Dataquest: implementation of `true' broadband could bolster U.S. GDP by $500 billion a year.

Dataquest Inc, a unit of Gartner Inc. (NYSE:IT and ITB) has modeled the impact of ubiquitous broadband based on the United States and estimates the incremental increase as $500 billion annually for each of the next 10 years.

The International Telecommunications Union (ITU) has tracked the historical relationship between the GDP per capita and telephone penetration in each country on a worldwide basis. Gartner Dataquest applied this principle of correlation of teledensity and GDP per capita to create a broadband model.

While many consumers associate the term broadband with the typical 384 kbps downstream that service providers offer today, Gartner Dataquest defines "true" broadband as broadband to the home with aggregate downstream capability of a minimum of 10 Mbps. Gartner Dataquest analysts said boosting bandwidth to this rate could drive tremendous change and opportunity in today's depressed technology segment and lead to overall broader economic benefits.

The bottleneck to achieving this economic boost is the "last 200 meters" access to the home. Solving this will allow higher bandwidth applications to flourish, which in turn will utilize backbone capacity in place today.

"For example, mass deployment of 10 Mbps connections to the consumer will result in the need for deployment of a vastly more capable backbone," said Martin Reynolds, vice president and research fellow for Gartner. "The deployment of a new network will demand continuous upgrade of communications equipment, driving years of growth in user devices as well as networking hardware."

The proliferation of the Internet, mobile phones, advanced communications, and computing devices and e-commerce have already profoundly changed our world. These changes mark the beginning of a new age of anytime/anywhere connectivity and the emergence of the networked world. This phenomenon foretells a dramatic transformation in the very nature of our economies, societies and governments as well as interpersonal and international relationships. The various regions of the world are all experiencing this transformation at varying rates of speed.

"The participants in today's economic activities cannot tolerate slow, unsophisticated narrowband communications without suffering a loss of productivity, just as participants of yesterday's industrial age economic activities benefited considerably by the availability of even a modicum of communications capability," said Kathie Hackler, vice president and chief analyst for Gartner Dataquest's worldwide telecommunications and networking group.

While there can be substantial rewards with a "true" broadband environment, there are risks to even the largest companies, given the evolution of the industry structure and the enormous investment required to achieve a goal of ubiquitous broadband. Even with a national commitment and unified goal, the physical deployment will take years.

"In the United States and other developed countries, an effective initiative will include a public and private sector and participation in education, content creation and intellectual property protection to promote the benefits of broadband," said Ron Cowles, principal analyst for Gartner Dataquest's worldwide telecommunications and networking group.

"Now is the time to evaluate regulation and other incentives in light of this opportunity and act decisively," Cowles said. "Local rate rebalancing and competitive environments that are based on facilities-based competition are essential. Incentives will also be required. Measurable targets and measurement processes should be put in place to assess the effectiveness of actions."

More analysis is available in the Gartner Dataquest special report "Telecom Regulation Has Failed: Now What?" This special report examines why the telecom regulatory policy has failed, and what needs to be done now to fix the problems. The report provides links to reports analyzing various regional regulatory issues with emphasis on the U.S. experience as well as Asia/Pacific's path to regulatory maturity. The report also addresses the impact of telecom regulation on other industries such as media, which are converging with communications.

This analysis is provided by Gartner Dataquest's worldwide Telecommunications and Networking group. This group provides an analysis for the full spectrum of telecom and networking issues.