Chorus Limited

11/21/2022 | Press release | Distributed by Public on 11/20/2022 22:51

NZIER study shows $16.5 billion in economic benefits of high-capacity rural broadband

A recent NZIER report on rural connectivity highlights the potential for rural households and businesses to see benefits totalling $16.5 billion over the next ten years if they had access to the same digital connectivity as those within urban areas.

The report, Rural Connectivity: Economic Benefits of closing the rural digital divide, was commissioned by Chorus. It also found that simply having access to digital technology is not enough - constraints on capacity and reliability will discourage their use and the degree to which New Zealand can capture the economic benefits.

The report introduces the concept of 'digital parity' and calculates the economic benefits that flow from rural households and businesses having parity with urban.

The mainstay of the value from the availability of high-capacity networks will go to rural households, who could each expect an annual benefit, or cost savings, of about $6,500. These savings are primarily due to better access to broader employment opportunities and the ability to use telehealth services alongside easier online transactions with government agencies and banks.

Rural businesses are also beneficiaries. The report estimates rural businesses' annual benefit in time savings to be $344 million. In addition, NZIER estimates that productivity gains from access to connectivity with unconstrained capacity increase output yearly by at least $189.5 million for rural businesses.

Chorus Chief Executive JB Rousselot said, "The report illustrates the need for a broader discussion about the right mix of private and public investment that can deliver these benefits over the coming years.

"There's a growing demand for unconstrained, high-capacity broadband and a renewed case to take fibre further and reach many of the predominately rural homes and businesses not yet covered.

"Giving all New Zealand households and businesses access to the same high-capacity digital connectivity will improve productivity and business output and encourage innovation. Taking fibre further will positively impact the economy and help bridge the growing connectivity gap between rural and urban areas."

Christina Leung, Principal Economist at the NZ Institute of Economic Research, remarked, "The pandemic highlighted the importance for people of having access to reliable technology.

"Access to high-capacity networks improves the way we live and work. NZIER has estimated the benefits of closing the urban-rural digital divide for households and businesses. Our findings suggest a total benefit of around $16.5 billion over the next ten years.

"As our estimates only capture the benefits based on the current state of the economy, we would expect that as improved connectivity encourages the development of new innovations, the benefits would grow over the years."

The full NZIER "Rural Connectivity: Economic benefits of closing the rural digital divide" report is available online, https://company.chorus.co.nz/sites/default/files/downloads/rural-connectivity-04.11.22.pdf