December 15, 2011 By Craig Settles
Plenty of articles have been written that assert one of the main benefits that broadband delivers is the ability to impact economic development. However, are we getting the complete picture of what it takes to achieve this goal?
I don’t think we are. The absence of key details impedes communities’ attempts to generate economic outcomes.
Economists, the FCC, a parade of private-sector companies and industry trade associations are frequently cited — along with all sorts of numbers that claim to prove the economic value of broadband. But one source it seems you don’t see enough is economic development professionals, the people who work day in and day out to save, maintain and grow local economies.
Several years ago I started partnering with the International Economic Development Council (IEDC) to take an annual survey of professionals in this field. I’ve posed to them the commonly referenced economic outcomes and the main broadband issues in order to learn how accurate they think the conventional wisdom of the moment is. Often the data contradicts the assumptions policymakers make about broadband.
The U.S. stimulus of 2009 awarded public, private and nonprofit organizations more than $7 billion to build new broadband infrastructure, create public computing centers and implement broadband adoption programs. Hundreds of millions more has been spent by private companies and other federal agency sources. Improving economic development is a driving force behind these investments.
It’s a little early in the infrastructure deployment process, though, and only a portion of the stimulus checks have been issued. That made it difficult to use this year’s survey to gauge the impact of stimulus-funded networks on local economies. But I did want to determine what economic outcomes we can hope to achieve in the next two or three years. My survey produced results that reveal several clues.
Here’s a sampling of this year’s findings and some of my thoughts on what these numbers signify:
1. Rural economic developers appear to be well ahead of their urban counterparts in the area of planning. Fifty-eight percent of rural respondents either have broadband strategies and tactics worked into their economic development plans, or are writing plans currently with these elements. Only 39 percent of urban respondents have done the same.
Given reports this year that many rural communities are shrinking and some are near death, it makes sense they’re being more proactive; they see broadband as the last best hope for survival. That said, urban areas shouldn’t get complacent about this type of planning. Broadband doesn’t impact economic development without planning.
2. “We need a gigabit” has become the rallying call for broadband supporters everywhere; rural survey respondents say that 100 to 120 Mbps is the minimum they’ll need during the next three years to impact their local economies.
I’m bullish on gigabit networks being a national goal, but this isn’t a universal need at the moment. A 100 Mbps network in small towns and rural counties has fewer concurrent network users to support than mid-size and large urban areas, so rural areas can be content with 100 Mbps. The reality is, a fiber network with smaller capacity is relatively cheap to ramp up to higher bandwidth.
3. While the FCC and other policymakers continue to try to make a silk purse from a 4Mbps sow’s ear, economic development professionals aren’t buying it. At least 92 percent see no economic impact coming from this minimum national “standard.”
4. “Finding a job” is one of the most frequently cited personal economic benefits of broadband for low-income populations. Economic development professionals, though, rate it at the bottom of the list of potential economic outcomes.
When finding a job is perceived as the major economic goal, the tendency for policymakers is to champion less robust networks, and computing devices with less horsepower and tiny screens. How much capacity do you need to scan job listings and send email? But when communities have large numbers of people with limited or obsolete skills, the greater goal is to use broadband to significantly beef up their skills or retrain them for different, more financially rewarding industries. This means distance learning, video and other complex high-bandwidth applications.
5. As expected, fiber is clearly seen as the leading broadband technology to attract businesses to a community. However, wireless is viewed as a strong contender for increasing the number of startups in a community.
6. Not all wired broadband technologies are equal. Whereas fiber networks are clearly viewed by survey respondents as having a greater impact than wireless on a range of economic outcomes, cable is viewed as only slightly more effective than wireless despite the industry’s PR and marketing efforts.
The primary message here is that, if communities have a choice they should go with fiber if it can be afforded. But if their only choice is cable or wireless, they might want to evaluate their wireless options. Stakeholders also should remember that not all wireless is equal, either. Rick Harnish, president of the Wireless ISP Association (WISPA), lays out the differences and why they matter in this interview on the radio talk show Gigabit Nation.
7. Perseverance is still important. Although 19 percent applied and didn’t win a stimulus grant, another 11 percent whose communities also didn’t win kept fighting for money and got their projects funded through state or other federal grants.
8. As the second decade of the new millennium moves along, 7 percent of respondents still only have dialup as their broadband option; 13 percent of rural respondents say they don’t expect to ever have broadband sufficient enough to impact economic development.
You can download the full survey analysis report. Every community is different, of course, so look at these findings as a starting point to extensive analysis of local conditions and broadband needs. What’s also informative is reading the written comments of 169 of the survey participants who offer advice on getting better broadband into communities that need it.
Craig Settles, host of radio talk show Gigabit Nation, is a broadband industry analyst and consultant who helps organizations develop effective broadband strategies. Follow him on Twitter (@cjsettles) or via his blog.
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