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.

Why (and how) do we need to close the digital divide?

There is a new Digit Divide report out of Purdue University (Digital Divide in the US) authored by Roberto Gallardo, Ph.D., Lionel J. Beaulieu, Ph.D. and Indraneel Kumar, Ph.D. Folks who attended the Fall Broadband Conference will recognize Roberto’s as the keynote speaker – where we got a little glimpse at this report and a very solid explanation of the DDI (Digital Divide Index), which the team uses to measure broadband availability as well as socioeconomic indicators that characterize the digital divide. They use that to compare communities on either sides of the digital divide and the impact that lack of technology and technology-savvy as had on the communities.

As the authors comment – the digital divide is the most critical issue of the 21st century – so this report sets out to talk about why it’s so critical and how we can close the divide.

Why do we need to close the digital divide?

  • Job and establishment growth between 2010 and 2015 was substantially lower in counties with the highest digital divide; establishments with paid employees declined in counties with the highest digital divide while establishments with no employees barely grew.
  • Digital economy industries—one of the fastest growing group of industries in the nation—and associated jobs increased overall and across all DDI quartiles between 2010 and 2015.
  • Digital economy establishments—of which 57 percent were nonemployers—increased in the nation and across all digital divide categories. In fact, the largest percent change in digital economy establishments between 2010 and 2015 took place in counties with the highest digital divide.

It’s worth noting and demonstrating with the table below that while there may have been growth in digital economy industries and establishments in all areas – the areas with higher digital divides saw less growth that the areas that were better connected.

Investment in infrastructure and digital inclusion efforts reaps benefits in the forms of greater industry and establishments.

So – how can we make that happen? The authors offer a couple of suggestions…

  • Economic and community development efforts need to be refined to target and support digital economy entrepreneurs that are emerging throughout the nation. Robust strategies should not only focus on updating broadband infrastructure, but also on increasing awareness and digital literacy knowledge to effectively leverage and maximize these technologies.
  • Collaboration among key local and regional assets—schools, libraries, nonprofits, Extension Services, local economic development organizations, regional planning commissions, think tanks, faith-based among others—should be strengthened. This will ensure that local and regional resources will be working in tandem to tackle the digital divide problem in high need areas of the country.

Wondering where your county sits on the DDI scale? Roberto was kind enough last fall to run reports for us for all of Minnesota Counties. So you can see for yourself!

The Transactional Value of the Internet in Rural America? Nearly $1.4 trillion

The Foundation for Rural Service recently published a report – A Cyber Economy: The Transactional Value of the Internet in Rural America. They surveyed 1,200 user to answer a few questions:

  • How frequently do U.S. consumers use the internet for various transactional purposes—shopping, checking their bank accounts and investments, paying bills, etc.?
  • To what degree do those transactions end up driving actual spending?
  • What is the estimated dollar amount that can be attributed to internet-based transactions?
  • With respect to U.S. urban and rural markets, where does that economic activity occur?

Here are their key findings

  1. Internet usage among urban and rural consumers was largely similar.
  2. Rural consumers are responsible for more than 10.8 billion internet-driven transactions annually out of a total of 69.9 billion annual internet-driven transactions, representing 15% of all internet-driven transactions.
  3. Internet-driven transactions drive nearly 50% of United States gross domestic product (GDP) or $9.6 trillion annually. These transactions are estimated to grow to over 65% by 2022 to $14 trillion annually.
  4. The estimated value of rural online transactions is nearly $1.4 trillion—14% of all internet-driven transactions, or 7% of the U.S. nominal GDP.

It’s an interesting report – who buys what where online. There’s a lot to check out – one interesting note – the market for online transactions and spending is growing…

The Inclusive Internet Index: Measuring Success 2018 – US ranks third

The Economist’s Inclusive Internet Index ranks counties based on the scores of the Availability, Affordability, Relevance and Readiness categories. You can see how the US ranks below:

And here are the details, according to the site…

The US stands 3rd overall in the world, behind Sweden and Singapore. Affordability is second only to Canada, but Readiness, ranked at 21st globally and 15th among 30 high-income nations, is an area for improvement. Weaknesses in that area include low trust in online content, including government websites, non-government websites and social media.

