Broadband: bridging or building the gap in rural areas?

The Hudson Institute recently released a report that takes a good look at the cause and effect of digital divide on rural America, The Broadband for Rural America: Economic Impacts and Economic Opportunities…

This report identifies opportunity costs that arise from this gap. These costs exist today, but the pace at which data transmission capability is growing means that the inequality between the technology being newly deployed and the technology that was deployed a decade or more ago is increasing. Networks that connect research institutions in the United States can move 100,000 times more data per unit of time than the dial-up connections that some Americans still must use. The technology gap is not a fixed deficit that once filled, stays filled. The technology gap will be larger—much larger—in the future, along with the information and technology gap, unless significant action is taken to overcome it.

Cause:
The report recognizes that population density plays a large role in availability – especially when access to broadband involves building new infrastructure. And as the definition of broadband changes (gets faster), infrastructure upgrades are required to provide the service. Building infrastructure is a real barrier.

While villages, towns, and small cities in areas outside metropolitan areas have a better chance of being “haves,” areas outside population concentrations are likely disproportionately among the “have nots.” A baseline scenario for the future of broadband would not expect areas without broadband service getting it. This builds from the assumption that the financial factors that determine where there are enough customers are unlikely to change. Funds provided through the American Recovery and Reinvestment Act of 2009 (ARRA) have provided the capital required to make investments in some areas, and many projects funded by that legislation have not yet been completed. However, once these projects are complete, additional federal dollars are unlikely, especially at the scale provided under the ARRA.

The report also notes the difference between the “can-nots” and the “do-nots” – folks who don’t have access and folks who have access but don’t subscribe. Converting the folks that choose not to subscribe is one way to increase profitability in a given area and in turn encourage greater investment. Ironically, increasing population density is also way to make a community more attractive to providers – but I think that’s a chicken and egg situation. Which comes first – increase in population or improved broadband access? Few people want to move to an area without access; few businesses want to invest in an area with population.
Effect:
The chart below shows the resulting disparities based on rural-urban divide…

So there are the hard numbers – but what does it mean in terms of utility? The report offers a few answers…
Broadband can have a direct impact:

The evidence about broadband levels of service first reaching a community shows it brings economic and population growth with it. For example, an analysis of the impact of broadband availability found that counties with broadband availability by 1999 experienced higher employment growth in employment and the number of businesses.

And broadband provides a tool that helps close other socioeconomic gaps in rural areas…

Broadband creates new opportunities for increasing learning opportunities in rural America. Online education programs create opportunities for people to obtain training and credentials far from the campuses where the training originates. It also creates the opportunity to bring specialized programs to areas where the population density is too low to support a traditional, campus-based program. Online education programs, using rich visual content, are unavailable to people who do not have broadband levels of service …
Rural areas have fewer surgeons to do surgeries and fewer specialists to refer patients for imaging services, and it is more difficult for consumers to seek out health-care services at a  greater distance. Telemedicine creates new opportunities for rural residents to obtain medical services. The health-care sector is emerging as a heavy user of telecommunications services. Improved imaging techniques result in larger and larger data files. Moving those files between providers requires substantial capacity. The demand from hospitals alone means that any community with a hospital has, or will come to have, a substantial “off ramp” from the broadband superhighway. …
Employers and government officials have endorsed telecommuting as a win-win. Employers save on occupancy costs, and governments see less use of highways at peak times. Employees benefit from being able to take advantage of lower housing costs in less densely populated areas. However, without broadband, an area cannot host telecommuters,  costing the “have not” area a household, and leaving telecommuters with a smaller range of feasible housing locations. …

And broadband plays a role in all industry sectors, I’ll just highlight one from the report…

A group of agriculture and information scientists at the University of Illinois recently concluded, “Information technology … could have at least as big an impact on agriculture in the next half century as mechanization had in the previous century.”
What lies ahead is the transition to agriculture that operates as a cyber-physical system, that is, a system that achieves higher levels of output with fewer inputs by combining vast quantities of information to identify the optimal use of the land and inputs including seed, equipment, water, and fertilizer. The capacity to move large amounts of data rapidly will be a limiting factor to the development of this system.

The report does a good job of explaining that the top applications from 10 years ago are not the top applications today – and the applications today will probably not be the top ten in ten years’ time, which of course helps make the original point that the broadband gap does not get “filled” it must be updated to match the rate of growth in the market. But that doesn’t make broadband a problem; it’s an infrastructure that provides a solution to closing gaps in education, health care, economics.
The report ends with a warning…

There is a very real danger of a growing technology gap between rural and urban America. This gap, if not addressed, will have growing consequences for the American economy, both urban and rural.