Deloitte: Widespread broadband infrastructure critical to the US economy

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A Deloitte study has found that additional broadband coverage, adoption and speed are all accretive for incremental growth of US jobs and GDP, but warned that – despite that more than $100bn of US infrastructure investment over the past decade – a digital divide still presents a significant gap.

The study, Quantifying the economic impact of closing the digital divide, looked at the criticality of broadband infrastructure to the US economy, providing insights into the benefits associated with various broadband speeds and adoption rates to optimise economic and social benefits, while also reducing inefficiencies.

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Not surprisingly, the Covid-19 pandemic has been a key mover for the market, forcing much of the US population to trade classrooms, offices and conference rooms for at-home screens.

Yet the study also pointed out that many Americans were left stranded by inadequate or unaffordable access to internet connectivity or mobile devices. It added that the post-Covid reality has resulted in a pivotal moment for the US economy, with financial prosperity, educational opportunities and personal/professional productivity all depending on reliable, affordable and fast internet connectivity for the masses.

Deloitte calculated that 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.

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In addition, it suggested that more than 875,000 additional US jobs and $186bn more in economic output would have occurred in 2019 had there been a 10 percentage-point increase in broadband access in 2014. Adding 10Mbps to average download speeds in 2016 would likely have resulted in 139,400 additional jobs three years later.

However, Deloitte stressed that added investment doesn’t always equate to outcomes, and cautioned that the optimism that billions of private and public investment in underserved geographies for broadband access and adoption would help to close the digital divide has waned over the past 10 years as outcomes due to disappointing outcomes.

It pointed out that previous programmes had increased the number of people with access to US communications regulator the FCC’s definition of broadband by less than 1% – the equivalent of 1.6 million people – between 2014 and 2019, partially as a result of the changing definition of broadband.

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The Deloitte report also noted that between 2010 and 2020, federal programmes – including USAC and Rural Digital Opportunity Fund – spent approximately $107bn. Yet in 2014, the last year of the 4Mbps downlink benchmark, 16 million Americans (approximately 5% of the US population) did not have broadband services that met that standard.

In 2019, after five years and approximately $54bn, 14.4 million Americans did not have broadband that met the new FCC speed threshold of a 25Mbps downlink.

“The pandemic hastened the pace of a decades-long trend in which innovative applications are increasingly essential to enhancing educational opportunities, organising our lives, connecting with colleagues and friends, improving workplace productivity and enriching the quality of lives,” said Dan Littmann, principal of technology, media and telecommunications at Deloitte Consulting LLP.

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“If large segments of our population lack the necessary communications infrastructure to participate, progress will be increasingly difficult,” he added.

This reflects other studies, such as an April 2020 survey from global edge cloud platform Fastly which found that there was a clear stratification of download speeds when looking at internet performance within median income brackets in the US, indicating that households with lower incomes were experiencing worse download speeds compared with households on higher incomes.

The analysis also showed that on 26 February, 26.3% of the connections in the lower income bracket did not meet the 5Mbps minimum download speed recommended by the FCC. However, from mid-March to mid-April, Fastly observed the biggest improvement in number of users without the minimum required download speeds in that same bracket, dropping from 26.3% to 22.3%.

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