Deloitte: Quantifying the Economic Impact of Closing the Digital Divide
Tuesday, May 4th, 2021
Key takeaways
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Additional broadband coverage, adoption, and speed is accretive for incremental growth of U.S. jobs and GDP, making the case for investment.
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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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More than 875,000 additional U.S. jobs and $186 billion more in economic output would have occurred in 2019 had there been a 10 percentage-point increase in broadband access in 2014.
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Adding 10 Mbps to average download speeds in 2016 would have resulted in 139,400 additional jobs in 2019; however, the analysis also indicates diminishing returns with the rate of job growth slowing as speeds continue to increase.
Why this matters
The COVID-19 pandemic forced much of the U.S. population to trade classrooms, offices and conference rooms for at-home screens. Many Americans were left stranded by inadequate or unaffordable access to internet connectivity or mobile devices. This reality has resulted in a pivotal moment for the U.S. economy, with financial prosperity, educational opportunities and personal/professional productivity, depending on reliable, affordable and fast internet connectivity for all. More than $100 billion of infrastructure investment has been allocated by the U.S. government over the past decade to address this issue; however, the digital divide still presents a significant gap.
Deloitte today released a new report titled, "Broadband for all: charting a path to economic growth," that uses economic models to evaluate the relationship between broadband and economic growth. It proposes a geographic segmentation that distinguishes the specific needs of different under-served geographies, better reflecting their unique challenges. The report also provides insights into the benefits associated with various broadband speeds and adoption rates in order to optimize economic and social benefits, while reducing inefficiencies.
Investment doesn't always equate to outcomes
Optimism over the past 10 years that billions of private and public investment in underserved geographies for broadband access and adoption would help close the digital divide has waned as outcomes have often disappointed. Previous programs increased the number of people with access to the FCC's definition of broadband by less than 1% (<1%; 1.6 million people) between 2014 and 2019, partially as a result of the changing definition of broadband. The report notes:
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Between 2010 and 2020, federal programs including USAC and Rural Digital Opportunity Fund, among others, spent approximately $107 billion.
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In 2014, the last year of the 4 Mbps downlink benchmark, 16 million Americans (approximately 5% of the U.S. population) did not have broadband services that met that standard.
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In 2019, after five years and approximately $54 billion, 14.4 million Americans did not have broadband that met the new FCC speed threshold (25 Mbps downlink).