Can you estimate how much of your business-related day is now spent online? Or what percentage of goods and services you order or research digitally? My guess would be the vast majority on both counts.The Internet economy is projected to reach $4.2 trillion by 2016. According to Andrew Nusca of Smart Planet, if it were an economy of a nation, it would be ahead of Germany, and just behind the U.S., China, India, and Japan. According to McKinsey Global Institute, as a dedicated industry, the Internet would outperform agriculture and utilities. On average, it contributes nearly 4% to GDP in the 13 countries covered by their research (image below) — an amount the size of Spain or Canada in terms of GDP, and growing at a faster rate than that of Brazil.
My question is, why isn’t our government doing more to foster online ventures and tech start-ups? Similar to the highway investment FDR made back in his days. The numbers to sustain such initiatives speak for themselves:
- In 2010, the value of online retail was $252 billion (BCC)
- The added value of ROPO (research online, purchase offline) contributed $482 billion
As a ‘best practice’ example, let’s look at South Korea. The country boasts the fastest, most reliable internet access (the U.S. is #26). Research shows that doubling the broadband speed increases GDP by 0.3%. A 1000 times increase in broadband speed could mean a 3.0% boost in GDP.
If the U.S. were to build out 1 gigabit per second Internet, there should be a one-time boost of about 2.5% in GDP. This would mean an additional $375 billion each year and increasing with further GDP growth.
Today, the U.S. has an average broadband speed of about 4-5 mbps and in 2009, the FCC’s National Broadband plan claimed it would cost about $350 billion to fully upgrade America’s infrastructure. By comparison, South Korea, a country of 48 million people, spent $24 billion to rollout gigabit per second Internet that is scheduled to wrap up this year.
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