Imagine for a second that your computer can only process Windows XP, the operating system of the early 2000s. Imagine trying to keep doing all of your daily online activities – sending work emails, checking Facebook, paying your phone bill – but at the speed of your computer in 2005, not 2015.
A surprisingly high number of Americans don’t have to imagine this – they’re already living it. 55 million Americans lack access to high-speed broadband. 22 million of those people live in rural communities.[i] That means that significant portions of rural-dwelling Americans are at a disadvantage, in particular in the new world of e-commerce. They’re missing out on something that has become a 21st-century necessity. And while hardware and Internet companies like Apple and Google are making a splash with things like Google Fiber, they’re focusing their efforts on more urban places like Charlotte and the Research Triangle, leaving rural areas even further behind.
“As the Internet becomes crucial in economics, education, and civic life, communities that are left behind pay a higher price for their lack of access.”[ii]
Recent research shows that counties with high levels of broadband adoption have higher rates of employment and economic growth.[iii] These results hold true even when controlling for education, income, age, and race. And rural counties with low broadband adoption rates are doing the worst in terms of poverty, employment rates, and economic growth.
Limited broadband access also hurts the market: Rural areas much more likely to see only one broadband provider than urban or suburban areas, which means less competition and higher prices.
In 2009, the federal government made broadband expansion one of its economic recovery priorities. The American Recovery and Reinvestment Act of 2009 (ARRA) allocated $7.2 billion for broadband grants and loans in order to both quantify and increase broadband access across the country.
The Rural Utilities Service (RUS) received $2.5 billion for the Broadband Initiatives Program (BIP) for broadband loans and grants. The National Telecommunications and Information Administration (NTIA) received $4.7 billion for the Broadband Technology Opportunities Program (BTOP), including $300 million to develop the National Broadband Map, which visualized broadband access and identified unserved and underserved areas of the U.S.[iv]
National Broadband Map: Maximum Advertised Speed Available
North Carolina received over $250 million from the broadband stimulus. Local technology non-profit MCNC used the majority of that funding to expand North Carolina’s fiber network by 1,700 miles.[v] That expansion more than doubled MCNC’s network and made it one of the largest in the state, “linking most of the state’s schools, colleges, and universities.”[vi] They can now also connect libraries and non-profit and university hospitals across the state.
In March 2015, North Carolina’s Commerce Department announced a new broadband program. The Bizconnect Broadband Pilot Grant Program will use $350,000 this year to reimburse North Carolina municipalities that “fund deployment of broadband connectivity to a business location that is unserved, or underserved, by necessary productivity.”[vii] The program will prioritize rural census tracts and towns with fewer than 50,000 residents.
Funding for these projects is set to end in the summer of 2015, which means that a complete impact evaluation is still some time away. But independent organizations have conducted progress evaluations of the BTOP and BIP projects to make sure they’re on the right track.
“…while broadband will not bring immediate economic transformation to rural America, regions that lack broadband will be crippled.”[viii]
The broadband stimulus has caught some controversy since its inception. According to a February 2013 memo written for the U.S. House Committee on Energy and Commerce, “only 60 percent of the broadband funds [had] been put to use so far even though all $7 billion was awarded by September 30, 2010. And of the 533 projects funded, only 58 [were] finished or in the finishing stages” at that point.”[ix]
There’s also some concern about overbuilding – that is, increasing and improving broadband access in already vibrant areas, rather than focusing on the economically vulnerable areas that should be the priority.[x] The FCC’s annual broadband report found that “broadband advances are not happening broadly or quickly enough.”[xi]
While federal funding for broadband expansion hasn’t been renewed since 2009, private funding has skyrocketed. “Private sector wired and wireless broadband providers have invested an average of $65 billion a year between 2002 and 2011, as compared to the one-time investment of $7 billion in public funding nationwide.”[xii]
"Internet connectivity increasingly is necessary for many political, economic, and social transactions…not having access to these mechanisms means being cut off from opportunities and from what are increasingly being defined as normal communication channels.”[xiii]
Broadband investment has stopped being just a good idea – in the 21st century, it’s a basic necessity. If private investment will be the driving force behind growing broadband access, federal, state, and local governments need to incentivize investment in rural, underserved areas. Otherwise, rural America will stay in 2005 as the rest of the country speeds ahead.
[i] Federal Communications Commission. (January 2015). 2015 Broadband Progress Report. Available at http://www.fcc.gov/reports/2015-broadband-progress-report
[iii] Whitacre, Brian; Gallardo, Roberto; Strover, Sharon. (August 2013). Broadband’s Economic Impact. Center for Rural Strategies. Available at http://www.dailyyonder.com/broadbands-impact-rural-economy/2013/08/16/6712
[iv] Severson, Kim. (February 17, 2011). “Digital Age Is Slow to Arrive in Rural America.” The New York Times. Available at http://www.nytimes.com/2011/02/18/us/18broadband.html?pagewanted=all
[v] Engebretson, Joan. (August 13, 2013). “MCNC Celebrates Benefits of Stimulus-Funded North Carolina Network.” Telecompetitor. Available at http://www.telecompetitor.com/mcnc-celebrates-benefits-of-stimulus-funded-north-carolina-network/
[vi] Murawski, John. (March 21, 2011). “MCNC Aims To Spread Broadband Around State.” The News and Observer. Available at https://www.mcnc.org/news/MCNC-aims-to-spread-broadband-around-state
[vii] North Carolina Department of Commerce. (March 13, 2015). “North Carolina Department of Commerce Now Accepting Applications for BizConnect Broadband Pilot Grant Program.” Available at http://www.nccommerce.com/news/press-releases?udt_4733_param_detail=189270
[viii] See note ii
[ix] The House Committee on Energy and Commerce. (February 27, 2013). “Is the Broadband Stimulus Working?” Available at http://docs.house.gov/meetings/IF/IF16/20130227/100331/HHRG-113-IF16-20130227-SD002.pdf
[x] See note ix
[xi] See note i
[xii] See note ix
[xiii] See note ii