The promise of rural broadband

Brian Whitacre’s essay on rural broadband is the second in a CGO series on broadband. The pandemic has heightened concern over broadband access, as more Americans than ever shifted to working from home, students went virtual, and healthcare providers moved to online appointments. With money going out the door, the time is right to take stock of our country’s progress over the last two decades and to consider what the future holds for broadband policy. After surveying the current spending bills, Whitacre considers the impact that new monies will have on rural broadband.   

It is a promising time in the world of rural broadband. Rural areas lagged behind their urban counterparts in broadband availability and adoption even before COVID-19 (Whitacre, 2021). The pandemic laid bare the extent to which disconnected individuals are disadvantaged, and US policy has responded with a series of investments that are dramatically different from previous efforts in both size and scope. Several of these federal programs will focus heavily on rural areas.

Questions remain about the optimal path forward and the degree to which these investments will affect rural economies. As new programs roll out, researchers have the opportunity to study which programs are most effective and gather empirical evidence that will shape broadband policy going forward.

New Broadband Legislation


Three distinct federal acts are currently underway with significant broadband components that address both (McBeath, 2021; , 2021). The funding within these acts represents a substantial commitment to reducing the rural-urban “digital divide.” Prior federal broadband programs focused nearly exclusively on improving rural availability (Rachfal, 2021) . Table 1 highlights the broadband components within each act, whether they focus on availability or adoption, and their associated amount of funding.



 

Given this substantial amount of funding, a logical question is whether it will be enough to bring universal broadband availability to the United States. The Federal Communications Commission (FCC) estimated the cost of deploying fiber-to-the-premise to 100% of US households at $80B in 2017 (de Sa, 2017). The US Fiber Broadband Association came up with a similar estimate of $70B to pass 90% of US households (Cartesian, 2019). Marre (2020) argues that the total price could be brought down by using electric cooperatives to provide fiber service or by using less expensive, non-wireline options like satellite or fixed wireless to serve the hardest-to-reach locations. Thus, it appears that the recently enacted funding is a giant step towards universal broadband access. Even if all of state and local Fiscal Recovery Funds are spent on other infrastructure projects, the Broadband Grant and Tribal Connectivity programs represent a nearly $50B investment in broadband availability. Other significant efforts are also underway, including Rural Digital Opportunity Fund commitments and state-level broadband grant programs.

The availability-oriented programs in Table 1 have different aims and requirements:

  • American Rescue Plan’s (ARP) Emergency Connectivity Fund focuses on schools and libraries with an emphasis on providing devices (smartphones, laptops) to households without them. The ARP state and local Fiscal Recovery Funds have an expectation that “eligible projects will meet or exceed symmetrical upload and download speeds of 100 Mbps.” This program prioritizes fiber optic infrastructure and support for networks owned/operated /affiliated with community entities such as local governments, non-profits, and cooperatives.
  • State Fiscal Recovery Funds are unique in that they allow state and county governments to determine funding priorities. The amount given to broadband will depend on many factors, including its relative priority versus other local infrastructure needs and the attitudes of local leaders regarding broadband.
  • The Broadband Grant program has no such preference for locally-owned networks and requires projects to provide 100 Mbps down but only 20 Mbps up. It consists of block grants to states and allocations for high-cost areas/unserved locations. The manner in which the allocated funds will be distributed has yet to be determined, with some arguing that a reverse auction is better suited than traditional grant applications (Rosston and Wallsten, 2021; Oh, 2021). The program also has a requirement for recipients to offer a low-cost option (with a price point to be defined later) in the areas where they build.


An area of concern with these varying programs is the degree to which they may crowd each other out. For example, states and local governments may see the amount of funding potentially coming to them under the Broadband Grant or Tribal Connectivity programs and choose to pursue other infrastructure projects with their Fiscal Recovery Funds. Similarly, states with their own broadband grant programs may be tempted to re-purpose those funds, given the federal “broadband windfall” about to be unleashed. Achieving the optimal outcome of providing high-level broadband service to all locations will require cooperation and foresight among the government entities involved—with a high degree of responsibility falling to state broadband offices.

One notable element of the Broadband Grant program legislative text is that the funding is provided on the basis of unserved locations, which can include agricultural or recreation-oriented buildings (like campground sites) that may not contain full-time residents. This could change the calculus on areas defined as most in need of broadband. It could also result in complaints that funds are being distributed to areas where no one lives. Rural advocates should be prepared to make arguments for why such funding is necessary and appropriate.

Adoption-oriented funding is relatively new to the broadband policy arena. While most of it will likely be distributed in urban locations (since 86% of the population lives in a metropolitan statistical area), it is still a crucial ingredient for improving rural connectivity. As such, a thorough evaluation of whether these programs “moved the needle” for rural broadband adoption is an important undertaking.

