Virgin high speed internet adds 7.7 billion to economy

22 April 2015

With Virgin Media’s direct investment of £3 billion in a high speed internet network, £7.7 billion will be added to the UK’s wider economy by 2030, finds an economic analysis from consulting firm Oxera. The benefits will be created by both direct and indirect effects, including the addition of 6,000 jobs as well as gains in competitive benefits and productivity improvements.

High speed internet connections are fast becoming a critical piece of infrastructure for digital economies. This infrastructure delivers access for consumers to information and entertainment, as well as improving the productivity of business. Besides the surface benefits of providing large data throughput, high speed internet connectivity has a number of indirect benefits, including reducing the need for commuting, printing and other physical media.

Recently Virgin Media announced that it will invest £3 billion in broadening its high speed internet network in the UK. With the expansion of its network the company will increase the number of premises reached from 12.6 million to 17 million. The rollout is expected to take five years, and deliver speeds of 152 mbs to customers (twice the current best rate offered by BT).

Virgin high speed internet adds 7.7 billion to economy

To gain insight in the economic impact of Virgin Media’s rollout on the UK economy as a whole, Oxera analysed and quantified the direct and indirect effects. Based on its models, the economic advisory forecasts the move to add £5.3 billion of economic activity within the UK by the time the investment is complete. This activity includes around 6,000 jobs that will be created, with 800 professional positions opened up, 1,400 engineering positions and 3,800 construction positions. Of these positions, around 1,000 will be new apprenticeships.

Benefitting consumers and business
The benefits to consumers will be varied. The consultancy calculates that the increase in competition from Virgin is set to create £650 million in benefit for consumers from greater choice by 2030. The value users place on this speed increase will result in an expected total net benefit to consumers – after having paid the costs of the upgrade – of around £1.6 billion in the same period.

While for businesses the introduction of high-speed broadband is expected to, together with the expected productivity benefits accruing to Virgin Media’s home Internet users, create a benefit to the UK economy worth £100 million between now and 2030. In total Oxera finds that the £3 billion initial investment will produce £7.7 billion in wider economic benefits to the UK by 2030.


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