LSE report determines cost benefit case for rural areas is not strong
Good news if you own property in London that has good broadband as it seems to be the basic output from a London School of Economics and Imperial College London study is that you could see an 8% rise in the properties value.
The study looked at the effect of improving broadband speeds over time from 1995 to 2010 and the effect on how prices while trying to negate all the other variables that affect house pricing, though how it looked at broadband speeds in the years 1995 to 1998 is unclear, since ADSL only appeared in early 2000 and cable broadband started to roll-out a year or so before then.
For the richest people living in the most dense areas e.g. London house prices rose by 6% as ADSL (up to 8 Mbps services) and a further 2% when ADSL2+ was introduced. The average across England was 2.8% for ADSL, with a further 1% when ADSL2+ was rolled out. We do not know why the report ends in 2010, as 2009 when Virgin Media started ramping up broadband speeds significantly and the fibre roll-outs by Openreach started are what should really feed into the equation if the aim is to understand the costs and benefits for rolling out faster broadband.
"The average property price increased by 2.8% when going from a slow dial-up connection to the first generation of ADSL Internet connections, which allowed a speed of up to 8 Mbit/s. The price increased by an additional 1% when a newer technology, ADSL2+, was rolled out to offer Internet speeds up to 24 Mbit/s. We further decompose these average results by income and degree of urbanization. It turns out that the gains are very heterogeneous, and they are highest at the top of the distribution, among the richest people living in the most densely populated areas. An average property value in London increased by 6% with the introduction of ADSL, and by an extra 2% with ADSL2+. Endowed with these findings, we then evaluate the benefits of the EU Digital Targets for each LE in England, which we compare with available costs estimates. We find that increasing speed and connecting unserved households passes a cost-benefit test in urban and some suburban areas, while the case for universal delivery in rural areas is not as strong."Extract from Spatial Economics Report
The ending of the data analysis in 2010, but citing surveys and other sources from 2012 onwards when the broadband landscape in the UK was undergoing massive changes tends to negate any use this report may have feeding into the Digital Agenda and any useful analysis beyond generating some exciting headlines. The report is restricted to England because they only had property data for England.
There is a possibility that the higher price performance in London if linked to broadband is down to the high availability of cable broadband, but almost impossible to tell from the report, which seems to allow for some speed degradation on cable broadband even though Virgin Media use cable lengths where this is not the case. Most worrying is that they have not acquired any speed test data for their analysis prior to 2008 (hint our summaries from back then are still online), appearing to assume that the cap of 2 Mbps applied until 2006 when speeds rose to 8 Mbps. Missing out the launch of a 16 Mbps ADSL2+ service in April 2006 by Bulldog, UK Online with ADSL2+ in November 2005 and Be Unlimited in the summer of 2005. Cable services in 2005 were launching 10 Mbps products.