Realist, not conformist analysis of the latest financial, business and political news

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

Pissing the money away By Pbrundel – Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=3911516

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….

0 0 votes
Article Rating
Total
0
Shares
Subscribe
Notify of
guest
5 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
djc
djc
2 years ago

My neighbours seem bothered by poor internet in this hamlet. Me, manage a data analysis business from home using no more than a (3G only) mobile broadband connection. OK I perhaps have to relevant skills to not use data needlessly and to get make the most of a poor signal. But what do they need this better connection for? Turns out it’s not to manage the farm nor any other business, they are unhappy because Netflick doesn’t work too well. But that isn’t, it appears, so important that they are willing to contribute a thousand pounds or so of their… Read more »

Quentin Vole
Quentin Vole
2 years ago

I very much doubt it even increases consumer satisfaction. I get 100Mb over a standard phone line*. How much would 1Gb (or even 10Gb) improve my experience? Sure I can download a 4GB Linux distro in seconds rather than minutes, but it’s not as though I sit there twiddling my thumbs while it’s happening. And I can already handle multiple HDTV streams without fibre. If someone offers me fibre for free, I’ll take it, but I wouldn’t pay a one-off few hundred quid (a realistic estimate) to install it. As for practicalities – I reckon ~30 million premises in the… Read more »

alastair harris
alastair harris
2 years ago
Reply to  Quentin Vole

no such thing as a free lunch!

Leo Savantt
Leo Savantt
2 years ago

Could Labour’s underlying, if not nessecarily conscious, reason for these plans have more to do with control as opposed to access? One suspects many a momentum feel more than slightly sympathetic towards the Chinese model of internet control and allied social credit system.

GR8M8S
GR8M8S
2 years ago

You could look into the case of national broadband (NBN) here in Oz. It’s been going for a couple of years now and the instalation is coming to an end. The productivity data, along with Labor’s heroic business case should be there.

We live in rural Oz and have wireless NBN which can be flaky. Can’t notice much of an improvement over the old copper wire connection. It is cheaper though!

5
0
Would love your thoughts, please comment.x
()
x