Broadband networks supporting innovation

High-speed broadband networks are a platform supporting innovation throughout the economy today in much the same way electricity and transportation networks spurred innovation in the past. New innovations such as smart electrical grids, tele-medicine, intelligent transportation networks, interactive learning and cloud computing will require fast communication networks to operate efficiently. Telecommunication companies have been investing to upgrade their older copper and coax cables to new fibre lines which have vastly larger capacity but the economic crisis has threatened to halt this investment just when consumers and businesses are using more Internet bandwidth. Telecommunication investment largely mimics GDP (gross domestic product) growth - but in a more exaggerated way. Many governments have stepped in to fill the gap using stimulus funds to pay for new broadband networks. But there has been significant debate about whether these investments make economic sense, particularly as governments are entering into an area which has recently been entrusted to the private sector. This report helps put these interventions in perspective by showing that government investments could be justified based on just small direct benefits in just four key sectors of the economy - electricity, health, education and transportation. Just a small cost reduction across these four sectors resulting from the new networks could justify the government spending.