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New Zealand's gain from the "broadband bonus" relatively high

Internet NZ

Friday 4 May 2012, 2:58PM

By Internet NZ

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InternetNZ (Internet New Zealand Inc) welcomes the publication of the OECD report Measuring the Broadband Bonus in Thirty OECD Countries (OECD Digital Economy Papers No 197).

The report provides estimates of the economic value created by broadband Internet in the 30 OECD countries including New Zealand over the period 2005 - 2010. The study finds that the economic value created by broadband Internet correlates roughly with the overall size of a country’s Internet economy, i.e. economic value derived by each of the 30 OECD countries is broadly proportional to the scale of their respective Internet usage.

The report attempts to measure increases in economic value of moving from dial-up to broadband that conventional government statistics do not capture. It estimates the “broadband bonus” as new economic value resulting from the transition to broadband Internet by considering both new gross domestic product (GDP) and new consumer surplus.

This qualitative improvement in understanding economic value shows that New Zealand is very highly ranked across many of the areas measured such as broadband as a percentage of GDP per capita; and broadband bonus per capita and per subscriber.

With the quality adjusted figures New Zealand’s broadband bonus as a percentage of GDP per capita is 3.03 percent, placing us 5th in the OECD. In comparison, Australia ranks 21st on the same scale. The highest gainer is the Netherlands and the lowest the Slovak Republic.

InternetNZ Chief Executive Vikram Kumar says “this research is starting to show the latent benefits that the Internet is providing to all countries. It is also showing that New Zealand is benefiting significantly more relative to most other countries. One key factor for New Zealand’s results could be our comparatively high level of broadband uptake despite the comparatively high broadband prices”.

“However, there is no room for complacency. For example, the latest quarterly ‘State of the Internet’ report from Akamai Technologies shows New Zealand broadband slipping relative to Australia. For the fourth quarter of 2011, peak connection speeds for Australia users from Akamai’s global network of servers reached 21.7 Mbps, a spurt of 25 percent quarter-on-quarter and 42 percent year-on-year, giving the country the highest growing connection speed in Asia and making it the sixth fastest country in Asia. Average speed was even better with 4.9 Mbps, an increase of 37 percent over the previous quarter, and 66 percent over the same period a year earlier. On the other hand, New Zealand had peak connections of 16.1Mpbs, down 3.8 percent quarter-on-quarter, while the average connection speed was 3.7 Mbps, down 7.2 percent quarter-on-quarter.”

“InternetNZ has long believed that difficulty in measuring the economic benefits that the Internet provides has resulted in underestimates of its benefits. Recognising this, we have recently contracted two of New Zealand’s leading economic analysis organisations - Infometrics and NZIER - to undertake complementary work in this area. These reports will be presented at the upcoming NetHui 2012 Conference.” (more information on NetHui below).

A copy of the OECD report is available at:

www.oecd-ilibrary.org/science-and-technology/measuring-the-broadband-bonus-in-thirty-oecd-countries_5k9bcwkg3hwf-en