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8. Insight into the Economics of ‘Broadband’

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8.1 Introduction

It has become almost passé to talk about the role of broadband in the growth and prosperity of a modern society. It is quite simply understood as a necessity. Whether related to trade and commerce, education or health, government services, knowledge transfer or general enlightenment, social networking, or simply entertainment, we find that broadband is a deeply rooted part of our lives, our sustainability, our happiness.

There is a strong argument to be made that significant IT investments would do more than any other form of physical investment to assist in developing the social economy and addressing the issues of deruralization, poverty, and sustainability challenges facing many Arctic communities.

But there is another side to the economics of broadband, one that is far more complex, especially as it relates to the northern context of this report. It is perhaps ironic that the true economic challenge for broadband and other communication infrastructure products is not in the ability or manner in which society will adapt to and make use of it, but rather the manner in which our markets have developed in selling these products and services to consumers.

This section offers a overview of the role of broadband in the pursuit of a higher quality of life, its role of developing sustainable communities, and provides a snapshot of the Territorial economies. In Section 8.5, we outline the market challenges, looking at the roles of competition, regulation, subsidization, and innovation in an effort to bring some clarity to the discussion on building an infrastructure for 21st century access.

Finally, the section wraps up with conclusions and recommendations from an economic point of view for a path forward. […]

8.2 The Role of Broadband in the Pursuit of a High and Sustainable Quality of Life in Canada's Territories

Internationally it is recognized that broadband access is significant to the development of a sustainable society.

IT use is considered not just a part of everyday life for most businesses, organizations and citizens, but also has an impact on growth, competitiveness and the development of a sustainable society. As already outlined in this report, more and more services are becoming digital, requiring businesses and households to be able to make use of these services. Northerners, just as all Canadians, must be connected in order to accomplish simple tasks such as financial reporting and banking.

In Sweden, policy makers see ease of access as a matter of democracy and rights […]

8.3 Community Sustainability

The Internet has become a necessity of life for much of the world's populations. Northern Canadians are no exception. Internet services make northern, remote and isolated communities more sustainable and will aid in their long-term survival. IT and good electronic communications are essential for business, employment and efficient administration; all key components that increase the likelihood that people will live in remote communities […]

8.4 Territorial Economics

The economic outlook for Canada's territories, if taken as a whole, is very positive. Much of this growth will come from resource extraction, but increased interest from the federal government in seeing the region developed may mean new opportunities for economic growth will emerge. Already, the territorial economies are growing faster than the Canadian average. (See Chart)…

Gross Domestic Product, Chained (2002) dollars, Index 1999=100. The general trend shows the territorial economies growing faster than the Canadian average. Northwest Territories are growing much faster than the others.

Gross Domestic Product, Chained (2002) dollars. Source: Statistics Canada, Economic Accounts Division

Finding a way to ensure the wealth from resource development benefits all of society is the single greatest economic challenge the North faces…

It is clear northern economies are very strong and are getting stronger. It is also very clear the challenges the North face are not economic, but social. Broadband-enabled services have a very significant role to play in ensuring a higher quality of life while helping to build and maintain sustainable communities and lessening the digital divide. […]

8.5 The Market Challenge for Communication Infrastructure in Canada's Territories

Most literature on the subject of the economics of communications infrastructure and broadband services emphasizes the importance of competition. The need for quality Internet services is so great in the context of the world's economy that it is shaping the international flow of investment capital. Money now flows toward regions of the world that offer a quality Internet service. To keep pace with that reality, a region must establish a marketplace where innovation and competition can improve the quality of Internet services while also lowering their cost…

In this chapter, the market challenge for communication infrastructure, broadband and Internet services in Canada's territories is presented. The chapter is organized into four sections, discussing the nature of competition, innovation, regulation and subsidization […]

8.6 Conclusions on the Economics of Broadband

There isn't a single approach to bringing a great broadband service to a region. In our study of the world leaders in broadband, each has taken a different path…

Economic recommendations: proposed steps for a way forward, based on other countries' initiatives:

[…]

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Prepared for the Northern Communications & Information Systems Working Group by Imaituk Inc.
Report funded by Canadian Northern Economic Development Agency.
Site by Manoverboard.
© Government of the Northwest Territories 2011.