So, what should rural broadband advocates push for as the funding unfolds? De Wit (2021) points to three critical elements on the way to universal access:

  1. Faster speeds that take into account what households will need in the future (and are far beyond the current 25/3 Mbps threshold)
  2. Accountability, including data collection on prices charged (which has proven elusive to date) as well as accurate address-level information on service availability
  3. Affordability, since productively using the internet is largely dependent on being able to regularly access it from your own home


The forthcoming broadband programs contain elements to address the speed and affordability components. passed in March 2020 offers some hope that address-level availability checks will soon be a reality (Whitacre and Biedny (2021) offer a preview). However, no legislation to date has mandated collecting pricing data for all providers.

Potential Social and Economic Impacts in Rural Areas


There is a growing body of evidence suggesting that improved broadband availability and adoption will have positive effects on the quality of life for rural residents. Studies focusing on broadband availability in rural areas have demonstrated its importance for

  • attracting new businesses (Mack, 2014; Kim and Orazem, 2016),
  • enhancing entrepreneurship (Conroy and Low, 2021; Deller et al., 2021),
  • promoting in-migration (Mahasuweerachai et al., 2010), and
  • improving farming yields and profits (Kandilov et al., 2017; LoPicallo, 2021).


Other studies have argued that it is higher levels of broadband adoption, and not necessarily availability, that matter most. This line of research has found that greater levels of broadband adoption in rural locations lead to

  • higher levels of income (Whitacre et al., 2014a),
  • higher numbers of jobs (Whitacre et al., 2014b),
  • higher productivity (Gallardo et al., 2021), and
  • greater civic engagement (Whitacre and Manlove, 2016).


In this vein, it seems clear that previously disconnected rural communities and households will benefit from the forthcoming investments in a variety of ways.

However, significantly less research has focused on whether higher speeds beyond the current 25/3 Mbps threshold are beneficial. Some studies have found promising results for “ultra-fast” speeds in more urban locations (Briglauer and Gugler, 2019; Hasbi, 2020), but the evidence is extremely sparse for rural areas. Only Lobo et al. (2020) have examined this issue within the United States, and they find that rural Tennessee counties with earlier access to speeds of 100 Mbps or greater saw beneficial impacts on unemployment rates.

Opportunities abound for rural researchers and regional scientists as these programs roll out:

  • How close are we to universal access?
  • Will investments in broadband availability and/or adoption lead to more jobs/income/productivity in rural counties?
  • Which category of investment (availability vs. adoption) offered a better overall return?
  • Will rural communities without access to 25/3, who “leapfrog” to 100/20 service because of these programs, fare better than communities who may have been stuck with 25/3 service?
  • Are payments to private providers more effective than payments to cooperatives?


COVID-19 has undoubtedly changed the conversation around rural broadband policy, and leaders should be prepared to make a case for its future direction with empirical evidence.

 


References

Briglauer, W. , and K. Gugler.  2019. “Go for Gigabit? First Evidence of Economic Benefits of High-Speed Broadband Technologies in Europe.”  Journal of Common Market Studies, 57(5): 1071-1090.

de Sa, P. 2017. “Improving the Nation’s Digital Infrastructure.” Office of Strategic Planning and Policy Analysis, Federal Communications Commission. Available online: https://www.fcc.gov/document/improving-nations-digital-infrastructure

de Wit, K. 2021. “Three Steps to Universal Broadband Access.”  PEW Internet Blog.  Available online: https://www.pewtrusts.org/en/about/news-room/opinion/2021/05/13/three-steps-to-universal-broadband-access

Conroy, T. & Low, S. 2021. Entrepreneurship, Broadband and Gender: Evidence from Establishment Births in Rural America. International Regional Science Review.

Cartesian. 2019. “FTTH Study 2019:  Summary Findings.”  Available online:  https://optics.fiberbroadband.org/Portals/0/Cartesian%202019%20FTTH%20Study%20Summary%20Findings%2020190604%20SENT.pdf

Deller, S., B. Whitacre, and T. Conroy.  2021.  “Rural Internet Speed and Business Startup Rates.” American Journal of Agricultural Economics. Available online: https://onlinelibrary.wiley.com/doi/10.1111/ajae.12259

Gallardo, R., B. Whitacre, I. Kumar, I., and S. Upendram. 2021.  “Broadband Metrics and Job Productivity: A Look at County-level Data.”  Annals of Regional Science 66(1): 161-184.

Hasbi, M. 2020. “Impact of Very High-Speed Broadband on Company Creation and Entrepreneurship: Empirical Evidence.”  Telecommunications Policy 44(3): 101873.

