Body of Research Builds on Net's Economic Impact

One report cites 1.1M new jobs in 1996; academics also study pricing schemes

By Kathleen Murphy

The existence of the Internet Millionaires Page may be one of the best, albeit unscientific, clues to the impact the Net is having on the overall U.S. economy.

But some university professors, economists, government officials, and think tanks are making serious efforts to measure in hard numbers exactly that.

A report by the Global Internet Project of the Information Technology Association of America (ITAA), a trade group in Arlington, Va., said the Internet created 1.1 million jobs worldwide in 1996. The statistics were developed by extrapolating from this year's growth in technology companies' market capitalization and employment. No attempt was made to quantify job creation in prior years.

The study, "The Emergence of a Networked World," indicated that of the 1.1 million jobs created overall, 760,000 Internet-related jobs were created at U.S. companies last year. The Global Internet Project, led by Netscape chairman James Clark, represents 16 member companies, including MCI, Oracle, AT&T;, IBM, Sun Microsystems, BBN Planet, and Visa International. The study didn't include jobs created within companies using Net technology, such as those involving intranets.

Telecommunications and information-related industries will soon make up more than 15 percent of the domestic economy, according to federal estimates. The sector--including satellite, wireless telephony, broadcast, cable, and the Net--generates more than $680 billion in revenue and is among the growth sectors of the next century, according to the Commerce Department.

And the survey of 2,000 U.S. companies by ITAA also showed that the number of unfilled positions for IT employees is about 190,000, with 82 percent of those companies anticipating increases in staff numbers. ITAA plans to update its study quarterly, said Jon Englund, ITAA vice president.

"If you don't understand the significance of the technology and market trends, you're going to have a tough time developing the policies that will encourage that growth," Englund said.

The Net is impacting the economy tremendously, and "it's not as if anybody needs convincing" of that, said Hal Varian, dean of the School of Information Management and Systems at the University of California, Berkeley. Examining the Net's impact, much of which is intangible, is premature, Varian said.

At the heart of the Net's underlying economic principles are issues relating to architecture and infrastructure that could be more meaningful to sustaining its exponential growth, Varian said. Varian and other university professors, such as Jeffrey MacKie-Mason, an associate professor of economics at the University of Michigan and founding director of the Program for Research on the Information Economy (PRIE), are studying pricing issues related to Internet service.

Congestion is as much an economic problem as a technological one, MacKie-Mason said.

"It's an economic issue, because any time you make a shared resource available for free, people tend to overuse it," he said.

The first-come, first-served network system hasn't worked efficiently, according to MacKie-Mason. "People obviously are willing to pay for better service," he said.

Reprinted from Web Week, Volume 3, Issue 8, March 31, 1997 © Mecklermedia Corp. All rights reserved. Keywords: electronic_commerce Date: 19970331