[UPDATED]There are no discernable business productivity gains in switching from slow to fast broadband, according to groundbreaking new research.

But TUANZ claims it's a "fundamentally flawed piece of research."

Motu Economic and Public Policy Research has released a paper analysing the impact that upgrading their internet connection has on a firm’s productivity. The researchers found that while switching from dial-up to broadband produces a 10% productivity gain, switching from slow to fast broadband has produced no detectable gain.

Chief researcher Arthur Grimes, a former Treasury official and head of the Institute of Policy Studies at Victoria, says this is the first time globally that firms have been analysed at the micro level to determine the effect broadband has on productivity. The research was made possible because of detailed data collected by NZ Statistics in 2006 about individual companies with more than six employees.

“Despite huge investment budgets associated with broadband (especially fibre) roll-outs, there has been little rigorous supporting evidence indicating that such connectivity brings material productivity benefits,” the report reads. “Our study is the first, internationally, to estimate the productivity impacts of connectivity upgrades using firm level data.”

Researchers are careful to point out that the report’s conclusion that the lack of productivity gain in switching from slow to fast broadband could be explained by the following four factors;

1. There may be little discernable difference in NZ between what the researchers considered slow broadband (ADSL) and what was considered fast (cable).

2. Not all survey respondents may be aware of the what type of broadband their firm subscribes to.

3. Firms may have only just switched to faster broadband and so it was too early to measure productivity gains.

4. Fast broadband may only be beneficial for a type of firm, which would require further research. Grimes says the research has been presented to the Ministry of Economic Development, who are currently working through issues on how to spend the $1.5 billion that’s been earmarked for a nationwide fibre broadband network.

UPDATE