Increasing Broadband Internet Penetration
In the OIC Member Countries
16
• Introduction of new services and applications such as telemedicine, Internet
information searches, electronic commerce, distance education and social networks
(Atkinson et al., 2009)
• New forms of trade and financial intermediation (Atkinson et al., 2009)
• Development of new products and services (Atkinson et al., 2009)
• Improved productivity as a result of the introduction of more efficient business
processes provided by broadband, and marketing of excess inventories and supply
chain optimization 4 (Atkinson et al., 2009)
• Revenue growth resulting from extended market coverage (Varian et al., 2002 and
Gillett et al., 2006)
• Growth of some industries within the services sector (Crandall et al., 2007)
• Impact on the composition and deployment of industrial value chains. Broadband can
attract jobs from other regions as a result of the ability to process information and
provide services remotely. The services most greatly impacted are outsourcing and the
deployment of virtual customer care centers.
Job creation as a result of externalities has been calculated based on econometric analysis of
historical data series, and has yielded important conclusions. These studies have been carried
out mainly in the United States, although one was conducted in Germany and another one in
Ecuador. Table 5 presents the econometric studies that were used to estimate the impact of
broadband in the creation of jobs, according to the positive externalities.
Table 5: Impact of positive br adband externalities on employmen
Country Authors Data Effect
Germany Katz et al.
(2010a) 2000-2006 for Germany
counties A 1% increase in broadband penetration
contributes to employment growth by 0.002%
United States
Gillett et al.
(2006) 1998-2002 United States
zip codes Availability of broadband access increases
employment growth between 1% and 0.5%
Crandall et al.
(2007) For 48 states in the
United States For every 1% increase in broadband penetration
in each state, employment would increase by an
estimated 0.2 and 0.3% per year, if the economy
were not at full employment.
Thompson et
al. (2009) 2000-2006 for 48 states
in the United States Job creation varied by industry
State of
Kentucky
(United States) Shideler et al.
(2007) Data broken down by
county in the state of
Kentucky for 2003-4 A 1% increase in broadband penetration
contributed between 0.14% and 5.32% to
employment growth, depending on the industry.
State of
California
(United States) Kolko (2010) 1999-2006 for Californiazip codes The study does not find a significant relation in
part because broadband service is measured
based on the number of operators per zip code.
Ecuador Katz & Callorda
(2013) Econometric model of
Ecuador data between
2008 and 2012 0.56 percentage points increase in employment
rate for every 10 % increase of fixed broadband
penetration
Source: Compiled by Telecom Advisory ServicesAccording to these studies, once broadband is deployed, its contribution to employment
growth ranges from 0.14% to 5.32%, depending on the territory and the industrial sector.
More precisely, a 1% increase in broadband penetration contributes between 0.002% and
4 Efficient telecommunications make it possible to reach a broader market, facilitating business processes. They also result in
reduced input costs as the capacity to search for lower prices increases.