The economic impact of digital exclusion
Type of work: Report
In the US, over 100 million individuals representing over 40 million households do not use broadband because they cannot access it, cannot afford it, do not know how to use it, or are not aware of its benefits. This “digital divide” is costly not only for the digitally excluded but for businesses, government, and the nation as a whole. In response, the 2009 American Recovery and Reinvestment Act (ARRA) called on the Federal Communications Commission (FCC) to issue to Congress a National Broadband Plan, which “shall seek to ensure that all people of the US have access to broadband capability and shall establish benchmarks for meeting that goal.” In support of this effort, Digital Impact Group and Econsult Corporation have produced this assessment of the economic impact of digital exclusion.
This report develops a taxonomy of negative economic impacts associated with digital exclusion, articulates the mechanisms through which digital exclusion has adverse impacts, and qualitatively and quantitatively evaluates categories of significant impact. This report took a conservative approach to evaluating impacts by seeking to identify minimum likely levels of impact in each category. Summing the conservative, lowend estimates of 11 categories of economic impact yields an aggregate estimate of the current costs of digital exclusion at over $55 billion per year.
The cumulative figure does not directly account for a number of significant, albeit hard to quantify, considerations that are more diffuse in nature but are no less important. Therefore, the report identifies aspects of the cost of digital exclusion that warrant further exploration and precision. Certain components of the cost of digital exclusion that are more difficult to estimate are not quantified here but are discussed in narrative form. Notably, the cumulative figure is a current, annual estimate; over time, the costs of digital exclusion are likely to increase, as technological advances in key sectors enhance the efficiencies enjoyed by digitally included populations and therefore magnify the costliness of being excluded.
A full cost-benefit assessment of digital exclusion would require extensive resources and time that far exceed what was available for this study. It is therefore important to define the boundaries of this assessment. This study, which provides the first estimates of the full range of economic impacts of digital exclusion in the US, derives its cost estimates from previously published research in each of the impact categories. In most cases, the costs of digital exclusion cannot be directly observed and therefore must be inferred, which inevitably requires assumptions that have not been verified. This report, therefore, is best seen as providing an approximation of the scale of economic impact and as offering guidance on concepts worth further elaboration, analysis, and quantification.