Broadband׳s contribution to economic growth in rural areas: Moving towards a causal relationship

This paper uses recent data on both broadband availability and adoption to empirically gauge the contribution of broadband to the economic growth of rural areas of the United States over the past decade. Availability data from the National Broadband Map aggregated to county level is used in conjunction with county-level adoption data from Federal Communication Commission. Economic variables of interest include median household income, number of firms with paid employees, total employed, percentage in poverty, and the percentage of employees classified as either creative class or non-farm proprietors. A propensity score matching technique (between a “treated” group associated with various broadband thresholds and a control group) is used to make preliminary causal statements regarding broadband and economic health. Growth rates between 2001 and 2010 for different economic measures are tested for statistical differences between the treated and non-treated groups, restricting the analysis to non-metropolitan counties. Results suggest that high levels of broadband adoption in rural areas positively (and potentially causally) impacted income growth between 2001 and 2010, and negatively influenced unemployment growth. Similarly, low levels of broadband adoption in rural areas lead to declines in the number of firms and total employment numbers in the county. Broadband availability measures (as opposed to adoption) demonstrate only limited impacts, suggesting that future broadband policies should be more demand-oriented.     

Price elasticity of demand for broadband: Evidence from Latin America and the Caribbean

In this study the authors analyze fixed broadband retail prices in Latin America and the Caribbean (LAC), and provide estimates about the effect of price changes on broadband adoption. The analysis is based on a survey of plans and tariffs conducted by the authors during Q2 2010. Their results suggest that fixed broadband services in LAC are generally expensive and of poor quality when benchmarked against Organisation for Economic Co-operation and Development (OECD) countries, although there is significant variance between markets in the region. In order to isolate the effect of prices on broadband adoption they use an instrumental-variable approach. Their findings show that broadband demand is relatively elastic to price in LAC but not in the OECD. They estimate that an average price reduction of 10% would result in an increase of almost 22% in the penetration rate in LAC, equivalent to almost 8.5 million additional broadband connections. Several policy implications result from these findings. First, national broadband policies in LAC should pay a closer attention to a deficit of competition in fixed broadband services, as households and firms face high prices for poor quality services, thus deterring adoption. Second, while their findings generally suggest that price reductions could significantly increase penetration, they elasticity estimates reveal that price effects might not be sufficient to achieve the penetration goals set in national broadband plans. This validates the need for complementary policy strategies that affect other determinants of broadband demand. The example of Brazil is used to illustrate this finding.     

Broadband achievement index: Moving beyond availability

High-speed access to the Internet enhances economic prosperity, social development and global competitiveness. Significant progress has been made in broadband deployment in the last decade. Nevertheless, there are increasing gaps in broadband adoption, use and speed between, as well as within, the states. Federal and state legislators and regulators currently use a number of indicators such as adoption, availability and speed to track states’ progress in broadband diffusion in order to design appropriate policy responses. Single indicators, however, when analyzed individually, fall short of capturing multi-dimensional aspects of broadband diffusion and, thus, do not provide an integrated and easily comprehensible picture of states’ advancement. To monitor states’ overall progress it is useful to aggregate various indicators into a composite index that could measure the overall extent of broadband diffusion. A composite index can also provide with an important benchmark for designing policies to improve states’ overall performance. This paper offers a flexible framework for benchmarking states’ achievement in broadband diffusion by proposing a composite Broadband Achievement Index (BAI). The index combines several key performance indicators: broadband availability, adoption, competition, speed and the dispersion of broadband adoption within the states utilizing FCC's Form 477 data and the recently collected census block level broadband availability data from NTIA. The purpose is to provide a more comprehensive picture of where the states stand in their evolution toward high-performance America by measuring each state's current broadband achievement relative to other states and providing an important benchmark for assessing state-specific needs. The indicators are combined using the Benefit of the Doubt (BOD) methodology (Cherchye, Moesen, & Van Puyenbroeck, 2004). The methodology is founded on the premise that, absent a consensus on social policy priorities, that are, on which indicators are more important and should be given higher weights in the index, each state is granted leeway for deciding how to weigh its own indicators and the most favorable weights for indicators are determined for each state. A good relative performance in a particular dimension is seen as revealed evidence of setting high state policy priority to that indicator, when each state's specific policy priorities are unknown. Additionally, the Second Order Stochastic Dominance (SOSD) methodology is used to compare the dispersion of adoption in the states. Using SOSD the states are ranked under the assumption that proportionally higher and more equally distributed adoption rates are better.     

An evaluation of the Connected Nation broadband adoption program

Closing the digital divide and increasing broadband adoption within households and communities continues to be a target for government and nonprofit groups. While a large number of studies have examined policies and programs aimed at improving broadband infrastructure availability, little analysis to date has focused on evaluating efforts to increase adoption. One of the most well-known programs focused on adoption is Connected Nation, which partnered with 14 states to provide local curricula aimed at raising residential connection rates. This analysis uses a generalized difference-in-difference methodology to evaluate the effectiveness of the Connected Nation program in 5 states during 2012 and 2013. The results indicate that participation in the Connected Nation program had no significant impact on broadband adoption rates. This paper represents a rigorous evaluation of one of the most well-known adoption-oriented programs and emphasizes that measurable impacts of such efforts may not accrue over the short term.     

