Feeding a need for speed or Funding a Fibre 'Arms Race'?

Arthur Grimes and Bronwyn Howell

No 19149, Working Paper Series from Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation

Abstract: Fast internet access is widely considered to be a productivity-enhancing factor. However despite promises of substantial gains from its deployment the evidence from recent empirical studies sugests that the productivity gains may not be as large as originally hypothesised. If substantiated these findings suggest that current government plans to apply significant sums to bring forward the deployment of fast fibre networks (e.g. in both Australia and New Zealand) may ultimately be unlikely to generate returns to the extent anticipated by their sponsors.Drawing upon the critical literature generated when the original 'computer productivity paradox' called into question why investment in ICTs was apparently failing to generate anticipated productivity returns this paper develops a critical questioning framework to assist policy-makers in identifying the salient productivity issues to be addressed when making the decision to apply scarce public resources to faster broadband network deployment. Using multiple literatures the framework highlights the nuanced and highly complex ways in which broadband network speed may affect productivity both positively and negatively. Policy-makers need to be satisfied that on balance government-funded investments in faster networks will likely generate the anticipated net benefits given the significant uncertainties that are identified in the questioning framework.

Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:vuw:vuwcsr:19149

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