The Downside of Rural Broadband

With all the emphasis on improving broadband for rural America, it’s easy to think that digital access automatically results in healthier communities. A new study shows it’s more complicated than that. For rural entrepreneurs and “creative class” workers, better broadband doesn’t always mean better business.

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Many articles paint a picture of the positive impacts broadband has on rural communities. Broadband availability has been an equalizer for rural areas – giving them access to advanced health care, online shopping, and income opportunities that were not previously available.

However, should broadband be treated as a “be-all and end-all” solution for rural areas?

A recent study that we conducted finds that broadband availability/ adoption might not be as important to entrepreneurs and “creative class” employees in rural areas as one might initially think.  (EDITOR’S NOTE: The complete peer-reviewed report by Kelsey Conley and Brian Whitacre appears in the Review of Regional Studies.)

Rural communities are often plagued with declining populations. To combat this, efforts to attract entrepreneurs and “creative class” workers (ones whose jobs are developing, designing, or creating new applications, ideas, relationships, systems, or products, including artistic contributions) have been important components of recent economic development strategies. Figure 1 shows non-metropolitan counties with high levels of entrepreneurs (denoted as “non-farm proprietors”) and creative class employees.

Efforts to attract these specific types of employees have been coupled with the desire for rural communities to have broadband widely available – the notion being that the lack of broadband is what is keeping these entrepreneurial / creative employees from moving to rural areas.  Figure 2 shows which non-metropolitan counties have high levels of broadband availability (defined as more than 85% having access to a wired provider) and adoption (defined as more than household adoption rates over 60%).

To determine if the absence of broadband (or a lack of broadband “availability”) or the lack of acceptance of broadband (broadband “adoption”) is a hindrance for entrepreneurs and creative class employees, we set out to examine that relationship in rural areas.

County level data was collected including broadband measures from the Federal Communications Commission and National Broadband Map, and creative class (USDA Economic Research Service) and entrepreneurship measures (Bureau of Economic Analysis). Using this data, we were able to run models and compare the relationship between broadband adoption/availability and creative class and entrepreneurs both over a period of time (2000 through 2011/2012) and during a specific period of time (2011/2012).

Other factors that might affect entrepreneurship were also included so the findings could focus as narrowly as possible on the relationship between broadband, the creative class, and entrepreneurship. Characteristics that were controlled in the study included factors such as age, race, education levels, unemployment rates, the existence of natural amenities that can effect development patterns, and the percentage of workers who were engaged in agriculture or manufacturing. The study also used a spatial technique that helps eliminate the impact that neighboring counties might have on broadband deployment and adoption.

Even after all these other factors were considered, we typically found negative relationships between broadband and entrepreneurship.

When it comes to broadband adoption, we found that high levels of broadband adoption in nonmetropolitan counties are associated with lower levels of creative-class employees both at a specific point in time (2011) and over time (2000-2011). Similar negative relationships were found between broadband adoption and entrepreneurs both for a specific time (2012) and changes over time (2000-2012) in nonmetropolitan counties.

Switching over to broadband availability, these same negative findings persisted – with one exception. The one positive relationship that exists in these nonmetropolitan counties is between the percentage of entrepreneurs and broadband availability in 2012.

Why were these results found? One explanation could be that increases in rural broadband adoption led to discoveries of job opportunities in non-entrepreneurial sectors. For example, an entrepreneur in a rural area might use their new broadband connection to find a better employment opportunity (either locally or perhaps in a more urban area). Therefore, this increased broadband adoption led to a decrease in entrepreneurship in rural areas.

Many previous broadband-oriented policies have focused heavily on increasing the infrastructure (availability) of rural broadband as opposed to trying to increase broadband adoption. When it comes to entrepreneurs in rural areas, this research suggests these policies are a step in the right direction, since the 2012 results imply that high levels of wired availability in nonmetropolitan counties are associated with higher levels of entrepreneurs.

This is great when it comes to a one year snapshot; however, over time (2000-2012) our findings indicate that increases in wired broadband availability were actually associated with fewer entrepreneurs.

This discrepancy can be explained this way: as rural broadband availability improved between 2000 and 2012, rates of “necessity entrepreneurs” (individuals who start small enterprises of out necessity) declined in these areas, perhaps because they found other opportunities. As time progressed, however, the entrepreneurs who remained (as of 2012) started to perceive broadband access as a positive factor.

These interesting findings serve as a reminder that broadband is not a panacea for all issues of importance to rural communities. This is certainly not to say that pursuing improved broadband availability or adoption rates is something that rural areas should avoid – the evidence is quite strong that increasing rural broadband adoption can have positive economic impacts.

However, those involved in rural development should remember that not all implications of broadband policies are positive…and there may in fact be negative consequences.

Kelsey Conley is a Ph.D. student and Brian Whitacre is a professor and extension economist at Oklahoma State University. Their study was recently published in the Review of Regional Studies and is entitled “Does Broadband Matter for Rural Entrepreneurs or ‘Creative Class’ Employees?”

 

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