Quadrupling the speed of broadband in Saudi Arabia has the potential to contribute an additional 0.6 percent to the nation’s gross domestic product (GDP), a research jointly conducted by Ericsson, Arthur D. Little and Chalmers University of Technology, revealed. Significantly, while doubling the Kingdom’s broadband speed would lead to a 0.3 percent increase in GDP worth almost $1.730 billion, quadrupling Internet access speeds would add approximately $3.460 billion or a growth of 0.6 percent, it noted. The study also showed that additional doublings of speed can yield corresponding GDP growth stimuli.
According to analyst firm Business Monitor International (BMI), there were just over 9 million broadband users recorded in the Kingdom as of 2011, with the number projected to rise by 6.26 million to 15.272 million users in 2016.
Broadband has emerged as a significant driver of economic growth
“Broadband has emerged as a significant driver of economic growth even as we continue to evolve from an information society to what we, at Ericsson, call a Networked Society,” said Anders Lindblad, president, Ericsson Region Middle East and North Africa. “There is no doubt in my mind that Broadband, whether mobile or fixed-line, is a vehicle for economic growth, innovation and productivity.
He added “the government and telecom operators here in Saudi Arabia have clearly recognized the importance of broadband and this is reflected in their collective efforts to achieve higher penetration across the country through fixed and mobile broadband solutions.”
Both broadband availability and speed are strong drivers in an economy. In 2010, Ericsson and Arthur D. Little concluded that for every 10 percentage point increases in broadband penetration, GDP increases by 1 percent.
This growth stems from a combination of direct, indirect and induced effects. Direct and indirect effects provide a short to medium term stimulus to the economy. The induced effect, which includes the creation of new services and businesses, is the most sustainable dimension and could represent as much as one third of the mentioned GDP growth.
The study is the first of its kind in that it quantifies the economic impact of increases in broadband speed in a comprehensive scientific method using publicly available data.
The study is based on the economic impact of average attained broadband speed, both fixed and mobile, has been analyzed using panel data regression analysis with quarterly data points from 2008-2010 for 33 OECD countries.