  Broadband connectivity is regarded as generally having a positive
macroeconomic effect, but we lack evidence as to how it affects key economic
activity metrics, such as firm creation, at a very local level. This analysis
models the impact of broadband Next Generation Access (NGA) on new business
creation at the local level over the 2011-2015 period in England, United
Kingdom, using high-resolution panel data. After controlling for a range of
factors, we find that faster broadband speeds brought by NGA technologies have
a positive effect on the rate of business growth. We find that in England
between 2011-2015, on average a one percentage increase in download speeds is
associated with a 0.0574 percentage point increase in the annual growth rate of
business establishments. The primary hypothesised mechanism behind the
estimated relationship is the enabling effect that faster broadband speeds have
on innovative business models based on new digital technologies and services.
Entrepreneurs either sought appropriate locations that offer high quality
broadband infrastructure (contributing to new business establishment growth),
or potentially enjoyed a competitive advantage (resulting in a higher survival
rate). The findings of this study suggest that aspiring to reach universal high
capacity broadband connectivity is economically desirable, especially as the
costs of delivering such service decline.
