Broadband as an Economic Driver

Broadband has become a leading engine of economic growth, creating jobs, improving education, enhancing health care, upgrading public safety and security systems and a host of other things. Economist Dr. John Rutledge sees broadband infrastructure "as the Central Nervous System of the economy."

In a 2006 report, the authors stated that "broadband access does enhance economic growth and performance," noting that communities in which mass-market broadband was available "experienced more rapid growth in employment, the number of businesses overall, and businesses in IT-intensive sectors, relative to comparable communities without broadband."¹

Research conducted by Michael Curri, founder of global consulting firm, Strategic Networks Group, shows that on average every dollar spent on broadband infrastructure results in a tenfold multiplier impact on GDP. Additionally, it increases efficiencies and reduces costs for government, business and industry.

Broadband can also positively impact communities in a variety of other ways, cultivating entrepreneurship, creating an environment for continued growth and helping to reduce the rural community 'brain drain.'

A New Cycle of Growth and Prosperity

Around the globe small- and medium-sized cities and communities are searching for ways to attract new businesses and help existing businesses become more successful. According to Strategic Networks Group, 70-80 percent of the growth broadband enables comes when local companies find greater success.

Broadband can lay the foundation  for a variety of new and import applications, including telemedicine, education and research, various types of e-business and new 'green' business. It can increase revenues, decrease costs and improve customer service for businesses, government and educational institutions alike. Advanced broadband services can hold the key to starting a cycle of growth and improvement, particularly in underserved rural and suburban areas.

Deploying A Local Broadband Infrastructure

Deploying a local broadband infrastructure has never been more timely. The American Recovery and Reinvestment Act of 2009 (ARRA) has allocated $7 billion to accelerate broadband deployment in unserved, underserved and rural areas, providing communities across America with unprecedented access to funds that can move their communities into the 21st century.
Municipalities deploying a broadband infrastructure should formulate a written, 'localized' plan that takes into account all the requirements of the various stakeholders. Understanding the needs of local business, education, government agencies and residents now and in the future will enable a community to build the broadband network that is most suitable for area requirements. A key component of the plan is to identify consultants, service providers and equipment manufacturers who will collaborate as partners to create and build the broadband network.

Another important part of that strategy is researching and utilizing all the funding options available. The Rural Development Utilities Program arm of the USDA provides a number of loan and grant programs designed to spur economic growth throughout the United States. These include:

• Infrastructure Loan Program: Loans to local telephone companies for improving telecommunications service in rural communities
• Broadband Access Loan Program and Community Connect Grant Program: Loans and grants for local telephone companies and other service providers who offer Broadband (high-speed Internet) services in eligible communities
• Distance Learning/Telemedicine Loan and Grant Program ("DLT"): Loans and grants for providing Distance Learning and Telemedicine services to rural residents

Additionally, there are currently a number of initiatives being funded by ARRA 2009 that will provide grants and other funding. These include the Broadband Technology Opportunities Program, the new Rural Development Broadband Program, and the development of a National Broadband Plan.

Broadband deployments have been most successful in areas where service providers have actively promoted new broadband services, explaining the benefits to the entire community including residential and business customers, as well as local, regional and state agencies.

Success Stories

Across America broadband is already driving economic growth and creating success. Here are a few examples.

Kansas. When Kansas-based Nex-Tech, Inc., a subsidiary of Rural Telephone, deployed broadband to underserved areas of Kansas, the communities were able to attract new businesses and new residents, which resulted in a wave of new home construction that fueled the local economy. Broadband services also provided a strong growth catalyst for exist small and medium businesses in the area through a growing labor pool.

North Carolina. Three years after installing a broadband infrastructure, Greene County, North Carolina has seen its school dropout rate decrease, with a majority of students going on to higher education. Its adult workforce is also retraining to learn new skills. As of 2007, the county had recruited six new businesses to the area, including commercial retail operators and technology companies. According to Chris Roberson, Assistant County Manager, "With the technology we have in place, we're closer to the rest of the country in broadband capacity than some of our more prosperous neighbors. We also have lower overhead in terms of rent and taxes." The Greene County experience has resulted in the county becoming a pilot county with various cities and counties across North Carolina coming to Greene County for ideas and to learn what the county has done.²

Maryland. An excerpt from Rural America's Emerging Knowledge Economy³ states "...To stimulate economic activity, Garrett County, Maryland, in cooperation with Garret County Community College, helped supply high speed access to the region's businesses and individuals through the Garrett Rural Information Cooperative. Many businesses have chosen to locate to Garrett County because of the telecommunications capabilities in the county... Building partnerships to overcome size and remoteness may be the primary key to sustaining rural knowledge-based activity."

Conclusion

While broadband may not be a universal remedy for spurring economic growth, it provides a foundation that can empower local businesses, educators, health professionals and governments to stimulate economic productivity and provide substantial benefits to consumers and the overall economy. It gives leaders access to new ideas, technologies and information that can transform the economy. Broadband is the central nervous system of today's economy.

Footnotes:
¹ S.E. Gillett, W.H. Lehr & M. Sirbu, Measuring Broadband's Economic Impact, Final Report (Feb. 28, 2006)
² The Economic Development Impact of Municipal Wireless, July 2007, by Craig Settles, Successful.com
³ August 2005, by Jason Henderson and Bridget Abraham