Business And Markets

Broadband Technology: Unseen Contributor to Economic Growth

Broadband Technology: Unseen Contributor to Economic Growth
Broadband Technology: Unseen Contributor to Economic Growth

Since the mid-1990s, when the internet became globally known as a new phenomenon, it has had a revolutionary impact on culture and commerce. The global system of interconnected computer networks has made connections and communications so fast and easy that the world has been described as a global village since then, as the communication theorist, Marshall McLuhan initiated the term.

Needless to say, the development, evolution and use of the internet have brought great benefits to all people throughout the world. Since its creation, developers have consistently tried to improve access and increase the speed of the internet. As of 2000, and by rapid expansion of mobile telecommunication technologies and popularity of cellular phones, technology leaders switched focus of internet access from personal computers and cabled networks to mobile networks.


These days, almost the entire globe has been captured by the most recent mobile telecommunication technology, 4G, though there are also a significant number of countries that still use 3G or the third generation of the technology.

Apart from all the benefits 3G and 4G offer mobile phone users including facilitating data transfer at higher speeds compared to the previous network generations, economists believe the new generations of mobile telecommunications technology could give national economies more distinct advantages.

Based on a report published by the International Telecommunication Union (ITU) in 2013, broadband networks, services, and applications can help generate economic growth and achieve social progress in any domestic economy.  

Broadband technology is an important contributor to economic growth at several levels. The use of broadband technology across business enterprises improves productivity by facilitating the adoption of more efficient business processes such as marketing, inventory optimization, and streamlining of supply chains.

The technology also accelerates innovation by introducing new consumer applications and services like new forms of commerce and financial intermediation. The enterprises could maximize their reach, access to different segments of the market, and consumers through the broadband technology.

 Industry View

The profound impacts of the 3G and 4G was also acknowledged by Iran’s second largest mobile phone network operator during their press conference held on Saturday on the occasion of their eighth year of activity in the Islamic Republic.

Alireza Ghalambor Dezfouli, the CEO of MTN-Irancell, noted that every $10 billion of direct investment for a 10% increase in broadband technology penetration would create as many as 1.8 million jobs in a ten-year time span. The CEO added that every 10% increase in broadband technology penetration would also help the gross domestic product (GDP) rise by 1.38%.

According to Dezfouli, who manages the joint Iranian-South African operator, every single percent of increase in broadband technology penetration would equal 0.13% rise in manufacturing productivity as well as 0.2% rise in employment rate.

These are the results of highly sophisticated econometric research techniques aimed at generating hard evidence regarding the economic impact of broadband technologies, as there are impacts regarding the qualitative micro-level case studies as well.

The investments by the private sector and government in expanding the broadband infrastructures prove to be extremely profitable. The US made an economic gain of $300 billion only in 2007 by increasing the penetration of the broadband networks, said Dezfouli, quoting a report published by Criterion Economics, an international institute that provides expert economic testimony in legal proceedings throughout the world.

Broadband naturally has bigger impacts on economies of the countries with higher rate of technology adoption. For instance, China and Malaysia invested $44.7 billion and $6.1 billion respectively during a four-year period of 2009-2012.

Findings by the American classical macroeconomist, Robert Barro, confirm the substantial contribution of the broadband to GDP growth, productivity and employment.

 Future Potential

Iran, during the past decade, has made good investments in information and communications technology (ICT) and broadband. The minister for communications and information technology, Mahmoud Va’ezi, recently said the country would invest 500 trillion rials ($18.7 billion based on official exchange rate) on ICT and broadband. The minister has described ICT and broadband as priority areas set by President Hassan Rouhani’s administration.

Va’ezi emphasized that information technology is an industry with fast returns which could help other industries increase productivity by up to 30%, while private sector investors do not have to wait for 20 to 25 years for their investment to return.

Iran’s Telecommunication Infrastructure Company (TIC) had given a newly-established company known as Rightel the right for running the first 3G services. But in summer, the monopoly expired and other operators, including MTN-Irancell, are now allowed to provide 3G, and 4G, along with other future broadband technologies.

During the past five years, mobile phone ownership has been constantly increasing and it was up 129% in 2012. Such large demand by Iranians, many of whom have multiple SIM cards from different mobile operators, can be considered a strong motive for mobile phone network operators to offer their most recent services regarding broadband telecommunications technologies.