Crowdsourced Data Indicates Broadband Has a Positive Impact on Local Business Creation

Broadband connectivity is regarded as generally having a positive macroeconomic impact, but we lack evidence as to how broadband affects key economic activity metrics, such as firm creation, at the local level. This analysis models the impacts of broadband Next Generation Access (NGA) on new business creation at the local level over the 2011-2015 period in England, using high-resolution panel data. After controlling for a range of factors, we find that faster broadband speeds brought by NGA technologies have a positive effect on the rate of business growth. The effect is statistically significant and likely causal. We find that in England between 2011-2015, on average one standard deviation higher download speeds were associated with a 2.1 percentage point increase in the annual growth rate of businesses. The primary hypothesised mechanism behind the estimated relationship is the enabling effect that faster broadband speeds have on innovative business models based on new digital technologies and services. Entrepreneurs either sought appropriate locations that offer high quality broadband infrastructure (contributing to new business establishment growth), or potentially enjoyed a competitive advantage (resulting in a higher survival rate). The findings of this study suggest that aspiring to reach universal high capacity broadband connectivity is economically desirable, especially as the costs of delivering such service decline