Wednesday 20 February 2019

Lack of broadband shaves a third off firms' productivity

Administrative and service sectors suffer the greatest loss of potential versus rivals in places with high-speed access

"We find significant gains from broadband availability in two services sectors, the information and communication services and administrative and support service activities," said the ESRI report. Stock image / PA
Adrian Weckler

Adrian Weckler

High-speed broadband boosts productivity for Irish firms by up to a third, a new study by the Economic and Social Research Institute (ESRI) has found.

The report follows European Commission research suggesting that Irish small firms with access to broadband achieve better trading results than European peers.

"We find significant gains from broadband availability in two services sectors, the information and communication services and administrative and support service activities," said the ESRI report.

"The effects measured for these two sectors are large, equivalent to about a third of the typical variation in productivity among the firms."

The report said that "most other sectors show smaller positive associations between broadband and firms' productivity levels".

However, it said that the effect was not consistent across the board and that "the benefits of broadband for productivity depend heavily upon sectoral and firm characteristics rather than representing a generalised effect".

And it said that some sectors show minimal productivity gains when given access to broadband.

Figures from the European Commission's Digital Economy and Society Index (DESI) show that Ireland ranks first out of 28 countries in Europe when it comes to small firms selling online, turnover from ecommerce and cross-border ecommerce.

The ESRI report comes as 540,000 rural homes and businesses await the fate of the National Broadband Plan, the Government's promise of a high speed roll-out to areas of the country not adequately covered by private broadband firms.

Taoiseach Leo Varadkar has signalled that it could be the end of February before the Government decides whether it will award a contract under the bidding process it has pursued for the last five years.

There is only one remaining bidder, Granahan McCourt, vying for the contract.

Earlier this week, Communications Minister Richard Bruton defended the delayed decision, saying that the extra time was needed to ensure that a "robust" service was rolled out.

"Whatever decision is taken will be taken on the grounds that this is in the best interests of delivering the sort of service and technology that's robust at an appropriate cost," he told the Dáil.

"That is why the time is being taken to evaluate what has been submitted... that we have the checks and balances within the contract that protects the taxpayer and the user."

Mr Bruton is to report to Cabinet in the coming weeks on the awarding of the NBP contract.

Irish Independent

Also in Business