The most misquoted number in telecom

29 Feb 2012

The much-touted link between an increase in mobile penetration and a corresponding rise in GDP growth has moved beyond the handset. The impact of connectivity on economic growth is now one of the most overused and misquoted numbers in telecom.

On the first day of the MWC in Barcelona, I heard four different speakers referring to the impact of a rise in mobile, broadband and mobile broadband penetration on society.

The impact broadband (fixed or mobile) has on society ranged anywhere from a 1% to 1.4% boost in GDP growth, while mobile's contribution ranged from 0.6-0.8%. Only two people bothered to cite a source for the numbers.

-- Ericsson CEO at a morning press conference:
For every 10%-increase in broadband penetration you get a 1% increase in GDP growth.

-- Huawei's NBN media briefing:
10% increase in broadband penetration can potential translate into 1.3% GDP growth, according to the World Bank.

-- Tim Williams, principal at ARUP Sydney, at Broad Ways Forum:
For every 10% of people who get online the nation gets an extra 1% GDP growth in most countries; an increase of 2.3% in numbers of SMEs that get online can led to 1% GDP growth; a family that gets online can lead to $1,200 in extra income.

-- GSMA chairman Franco Bernabe at opening keynote:
According to the World Bank, a 10% increase in mobile penetration drives a 0.6% increase in a developed country's GDP and a 0.8% increase in a developing country's GDP. And a 10% increase in mobile broadband penetration drives a 1.4% increase in a low- to middle-income country's GDP.

Tolaga chief research officer Phil Marshall told that correlation does not imply causation, and questioned how the figures were derived. "Presumably countries are doing others things like building roads, which also impact prosperity."

With all these positive correlations between rising connectivity and increased economic growth, the question is why aren't more governments around the world funding national broadband networks like we see in Asia -- specifically Singapore, Malaysia and now Australia?


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