Doubling UAE broadband speed can raise GDP by $690m

DUBAI - New research, released by Swedish telecommunications major Ericsson, claims that doubling the speed of broadband in the UAE can add as much as $690 million to the country’s GDP.

By Patrick Michael

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Published: Thu 24 Nov 2011, 11:18 PM

Last updated: Tue 7 Apr 2015, 5:19 AM

The study, jointly conducted with Arthur D. Little and Chalmers University of Technology quantifies the isolated impact of broadband speed, showing that doubling the broadband speed for an economy increases Gross Domestic Product (GDP) by 0.3 per cent. The study also shows that additional quadrupling the speed could yield a 0.6 percent GDP growth stimulus.

“This study reflects the tremendous amount of influence that connectivity has on the socio-economic aspects of society not just here in the UAE, but around the world,” said Anders Lindblad, president, Ericsson Region Middle East and North Africa. “The numbers are clear evidence that we are evolving from an information society to, what we at Ericsson call, a Networked Society. We have reached a stage where broadband has developed and is no longer simply a tool for communication but an enabler for new possibilities for people, business and society,” he added.

Ericsson claims that both broadband availability and speed are strong drivers in an economy.

Last year a similar report from Ericsson and Arthur D. Little concluded that for every 10 percentage point increase in broadband penetration GDP increases by 1 percent.

Erik Almqvist, Director at Arthur D. Little, said, “Until now there has been an absence of hard facts investigating the effects of broadband speed on the economy. This unique empirical study may help governments and other decisions makers in society make more correct tradeoffs and policy choices.” This study is claimed to be the first of its kind to quantify the economic impact of increases in broadband speed in a comprehensive scientific method using publicly available data.

“These results have been derived using rigorous scientific methods where the direction of causality, data quality and significance levels have been appropriately tested,” says Erik Bohlin, Professor at Chalmers University of Technology. “The results of this study support governmental policies that recognise and promote the importance of broadband.”

Meanwhile, in a separate report, Ericsson claims that the Middle East has one of the highest mobile penetration rates in the world, with 96 percent of the population having access to mobile communications. In comparison, it says, the global mobile penetration currently stands at 82 per cent.

Ericsson’s November 2011 Traffic and Market Data report claims that the number of new connections in the Middle East grew by three percent in the third quarter of 2011 alone, with the number of connections increasing to 244 million.

Significantly, according to the company’s data, the region saw more growth in mobile penetration during this time than North America and Western Europe combined with 7.7 million new mobile subscriptions added between July and September 2011.

Comparatively, 3.6 million new subscriptions were added in North America and 3.1 million in Western Europe. Ericsson also predicts that global mobile broadband subscriptions will reach almost five billion in 2016, up from the expected 900 million by the end of 2011. That would represent 60 percent year-on-year growth, at the same time as the data consumed by smartphone users is surging. Total smartphone traffic is expected to triple during 2011.


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