Building the benefits of high-speed broadband

Building the benefits of high-speed broadband for New Zealanders

Alcatel-Lucent economic impact study shows GDP increase and consumer surplus benefit for New Zealand from investment in UFB and RBI initiatives.

Auckland, New Zealand, February 21, 2011 – Alcatel-Lucent has released a study on the social and economic benefits for New Zealand from the Ultra-Fast Broadband (UFB) and Rural Broadband Initiative (RBI) investments.

A number of studies have suggested a link between access to high-speed broadband and GDP growth. Broadband applications connect people and businesses to information that is useful in their daily lives, improving their efficiency and productivity. Through the UFB and RBI initiatives, high-speed broadband is being delivered to 98 percent of New Zealand’s population, though the questions still remain: ‘What will be the actual impact of these programmes on the New Zealand economy?’ and ‘Can anything be done to further improve those benefits?’

The business modelling team within Alcatel-Lucent’s Bell Labs (one of the world’s foremost research and development organisations) has answered these questions for New Zealand. For several years they have been developing and applying macro-economic access deployment models. At the request of the World Economic Forum last year, they analysed and measured the social and economic benefits associated with accelerating ubiquitous access in multiple regions of the world. Building on that work they developed the analyses and models for assessing the impacts of New Zealand’s broadband initiatives, the findings of which are being released today.

The study ‘Building the Benefits of Broadband’ measures the GDP impact of the infrastructure build and determines the consumer surplus from applications UFB and RBI will support.

Commenting on the findings, Alcatel-Lucent New Zealand CEO, Andrew Miller stated: “The study shows the investment in UFB and RBI pays for itself, with more than $5 billion added to our GDP over the 20-year life of the build out programme.

He added that: “Perhaps of greater importance is the impact of applications associated with these initiatives that will allow for a higher consumer surplus – that is an economic boost that results from doing things more efficiently.”

The ‘Building the Benefits of Broadband’ study considered a sample of known applications across health, education, business and the dairy sector. Applications considered included: teleworking, high-definition video conferencing, on-line training, online doctors’ visits, remote patient monitoring, remote classes, online herd management and cloud computing amongst others. It showed the combined consumer surplus of using high-speed broadband applications significantly outstripped the GDP impact of building the UFB and RBI networks.

“The combined consumer surplus of the applications considered in the study reached nearly $33 billion over the 20-year period and continued to grow year-on-year,” said Andrew.

Critically, the study identified three factors that if improved could further increase the potential consumer surplus: the availability of relevant applications; the speed of application adoption; and the total level of application uptake.

For example, a sensitivity analysis showed that by increasing the speed of application adoption by 20 percent over the baseline, and increasing the total level of application uptake by 20 percent over the baseline, New Zealand can turn a $33 billion consumer surplus into almost $48 billion.

For Andrew Miller, this signals an important call to action for businesses. “Without relevant, compelling and useful high-speed broadband applications, there will be no consumer surplus. The availability of such relevant and compelling applications requires innovation, incubation and collaboration.

“There is no doubt some of this innovation will occur in the R&D labs of big global companies. But for a variety of reasons – language, culture, distance, and all the things that make New Zealand unique – many high-speed broadband applications will need to be created, adapted or incubated here.”

Andrew added: “We can’t afford to wait. The quickest possible roll-out of UFB and RBI is essential to drive speed of adoption. And it is a case of the more the merrier. Businesses have a part to play in thinking of ways to create mass migration over to these new networks to increase the total level of uptake and resulting consumer surplus.”

Details of the study ‘Building the Benefits of Broadband’ will be discussed at the Future of High Speed Broadband Conference, being held in Auckland today.

ENDS

ABOUT ALCATEL-LUCENT (EURONEXT PARIS AND NYSE: ALU)
The long-trusted partner of service providers, enterprises and governments around the world, Alcatel-Lucent is a leading innovator in the field of networking and communications technology, products and services. The company is home to Bell Labs, one of the world's foremost R&D organizations, responsible for breakthroughs that have shaped the networking and communications industry. Alcatel-Lucent is committed to making communications more sustainable, more affordable and more accessible as we pursue our mission - Realizing the Potential of a Connected World.

With operations in more than 130 countries and one of the most experienced global services organizations in the industry, Alcatel-Lucent is a local partner with global reach. The Company achieved revenues of Euro 15.3 billion in 2011 and is incorporated in France and headquartered in Paris.

Alcatel-Lucent’s presence in New Zealand dates back to 1927; a time when it was generating technology efficiencies for a range of industry sectors from its offices in the Hutt Valley. Alcatel-Lucent has a strong presence in New Zealand’s wireline, wireless and enterprise markets with interests ranging across a number of customer segments, from utilities with Transpower, media and broadcasting with Kordia, to the more traditional carrier segment with customers including Telecom, Vodafone and TelstraClear.

In New Zealand, Alcatel-Lucent employs the largest on-the-ground team of network engineers in the industry, who bring an unparalleled understanding of New Zealand’s telecommunications network infrastructure.

For more information, visit Alcatel-Lucent on: http://www.alcatel-lucent.com, read the latest posts on the Alcatel-Lucent blog http://www.alcatel-lucent.com/blog and follow the Company on Twitter: http://twitter.com/AlcatelLucentNZ

Building the Benefits of Broadband WhitePaper (pdf file)

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