The Australian Communications and Media Authority (the ACMA) has commissioned the CIE and Analysys Mason to investigate the economic impacts arising from mobile broadband in Australia. Mobile broadband means the variety of ways an internet service is delivered via a mobile network, typically comprising mobile wireless internet services provided via a dongle, USB modem or data card service, or mobile phone handset internet services. This report sets out the main economic impacts of mobile broadband from 2006 to 2013. It does not consider the future economic impacts of mobile broadband or how the impacts of mobile broadband would be affected by changes in Government policy.
Mobile communications, of which mobile broadband is a part, is a small component of the Australian economy, accounting for only 0.2 per cent of employment and 0.5 per cent of economic activity. However, its small size belies its impact. Mobile broadband has wrought substantial change across the Australian economy and has been taken up rapidly by Australian households and businesses.
The impacts of mobile broadband are largely productivity impacts. Productivity is the amount of inputs, such as labour and capital, required to produce goods and services. In the long term, improving productivity is one of the main ways that we can improve material standards of living. Yet over the last decade, Australia’s multi-factor productivity — the amount produced given the amount of hours worked and capital employed in production — has not increased.
There have been various interpretations of Australia’s productivity malaise. Partly the lack of productivity growth reflects specific issues with the mining, electricity and water sectors. However, as the Reserve Bank notes: “The most widely accepted explanation for the acceleration and subsequent slowing in productivity growth over the past two decades relates to the gradual waning of the impetus to productivity growth initiated by the economic policy reforms of the 1980s and 1990s.” (D’Arcy, P. and L. Gustafsson 2012, “Australia’s productivity performance and real incomes”, Reserve Bank of Australia Bulletin, June).
During the mid-1990s, technological innovation in information and communications technology (ICT) coincided with productivity enhancing impacts of economic policy reforms such as trade liberalisation and National Competition Policy. ICT was a small component of Australia’s strong productivity performance, contributing around 10 to 20 per cent of the uplift in Australia’s productivity growth.
The impacts of mobile broadband have coincided with a very different Australian productivity environment. Mobile broadband has been moving against the tide, unlike the productivity impacts of ICT. The substantial positive impacts of mobile broadband on the Australian economy and productivity have been more than offset by the broader productivity environment. Without mobile broadband, this means that Australia’s productivity and economic growth would have been lower still and that the Australian economy would be $33.8 billion smaller in 2013. Further, Australian households would have consumed $652 per person less in goods and services than they actually consumed in the absence of mobile broadband. These very substantial impacts of mobile broadband reflect the productivity growth within the mobile communications sector and the impacts of mobile broadband reported by over 1000 Australian businesses operating across all sectors of the economy.
The overlap between the impacts of technological change and the impacts of government policy are directly relevant to the mobile communications sector. Spectrum, the allocation of which is currently largely at the Australian Government’s direction, has been noted by the mobile broadband sector as a critical issue. The allocation of spectrum will be one issue that could potentially constrain or reduce the future economic value of mobile broadband.