Broadband’s Economic Impact in Michigan

Posted by Content Coordinator on Thursday, April 11th, 2013


Does broadband matter to the economy? The answer to this question has a number of far-reaching implications. If increasing broadband access, adoption, and usage helps households save money or earn income in excess of what they have to pay to be connected, then getting connected to the Internet would represent a positive return on investment, and show itself worth the cost of subscribing. If, on the other hand, the costs outweigh the benefits of subscribing to broadband, then based solely on financial terms, subscribing to broadband may not be worthwhile.

The question, then, is how to measure this economic impact among Michigan households. Past research has emphasized how broadband expansion affects employment, job creation, and GDP growth. For example, the Brookings Institute estimated that, “for every one percentage point increase in broadband penetration in a state, employment is projected to increase by 0.2 to 0.3 percent per year.” Connected Nation conducted a comprehensive study to measure broadband’s economic impact from different angles in 2008. It found a 7 percentage point boost in national broadband adoption could lead to $662 million in annual healthcare savings, and $6.4 billion in annual mileage savings.

Beyond the direct potential for economic growth, broadband also helps strengthen Michigan’s workforce by giving Michiganders opportunities to improve and continue their educations. In addition, through teleworking and the use of the Internet at work, Michigan is able to keep its most talented employees and prevent the “brain drain” that occurs when highly skilled employees are forced to move out of rural areas, or out of the state, to find gainful employment.

To better understand how broadband use contributes to Michigan’s economy, Connect Michigan conducted a survey of 1,201 households across the state. This report shows some of the ways that Michigan residents are using broadband connections at home and work to help fuel Michigan’s economy.

The Economic Impact of an Increase in Broadband Adoption

The 2012 Connect Michigan Residential Technology Assessment shows that 71% of Michigan residents subscribed to home broadband in 2012, up 10 percentage points from 61% in 2011 (Figure1). Mobile usage is also soaring in Michigan. In 2012, nearly 3.6 million adults accessed the Internet via their cell phones or through a mobile device (47% of residents) compared to 2.7 million mobile users (36% of adults) in 2011.

This increase in broadband adoption can have many positive effects, including job creation. Based on a 2007 study that found that each percentage point increase in broadband penetration resulted in a 0.593 increase in employment over two years, Connect Michigan estimates that just one percentage point increase in broadband penetration could create or save approximately 12,388 jobs statewide. The booming demand for mobile technology could be another stimulus for new economic development in Michigan. A study by the Mobile Technology Association of Michigan (MTAM) and the Michigan Economic Development Corporation (MEDC) indicated “every mobile-related job that is created in Michigan creates 3.9 additional non-mobile-related positions in the state.”

Download full report (PDF): Broadband’s Economic Impact in Michigan

About Connect Michigan
“Connect Michigan is a subsidiary of Connected Nation and operates as a non-profit in the state of Michigan.  Connect Michigan partnered with the Michigan Public Service Commission to engage in a comprehensive broadband planning and technology initiative as part of National effort to map and expand broadband. The program began by gathering provider data to form a statewide broadband map and performing statewide business and residential technology assessments, but has since progressed to working with communities on community plans.  Bolstered by benchmarking data that has been gathered through Connected Nation’s mapping and market research, the Connected Community Engagement program is drilling down to the regional and local level to facilitate community technology planning.”

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