proud to be part of the largest global professional services network serving our clients in the markets that are most important to them. Building on more than 175 years of service, our network of member firms spans more than 150 countries and territories. Learn how Deloitte’s more than 330,000 people worldwide connect for impact at www.deloitte.com.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the “Deloitte” name in the United States and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see www.deloitte.com/about to learn more about our global network of member firms.

You may also like

logo-white

Your Trusted Source for Capital Markets & Related News

© 2024 LiveTradingNews.com – For The Traders, By The Traders – All Right Reserved.

The information contained on this website shall not be construed as (i) an offer to purchase or sell, or the solicitation of an offer to purchase or sell, any securities or services, (ii) investment, legal, business or tax advice or an offer to provide such advice, or (iii) a basis for making any investment decision. An offering may only be made upon a qualified investor’s receipt not via this website of formal materials from the Knightsbridge an offering memorandum and subscription documentation (“offering materials”). In the case of any inconsistency between the information on this website and any such offering materials, the offering materials shall control. Securities shall not be offered or sold in any jurisdiction in which such offer or sale would be unlawful unless the requirements of the applicable laws of such jurisdiction have been satisfied. Any decision to invest in securities must be based solely upon the information set forth in the applicable offering materials, which should be read carefully by qualified investors prior to investing. An investment with Knightsbridge is not suitable or desirable for all investors; investors may lose all or a portion of the capital invested. Investors may be required to bear the financial risks of an investment for an indefinite period of time. Qualified investors are urged to consult with their own legal, financial and tax advisors before making any investment. Knightsbridge is a private investment firm that offers investment services to Qualified Investors, Members and Institutions ONLY. Qualified Investors are defined as individuals who have met those Qualifications in the relevant jurisdictions. Members are defined as individuals who have been accepted into the Knightsbridge membership program. Institutions are defined as entities such as banks, pension funds, and hedge funds. If you are not a Qualified Investor, Member or Institution, you are not eligible to invest with Knightsbridge. All investments involve risk, and there is no guarantee of profit. You may lose some or all of your investment. Past performance is not indicative of future results. Knightsbridge is not a registered investment advisor, and this disclaimer should not be construed as investment advice. Please consult with a qualified financial advisor before making any investment decisions. By accessing this website, you agree to the terms of this disclaimer. Thank you for your interest in Knightsbridge.