Conventional wisdom, according to some Washington, D.C., broadband policy wonks and industry players, says that one of the biggest economic benefits of highspeed networks is that they help the unemployed find jobs. Is this true? Eighty-nine percent of economic development professionals say no.
Conventional wisdom, as reflected in a $500 million block of broadband stimulus money, is that computing centers and adoption programs are the broadband solutions that will have the biggest economic impact in underserved urban areas. Of course this is true, right? Seventy-nine percent of the pros say no.
And last, conventional wisdom, as measured by column inches written in the media, is that a gigabit network is what everyone needs. Surely that can’t be wrong, can it? Actually, the highest percentage of economic developers said 100 Mbps is the minimum needed by 2014, and the second highest percentage believe that 25-50 Mbps is the minimum we need by 2014. They may feel a gigabit is needed in the long term, but survey respondents provide a little reality check on short-term needs, which quite a few believe isn’t being met and won’t be met anytime soon.
Broadband Fact Checking
When it comes to broadband and economic development, much of what's said doesn't jive with the reality observed by those who improve local economies for a living. Among policymakers and large incumbents’ marketing teams, some “bold weavers” spout numbers and stats that seem woven from whole cloth, indicating broadband is responsible for “X” million new jobs or “X” billion dollars. But it’s difficult, if not impossible, to draw clear lines between grandiose numbers and local economic realities, and subsequently create good policy. Then you have the “assumptive forecasters” who tout economic outcomes that seem reasonable, but whose validity is based on assumptions and anecdotal evidence. Case in point is the conventional wisdom just cited.
So how do we survive the deep sea of numbers and the devilish, but well promoted, assumptions that set expectations higher or lower than they should be? Go to the pros.
The 2012 Moving the Needle Forward on Broadband and Economic Development report details a national survey of economic development professionals, conducted by myself in partnership with the International Economic Development Council (IEDC). The survey was completed by 365 economic developers. Besides the quantitative data, they offered some in-depth commentary on prospects for an increasing number of communities to build their own broadband networks. The following are a handful of the survey's findings.
- More than 60 percent of economic developers believe selling pre-paid subscriptions that cover the cost of building out a broadband network has a fair to good chance of being successful.
- 41 percent to 48 percent of respondents believe broadband can increase the number of home-based businesses.
- 18 percent of respondents have insufficient speeds to produce economic outcomes listed and have given up on a solution. Another 13 percent do not have enough speed to get the job done, but are actively trying to find or create a solution.
- In a related finding, 43.5 percent of respondents’ jurisdictions exist under duopoly conditions, and 15.5 percent are in communities that deal with a broadband monopoly.
- About 12 percent of respondents say their communities plan to start building broadband networks in the next 18 months, another 22 percent hope to build a network at some point in the future.
Why Some Aren’t Down With Broadband
Another piece of conventional wisdom, or at least a logical assumption, is that local government officials would be pretty supportive of broadband once they see its potential to improve the local economy. Don’t take it for granted. During a Gigabit Nation broadcast that examined this survey report in greater detail, an economic developer said local officials are opposed to supporting broadband even when it was explained that broadband could increase home-based businesses and remote workers. Any economic development activity that does not directly result in new organizations moving to their town and paying property taxes is considered a distraction.
This may not be an isolated situation. At IEDC’s annual conference held in September, a consultant offered one possible reason for why a higher percentage of survey respondents felt broadband made local companies more competitive vs that it improved depressed business districts. You’d think there would be equal support for both since one outcome can lead to the other. However, “Everything’s about job creation. In many agencies that’s the primary way staff are evaluated, by how many jobs they bring to the community and how quickly.”
Don Mitchell, who works in government administration in Norfolk, Va, adds a constituent perspective. “Based on what I've seen locally, economic developers here mostly think and act in terms of traditional jobs and businesses that require a physical facility,” he says. “They ignore the fact that improving individual economic development, while not as lucrative to the tax base in the short term, will lead to economic betterment for the community.”
So, the moral of this story is that we need to go to the people who know best about the mechanics of improving local economies, but at the same time, we have a lot of educating to do of both elected officials and economic developers. The survey attempts to develop a snapshot of broadband’s impact on economic development; it’s not an exercise designed to record the total range of thinking among the pros. Use the survey as a starting point in getting your stakeholders on board with broadband, and/or as a reality check to gauge if they are moving generally in the right direction.
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