Just So We Know Where Labour’s £59 Billion Productivity Rise From Broadband Comes From

An interesting question elsewhere:

…nationwide full-fibre is estimated to provide a potential boost to productivity worth an estimated £59bn.

I’d like to know where they get this figure from. Having an internet connection is a vast benefit. But how many businesses benefit from a data rate better than can be obtained on a 4G connection? You’d have to be handling an enormous amount of data in real time. How many businesses do that?

So, where does it come from?

Actually, it’s nadgers, entire colei.

Here’s what has been done. We do know that the existence of a mobile phone network in a country without a landline telephone system adds to GDP. A rise in productivity isn’t exactly the same things as a rise in GDP but it’s pretty damn close in reality.

We even know how much adding communication ability adds – for every 10% of the population with a mobile phone GDP increases by 0.5% a year.

We have also done similar research and worked out that broadband – hmm, well, this is back when 64k was an interesting speed, broadband at that time being said to be 2Mb – also adds to productivity and GDP growth. Can’t recall what the addition was, sorry.

From that some backcasting was done and the conclusion that the creation of a national landline network added to growth over time. As it undoubtedly did.

Then, ah, then. One of the Big Four accountants – Coopers mebbe? – has a telecoms consultancy. And they’ve been pumping out reports for years shouting that more broadband adds to productivity. Except they’ve never gone out and proven this. They’ve just assumed that more speeds higher than 2 Mb increase productivity growth just as much as having the live internet at all does.

Entirely violating the concept of diminishing marginal returns of course.

We actually have no – none, nada, zip – evidence that fast internet access adds to anything other than consumer satisfaction. It’s an assumption from what we know about slow internet access. Which is really something of a problem. Because what if it’s, say, search engines and email which provide the boost? Things which higher speeds don;t make any difference to at all? Sure, it’s possible that watching Netflix is an addition to productivity but I’d like to see some proof of that to be honest.

Labour’s productivity increase number is a false one. Simply because no one has gone out and tested it. It’s an assumption, made by drawing a straight line from the experience of much slower speeds. Something that really isn’t valid. After all, we did eventually work out that Concorde wasn’t worth the faster speed, didn’t we? Sadly, only after pissed away those billions….