There isn’t a lot of info on how they calculate the rankings. I was particularly interested in how they calculated affordability. I did find the following context from their 2017 White Paper, which was helpful…

According to his organisation’s research, the average cost of an entry-level 500MB prepaid plan was 15% of per-capita income in less developed countries and over 6% across developing countries overall.10 (The UN’s threshold of affordability is 5% of average monthly income. A4AI is pushing to reduce this to 2% to account for extreme poverty among the lowest 20% of income earners.)
Generally speaking, the more robust the competition in internet service provision, the lower the access prices and the higher the level of adoption.
According to the ITU, broadband penetration in competitive markets is 1.4% higher for fixed-line connections and up to 26.5% higher for mobile
broadband,11 indicating a link between competition and adoption.

Minnesota ranks #7 for broadband

US News and World Report recently release their Best State Rankings. Drum roll please – Minnesota came in second place, behind Iowa.

They looked at 8 areas; here’s how Minnesota ranked:

  • Health Care #7
  • Education #13
  • Economy #20
  • Opportunity #3
  • Infrastructure #6
  • Crime & Corrections #11
  • Fiscal Stability #24
  • Quality of Life #2

Digging into the Infrastructure for Minnesota, here’s how we rank:

  • Internet #7
  • Broadband Access (households download speeds of 25 Mbps or faster)  #10
  • Ultra-Fast Internet Access (households with at least a gig) #14

FCC unveils updated broadband map – does it reflect reality in your zip code?

Borrowing from the Benton headlines – here’s the info on FCC’s latest national broadband map

As it works to close the digital divide, the Federal Communications Commission has updated and modernized its National Broadband Map so the map can once again be a key source of broadband deployment information for consumers, policymakers, researchers, and others. The new, cloud-based map will support more frequent data updates and display improvements at a far lower cost than the original mapping platform, which had not been updated in years. Improvements and features in the successor National Broadband Map include:

  • Fixed deployment data based on the latest collection by the FCC and updated twice annually

  • Deployment summaries available for seven different geographical types: nation, state, county, congressional district, city or town (census place), Tribal area, and Core -based

  • Statistical Area (such as New York-Newark-Jersey City NY-NJ-PA)

  • Broadband availability and provider counts in each of the nation’s over 11 million census blocks, available for six technologies (fiber, DSL, cable, satellite, fixed wireless, and other) as well as seven speeds, for a total of 441 combinations

  • Provider summary information available for 1,782 providers by technology, eight download speed tiers, and nine upload speed tiers

  • Deployment comparisons between geographic areas

  • A portal for data downloads

  • Satellite imagery map overlay that shows buildings, roads, and geography

  • Graphs that show what fraction of an area’s population has access to broadband at a given speed

You can use the maps to track access to a specific address or by community – county, state, zip code, tribal area, congressional district or MSA. Rumor has it that FCC Commissioner Jessica Rosenworcel is encouraging people to send corrections/suggestions to SO check it out – see if what you find on the maps for your community meets what you know to be true. If not, report it. These maps are used to make decisions. It’s worth making sure they are as accurate as possible.

Community Network Map through a Minnesota lens

The Institute for Local Self Reliance maintains a Community Network Map – a map of the variety of ways in which local governments have invested in wired telecommunications networks. Those ways include:

  • publicly owned FTTH citywide network
  • publicly owned cable network reaching most or all of the community
  • some publicly owned fiber service available to parts of the community (often a business district)
  • publicly owned dark fiber available
  • publicly owned network offering at least 1 gigabit services
  • served by rural electric cooperatives

You can get a look at coverage one their map (copied) on the right. (The map on their site is interactive.) They were kind enough to send me a list of Minnesota communities listed, which I’m happy to share. (Have to admit, I wasn’t able to post in spreadsheet as I wanted so feel free to contact me if you want a better format.)

Quick breakdown:

  • There are four publicly owned FTTH citywide networks. Lake Connections serves three communities. Monticello Fiber and Windomnet each serves one. SMBS serves eight communities.
  • There’s one publicly owned cable network  – Bagley Public Utilities in Bagley MN
  • There are seven providers serving some publicly owned fiber service available to parts of the community.
  • Two counties with dark fiber available. CarverLink serves 10 communities. Scott County Fiber Network serves seven communities
  • There are two rural electric cooperatives. RS Fiber serves 10 communities. True North serves four communities.