The role of broadband in Bridging the Urban-Rural Economic Divide

The National League of Cities recently released a report on Bridging the Urban-Rural Economic Divide. The digital divide was calling out as a major indicator of disparity…

In all states, urban areas outpace their rural counterparts in broadband access. States with overall higher levels of broadband access also have more significant urban-rural digital divides, underscoring the importance of extending affordable broadband to rural areas.

There port had this to say about broadband…

Nationwide, 10% of Americans do not have access to broadband, with rural areas experiencing significantly greater access challenges. In a world dominated by online communications, this digital divide severely limits rural residents’ access to online job application and employment opportunities, online higher educational and training opportunities, public school learning, research opportunities, healthcare and government services. The digital divide also limits rural areas’ capacity to grow and attract businesses and retain and attract residents.

Urban-rural divides in broadband access are inversely related to the percent of state population without access to broadband. This means that as overall state access increases, so too does the divide in access between urban and rural areas. Broadband access tends to cluster in urban areas because it is a guaranteed market for private providers, unlike less densely populated rural areas. Even in rural areas where broadband is available, it is often much more expensive, leading to gaps not only in access, but also in adoption.

There are no states in which rural areas have more people with access to broadband than urban areas. Overall, rural communities have 37% more residents without broadband access, as compared to their urban counterparts. Alaska has the most significant digital divide, with a gap of 62%, meaning that rural areas in Alaska have 62% percent more people without access to broadband than the state’s urban areas. Massachusetts has the narrowest digital divide, with rural areas having only 8% more people without broadband access than urban areas (see Map 2).

States with the narrowest urban-rural digital divide that have the highest proportion of population with broadband access include New York, Pennsylvania, Washington, Maryland and Massachusetts (see appendix data table 2). States with the most significant urban-rural digital divides and most significant lack of high-speed Internet access include Wyoming, Alaska and Oklahoma.

Although Massachusetts performs well regarding broadband access, the state was actively seeking private sector companies to provide high-speed service to underserved areas. The extensive capital expenditures needed to build broadband networks and a requirement that they connect 96% of homes and businesses in the town, however, hindered the interest of those companies. The state agreed that for underserved communities, instead of requiring providers to service 96% of the town immediately, it would consider projects that would plan reach this goal over time. This small adjustment was enough to gain interest of several businesses that are now competing for projects in rural communities.

Some communities are also exploring municipal broadband, which means that local government pays for all or part of the access. A 2018 Harvard University study found that community-owned broadband networks provide consumers with much lower rates than their private-sector counterparts. Not all local governments, however, are able to provide municipal broadband services. In 2017, the National League of Cities identified 17 states that preempt, or don’t allow, their cities or towns to create public broadband services. These include some states with lower than average broadband access and more significant rural disadvantages, including Arkansas, Alabama and Nebraska.

Broadband access is a factor in education attainment…

State education attainment levels tend to be higher in states that do a good job managing their levels of digital divide. In other words, the more access to broadband, the greater proportion of people able to attain education.

Broadband access is a factor in prosperity…

States with greater growth in their contributions to national GDP have stronger employment growth and wage growth. Prosperity growth also links back to the digital divide. Those states with greater digital divides between urban and rural areas experience greater divides in prosperity growth that disadvantage rural communities. This finding corroborates a McKinsey global study on the economic impact of the Internet that found that increases in Internet access strongly correlate with increases in real per capita GDP.

The also highlighted the Minnesota Border to Border Broadband grant program as a way to improve broadband in rural areas.

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