Will the market alone take care of rural America’s broadband needs – eventually? In the last installment of our broadband series, the authors outline the types of public policies they think will help improve rural broadband.
EDITOR’S NOTE: Previous installments in our broadband series have shown that 1) broadband is not ubiquitous in rural America, 2) being poor or elderly decreases the chances of residents subscribing to (or “adopting”) broadband and 3) high-speed Internet access has economic benefits. The last article in our series looks at what these findings mean for public policies governing broadband.
Clearly, broadband is an important technology – but there are problems making it available to everyone and getting people to use it. What kinds of policies can help to remedy this situation?
There are two schools of thought on this issue. One is that the market will eventually solve the problem: As sufficient demand builds for broadband Internet, suppliers will become available to meet that demand. The second perspective acknowledges that the market is imperfect: Populations living in regions that do not enjoy robust economies receive infrastructure and services much later or not at all; without some intervention, they will continue to fall behind other regions in the country.
Communications and telecommunications industries have historically been acknowledged as important for democracy, for the economy and for community. Agencies like the Federal Communications Commission and the National Telecommunications and Information Administration (among others) have sought to ensure that the benefits of these industries are broadly available to all. This is the premise of the universal service program that FCC has administered for many years. The stimulus-funded broadband investments under the American Recovery and Reinvestment Act of 2009 (through NTIA and the U.S. Department of Agriculture) that invested in both infrastructure and user training programs focused on the same basic principle. What policies can influence improved broadband for rural regions? We identify four areas for policy action.
Evaluation and open data. How well have recovery-act broadband investments succeeded? We need data (and time) to tell. Approximately $7.2 billion was allocated to the NTIA and USDA to invest in broadband infrastructure to serve people in unserved and underserved regions. Lots of different work was done, including building new “last-mile” and “middle-mile” facilities, creating public computing spaces and starting programs that encourage adoption.
Most of that funding ends this year, but we still don’t know much about results, and probably won’t for several years. NTIA invested in an evaluation whose results will be shared over the next few years, but USDA did not undertake an evaluation of its program. Did investment in a certain type of technology provide the biggest “bang for the buck?” Which adoption programs had the biggest impact? Answering these questions will be important for future policy efforts. These future efforts should gather rigorous data so we know exactly what each investment yields.
One NTIA investment that will be maintained is a statewide infrastructure mapping effort. Dubbed the State Broadband Initiative (SBI), grants to each state and territory and the District of Columbia were used to map infrastructure and initiate statewide broadband planning efforts. The FCC will be responsible for mapping infrastructure in coming years, but the near-term result of these maps has been to capture better data on the status of broadband (areas it serves, advertised speed, etc.). These data are essential to our continued understanding of how our network infrastructure is unfolding across all regions of the country.
One variable that is notably not captured in the current SBI data is monthly cost per household. While there are issues associated with trying to provide this information (such as bundling, specials and proprietary data), the lack of cost data prevents insight into geographical discrepancies that might exist and how much price factors into whether families and businesses adopt broadband. Gathering this cost data would be a notable improvement to the current dataset.
Continuing infrastructure investment in unserved and underserved regions. Our statistics indicate a continuing need for infrastructure support programs targeting rural areas, and this will come down to the FCC’s universal service programs under its retooled Connect America Fund, as well as various state or local efforts. In 2010 the FCC redefined the universal standard from “plain old telephone” service to a national goal of universal broadband access at speeds that reach at least 4 Mbps downstream and 1 Mbps upstream. Since our results show that higher speeds are significant in increasing the adoption rate, this is an important amendment on both quality and ubiquity. The Connect America Fund aims to connect an additional 7 million unserved rural Americans to broadband by 2018.
The agency’s renewed focus on health-delivery systems through its Healthcare Connect (2013) program in particular may yield important results and improved results in healthcare-related developments by exploiting broadband’s capabilities for extending services in rural regions. Broadband networks will link rural clinics to better resourced hospitals in other regions as one component of this effort.
Adoption programs. One policy effort that our results underscore has to do with identifying strategies that help people use broadband in ways that are meaningful to their circumstances. (NTIA has some examples in their May 2013 Broadband Adoption Toolkit.) Programs are needed to encourage people to subscribe to broadband services once they are present and to make the case for the utility of broadband. The FCC’s latest experiments with its Lifeline programs, in which providers are expected to help address factors such as the cost of devices and digital literacy that are salient to people who cannot afford service, represent an interesting behavioral economics approach to encouraging adoption. Other universal service-related programs also are grappling more deliberately with adoption issues. (See the table below on current FCC programs below.)
At this juncture, achieving the best broadband outcomes means tackling the population that is the least familiar with computers and the Internet. Simply providing technology and a network connection does not begin to address the human capital needed to make use of the hardware. People require training in settings that can address their specific circumstances. Investments in people – in education and training – are essential to achieve meaningful use of the Internet.
Network development. The location and capabilities of the network itself, plus the devices, platforms and, of course, human skills and capabilities, are elements in the landscape for broadband, and they evolve constantly. Monitoring network developments and insuring that they provide the needed capabilities to rural regions will be an ongoing task, both for federal and for state agencies. The policy community should monitor network developments, including the spread and speeds of wireless, to identify emerging problems.
Our data shows that networks in rural areas are disadvantaged compared to metro regions in terms of availability and speeds. The FCC reported in 2012 that one fourth of the population in rural areas (14.5 million people) lack access to fixed broadband service at the FCC’s threshold speeds. As well, we know that many conventional carriers are either leaving rural regions or opting to base services on wireless rather than wireline networks. Relying on wireless (as opposed to wireline) networks to meet rural needs does raise some cautions. First, our data illustrate that rural regions have fewer wireless service providers, and there is a correlation between the lowest number of service providers and low adoption rates. But second, the data suggest that when wireless services are present, fixed-line broadband adoption diminishes. We hypothesize that this may mean that people face economic tradeoffs: They can spend for a mobile, wireless service or they can spend for a fixed line broadband service. This possible “substitution effect” should be scrutinized.
While everyone likes wireless services, getting the best or most capable wireless networks may be a matter of “trickle down” – waiting for carriers to get around to investing in higher capacity wireless systems in less desirable regions. Current SBI data do not distinguish between slower mobile technologies that do not meet broadband benchmark speeds and more current technologies (sometimes referred to as LTE or mobile WiMax). However, wireless services in rural areas tend to be slower and geographically may be limited to only the most populous towns in a county. At this point, wireless access in most rural areas is not a quality substitute for wireline broadband access. While their speeds may be fine for voice connections, downloading larger files (video, graphics-intensive news, etc.) may be a problem. Unfortunately, most substantial network investments from larger carriers are more focused on expanding 4G wireless connectivity in populous cities, not in rural regions. The FCC’s Mobility Fund, however, is helping out in this domain. While the arrival of reliable wireless service in rural regions is welcome, should rural populations depend on wireless services for Internet access? Right now, our answer would be “no.”
Brian Whitacre is an associate professor in the department of Agricultural Economics at Oklahoma State University. His research, extension, and teaching appointments are focused on rural economic development, with a heavy emphasis on the role of broadband access.
Roberto Gallardo is an associate Extension professor at Mississippi State University, where he serves as project manager for the statewide broadband adoption initiative.
Sharon Strover is a Regents Professor in Communication at the University of Texas, where she directs the Telecommunications and Information Policy Institute. Her teaching and research focus on technology, policy and regulation.
Funding for this study was provided by the National Agricultural and Rural Development Policy Center (NARDeP).