Broadband

Broadband can have a positive impact on the local economy, but the effects are likely to vary across types of firms, workers and areas.

Summary

This page offers an overview of why we are interested in broadband provision as a means of encouraging local economic growth and offers insight on what does and doesn’t work in this policy area.

It summarises some of the evidence we already have on what works when delivering these types of programmes, provides guidance on what we know about the effectiveness of different ‘design features’, and offers some thoughts on improving evaluation as well as some case study examples. Throughout the page you’ll find links to further resources including a more detailed discussion of why we look at broadband, our full evidence review and toolkits, as well as evaluation resources.

What do we mean by Broadband and how can it deliver local economic growth?

‘Broadband’ is a generic term to describe always-on access to an internet service.

While Broadband and information and communications technologies can have wide ranging impacts, we are particularly interested in their impact on the local economy via their effect on productivity, employment and wages.

Governments may support Broadband provision because:

  • It could increase firm and worker efficiency by lowering costs and enabling innovation.
  • It may improve productivity, leading to higher wages and employment.
  • Connectivity allows for flexible working and may increase labour market participation.
  • It may lower barriers to starting a business.

Broadband provision is largely market-led, but the public sector may intervene in a number of ways, for example:

  • By subsidising connections to existing networks through voucher schemes and loans, particularly where there is a market failure – such as in rural areas.
  • Directly providing broadband infrastructure or services, sometimes partnering with the private sector.
  • Regulating private sector providers.

In terms of local economic growth in particular, broadband is likely to have different effects on different places, such as in rural and urban areas.

Find out more about how we define broadband and why we look at it.

What does the evidence on Broadband show?

  • Extending broadband to an area can affect firm productivity, number of businesses, and local labour market outcomes (such as employment, income and wages).
  • These effects are not always positive, are not necessarily large, and may depend on complementary investments by firms (for example, training workers, or reorganizing sales strategy or supply chains to take advantage of faster internet connections).
  • The effects of broadband provision can vary across different types of industries and workers with service industries and skilled workers possibly benefiting more than manufacturing industries and unskilled workers.
  • The economic effects of broadband tend to be larger in urban areas (or close to urban areas) than in rural areas.

Our evidence review covers further findings on a number of outcomes including property prices, working patterns and the effects on provision for SMEs.  You can find more details in the full review.

What policymakers need to know when designing Broadband programmes

Broadband, like many ICTs, is a ‘disruptive’ technology that creates winners and losers, and is not a silver bullet for local economic development. There is evidence that broadband has positive local economic impacts, but some of these may be due to in-migration. In particular it seems to benefit higher skilled workers over low or unskilled workers.

The effects of adoption and provision may differ. More work needs to be done to understand whether and how to encourage adoption and productive business use.

Rural areas may need to subsidise broadband provision but the economic benefits of doing so will not be as large as for urban areas.

This evidence is discussed in our evidence review, with additional evidence on particular aspects of programme design summarised in our toolkits:

Public provision Public provision refers to government funding for the construction of broadband internet. Read more about how they work.

Local loop unbundling obliges incumbents to allow local loop access to market entrants and potential price regulation. Read more about how they work.

Provider and consumer incentives provide direct or indirect support to providers or potential customers. Read more about how they work.

Go to the toolkit

What policymakers and academics need to know when evaluating broadband programmes

We need to improve our understanding of the value for money of Broadband schemes, as well as what the specific effects of adoption and provision are for firms and the local economy.

To help practitioners evaluate Broadband policy we have pulled out two examples of good practice in this area:

Norway’s National Broadband Policy analyses the effect of Norway’s National Broadband Policy. Implemented from 2001 to 2007, this policy aimed to ensure that the entire country had access to broadband at a reasonable price. Read the full case study

US Department of Agriculture Broadband Loan evaluates the impact of the USDA Broadband Loan programme in the United States. The programme was designed to increase broadband access in rural areas underserved by private telecommunications operators. Read the full case study

Read more about how we rank evaluations.

Evidence Review Downloads

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