Kandilov, A., I. Kandilov. X. Liu, X., and Renkow, M. 2017. “The Impact of Broadband on U.S. Agriculture: An Evaluation of the USDA Broadband Loan Program.” Applied Economic Perspectives and Policy 39(4): 635–661.

Kim, Y., and P. Orazem. 2017. “Broadband Internet and New Firm Location Decisions in Rural Areas.” American Journal of Agricultural Economics 99(1): 285–302.

Lobo, B., R. Alam, and B. Whitacre. 2020. “Broadband Speed and Unemployment Rates: Data and Measurement Issues.” Telecommunications Policy 44(1): 101829.

LoPicallo, K. 2021.  “Impact of Broadband Penetration on U.S. Farm Productivity.”  FCC Working Paper.  Available online: https://docs.fcc.gov/public/attachments/DOC-368773A1.pdf

Mack, E. 2014. “Businesses and the Need for Speed: The Impact of Broadband Speed on Business Presence.” Telematics and Informatics 31(4): 617–627.

Mahasuweerachai, P., B. Whitacre, and D. Shideler. 2010. “Does Broadband Access Impact Migration in America? Examining Differences between Rural and Urban Areas.” Review of Regional Studies 40(1): 5–26.

Marre, A. 2020.  “Bringing Broadband to Rural America.”  Community Scope 8(1).  Available online: https://www.richmondfed.org/-/media/richmondfedorg/publications/community_development/community_scope/2020/community_scope_2020_no1.pdf

McBeath, R. 2021.  “Our Challenge to Finally Close the Digital Divide.”  Benton Institute for Broadband and Society Blog.  Available online: https://www.benton.org/blog/our-challenge-finally-close-digital-divide

Oh, S. 2021.  “Using Reverse Auctions to Stretch Broadband Subsidy Dollars:  Lessons from the Recovery Act of 2009.”  Tech Policy Institute White Paper.  Available online: https://techpolicyinstitute.org/wp-content/uploads/2021/03/Oh-Reverse-Auctions-Lessons-from-BTOP-Jan-2021.pdf

Rachfal, C. 2021.  “The Digital Divide: What Is It, Where Is It, and Federal Assistance Programs.”  Congressional Research Service report R46613.  Available online: https://fas.org/sgp/crs/misc/R46613.pdf

Rosston, G. and S. Wallsten. 2021. “How Not to Waste $45 Billion in Broadband Subsidies.”  The Hill. Available online: https://thehill.com/opinion/finance/566772-how-not-to-waste-45-billion-in-broadband-subsidies

Scorse, Y. 2021. “NDIA Celebrates the Senate Passage of the Infrastructure Bill.”  National Digital Inclusion Alliance Blog.  Available online: https://www.digitalinclusion.org/blog/2021/08/10/infrastructure-bill/

Tomer, A. and C. George. 2021. “The American Rescue Plan is the Broadband Down Payment the Country Needs.”  Brookings Institution Blog.  Available online: https://www.brookings.edu/research/the-american-rescue-plan-is-the-broadband-down-payment-the-country-needs/

Whitacre, B. 2021. “COVID-19 and Rural Broadband:  A Call to Action or More of the Same?” Choices. Quarter 3.  Available online: https://www.choicesmagazine.org/choices-magazine/theme-articles/rural-development-implications-one-year-after-covid-19/covid-19-and-rural-broadband-a-call-to-action-or-more-of-the-same

Whitacre, B., and C. Biedny. 2021. ““A Preview of the Broadband Fabric:  Opportunities and Issues for Researchers and Policymakers.” Telecommunications Policy.  Available online: https://www.sciencedirect.com/science/article/pii/S0308596121001853

Whitacre, B., R. Gallardo and S. Strover. 2014a. “Broadband’s Contribution to Economic Growth in Rural Areas: Moving toward a Causal Relationship.” Telecommunications Policy 38(11): 1011–1023.

Whitacre, B., R. Gallardo and S. Strover. 2014b. “Does Rural Broadband Impact Jobs and Income? Evidence from Spatial and First-differenced Regressions.” Annals of Regional Science 53(3): 649–670.

Whitacre, B., and J. Manlove. 2016. “Broadband and Civic Engagement in Rural Areas: What Matters?” Community Development 47(5): 700–717.

Yoo, C. and T. Pfenninger.  2018. “Municipal Fiber in the United States: An Empirical Assessment of Financial Performance.”  Penn Law Center for Technology, Innovation and Competition.  Available online: https://www.law.upenn.edu/live/files/6611-report-municipal-fiber-in-the-united-states-an

CGO scholars and fellows frequently comment on a variety of topics for the popular press. The views expressed therein are those of the authors and do not necessarily reflect the views of the Center for Growth and Opportunity or the views of Utah State University.

Get the latest from The CGO!

Name
Hidden