Private investment in broadband infrastructure has led to rapid improvements in the speeds and capabilities of both access and backbone networks in the U. S. In March 2011, the New America Foundation (NAF) report “Costs of the Infrastructure Deficit” found that the total efficiency losses to the economy each year due to poor, inadequately maintained infrastructure were $195 Billion. The study focused on publicly funded, not privately funded infrastructure. I reviewed the NAF findings, and in an old blog post highlighted that “there can be little doubt looking at the New American Foundation study that the private sector based broadband industry is helping boost the U.S. economy due to its continued investment and network modernization efforts.” Two years on, Verizon’s commitment to invest in infrastructure development has remained strong.
Jobs, GDP, and Productivity (Oh My!)
In recent years, research from several reputable firms has substantiated the well-known fact that broadband infrastructure development leads to job creation, bolsters the GDP and enhances productivity and efficiency. Moreover, Information and Communications Technologies (ICTs) boost efficiency and productivity for an array of different industries. McKinsey Global Institute’s report, for example, on Net’s Impact on Growth, Jobs and Prosperity (May ’11) found that Small and Medium Enterprises (SMEs) utilizing web technologies grew more than twice as fast as those with a minimal presence online. The study also noted that most of the economic value created by the Internet fell outside of the technology sector, with 75 percent of the benefits captured by companies in more traditional industries.
We can’t ignore the fact that technological advancements that improve efficiency may reduce employment in some areas. But the multiplier effect of investment in broadband networks also creates more new jobs. Among 4,800 Small And Medium-Size Enterprises (SMEs) surveyed in the aforementioned McKinsey report, the Internet created 2.6 jobs for each lost to technology-related efficiencies. Deloitte’s study on Impact of 4G (Aug ’11) found that Investment in 4G networks could account for up to $151 Billion in GDP growth and 771,000 jobs. It’s no surprise that the added jobs and increased efficiency gains impact the economy in a positive way. Boston Consulting Group’s report on The Internet Economy (Mar ’12) found that the Internet economy accounted for 4.7 percent of GDP in the United States in 2010. The networks we build are at the heart of this growth, and as the McKinsey report found, our investments have strong multiplier effects that add jobs in a wide variety of industries that make up the Internet economy.
Winning the Future: Verizon is a CAPEX Leader
Given the substantial impact of broadband networks, expanding the deployment of advanced networks remains an important objective for our economy. At the beginning of this year, Verizon’s 4G Network covered close to 89% of the U.S. population. In the last six fiscal years (2007-12), Verizon alone has spent over $100 Billion towards capital expenditures. Verizon’s state-of-the-art 4G LTE and Fiber-to-the-Home FiOS networks are proof of our commitment to invest in networks that can help drive the US economy forward.