Productivity Questions for Public Sector Fast Fibre Network Financiers
Bronwyn E. Howell
Victoria University of Wellington - NZ Institute for the Study of Competition and Regulation Inc. and Victoria Management School
Motu Economic and Public Policy Research Trust
June 15, 2010
Communications and Strategies, No. 78, No. 2, pp. 127-145, 2010
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 suggests 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 not generate returns to the extent anticipated by their sponsors. Drawing upon the original 'computer productivity paradox' literature, 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.
Number of Pages in PDF File: 19
Keywords: Internet, broadband, productivity, public investment
JEL Classification: H49, O33Accepted Paper Series
Date posted: April 19, 2011 ; Last revised: May 5, 2011
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