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Friday, March 12, 2010

Build Rural Broadband, Build Permanent Economic Gains

If GDP growth is your cup of tea, then you have to admit President Obama's plan to expand rural broadband is one of the best long-term economic growth ideas he's had. Not only does it create lots of jobs upfront laying cable and hooking up gear, but it also lays a foundation for sustained gains in economic activity (click image to enlarge):

Chart showing GDP gains from 10% increase in information-communication technology penetration. From Information Society Policies: Annual World Report 2009, Árpád Rab, editor. Information for All Programme, UNESCO, p. 18.Information Society Policies: Annual World Report 2009,
Árpád Rab, editor. Information for All Programme, UNESCO, p. 18.

Every 10% increase in broadband penetration yields a boost of 1.2% in GDP. Giving more people access to high-speed Internet means they can do more, buy more, and sell more online.

The same thing happened thanks to President Eisenhower's Interstate Highway system. In meat-packing, for instance, the Interstate reduced the cost of entering the industry, as new companies could rely on trucks instead of more expensive and less flexible rail infrastructure (I just learned that from Jon Lauck).

Broadband Internet has similar positive effects. Suppose your business is growing and you want to invest in some serious database capacity. In the old days (meaning, a few years ago), you'd have to buy some expensive in-house software to install and maintain on your own high-power computers. With broadband, you can access high-quality and high-capacity database software online, through cloud computing. Your data and the software and hardware that do the heavy lifting all sit hundreds or thousands of miles away; broadband gets the data to you as fast as if it were on your hard drive.

And every dollar and hour you don't have to spend installing your own software and upgrades can be spent on doing more business. Yum!

Keep that information superhighway metaphor in mind. But unlike I-29, this economic network will offer darn near everyone an on-ramp.

Learn more at Broadband.gov; while you're there, test your Internet connection speed and help Uncle Sam map who's got broadband and who needs more signal!

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