Accelerating the development of Latin American digital ecosystem and implications for broadband policy

In the past ten years the Latin American and Caribbean region has been advancing in terms of various digitization metrics, such as the deployment of broadband infrastructure, and the adoption of the Internet and social media. However, despite the significant progress in terms of digitization of consumption,¹ the region faces still some important development challenges of its digital economy. This paper attempts to identify what the future challenges are for Latin America and the Caribbean, which raises a number of research and policy questions: (1) How close is consumer digitization in Latin America and the Caribbean to the levels observed in industrialized countries? (2) How should Latin America and the Caribbean address the broadband and Internet demand gap of the non-adopting population? (3) Are current digitization trends homogeneous across countries in the region or do we observe a divergence across countries, indicating some advanced nations approaching industrialized country performance, while others lagging? (4) If infrastructure and consumer adoption of certain digital products and services is evolving at a fast pace, what are the upcoming digitization challenges? (5) If broadband is a critical lever for the development of digitization, what are the policies to be implemented by Latin American and Caribbean governments to maximize investment for deployment of last generation technologies and promote adoption? To answer these questions the authors have developed, with support of CAF Latin American Development Bank, a comprehensive digitization index. This new index is used to assess the development of Latin America and the Caribbean region vis-à-vis industrialized countries. On this basis, an econometric model is developed to measure the economic development impact of digitization. Zeroing in on broadband as a critical lever for the development of the digital economy, a set of infrastructure investment and adoption goals is defined for different countries in the region. Finally, public policies are recommended to achieving the established goals.     

The broadband digital divide and the economic benefits of mobile broadband for rural areas

Broadband is becoming increasingly important to national economies and the personal lives of users. However, broadband availability and adoption are not diffusing in rural and urban areas at the same rates. This article updates the rural broadband digital divide, with special attention paid to mobility. Empirical estimations of broadband provision and usage in the US show that rural areas have fewer high-speed fixed and mobile providers but more slower-speed fixed providers than urban areas. While rural availability of mobile broadband is lower than in urban areas, it still helps fill in gaps in fixed broadband coverage in rural areas. The rural gap in fixed broadband usage remains, but the mobile broadband usage gap disappears after controlling for household demographics. The raw broadband usage gaps between rural and urban households are proportionally greater for low-income households. The potential for mobile broadband to benefit rural areas through economic development is also examined.     

Demand-side broadband policy in the context of digital transformation: An examination of SME digital advisory policies in Wales

Increasing attention has been paid to the potential for demand-side policies to stimulate use of broadband networks. Such policies form part of the increasing digitalisation of the economy and wider society. This is an area where governments are also facing challenges in their efforts to maximise the efficiency and effectiveness of their policies. The paper sheds light on the impact that the transition towards digital has had on demand-side policies supporting the adoption of broadband and digital technologies by SMEs, and draws out the implications for policy, using a case study of Wales in the UK over a ten-year period. It shows that digitalisation has seen policy mechanisms and messages evolving as policy makers have created a more integrated and multi-channel approach to the delivery of advisory support to SMEs, but that the emergence of multiple types of actors (large digital platform businesses) and ongoing digitalisation are adding complexity to policies and their interaction with other forms of public and private business support.     

Broadband policy assessment: A cross-national empirical analysis

The aim of this research study is to provide some insights into the effectiveness of different policy choices to promote broadband. This problem is addressed by examining them in the light of the results of an exhaustive cross-national empirical analysis that explores the factors influencing broadband supply, demand, and adoption. The results suggest that technological competition and the low cost of deploying infrastructures on the one hand and the predisposition to use new technologies on the other, appear to be the key drivers for broadband supply and demand, respectively. These results allow an inference that policies aimed at fostering these drivers seem to be the most effective.     

Exploring geographic variation in corporate broadband adoption; evidence from Irish small- and medium-sized enterprises (SMEs)

Despite its growth experience, Ireland still lags behind in international league tables on broadband adoption and within Ireland great disparities exist between central and peripheral regions. This paper explores the context-specific determinants of broadband adoption among Irish small- and medium-sized enterprises (SMEs), attempting to shed some light on the sources of the considerable geographic variation in particular. Drawing from determinants of broadband adoption identified in literature the authors develop a number of plausible hypotheses. Using cross-section data from a ComReg survey of Irish-based SMEs, a logit model of broadband adoption is estimated. Among other factors, a company's industrial sector and other demand proxies are good predictors of broadband adoption. Controlling for other factors, regional ISP market concentration appears to be negatively associated with the probability of broadband adoption. It is argued that, in the absence of more detailed information, statistics on regional-level market structure could be a promising indicator of the supply-side.     

Broadband speed and unemployment rates: Data and measurement issues

We examine the effects of broadband speed on county unemployment rates in the U.S. state of Tennessee. We merge the older National Broadband Map dataset and the newer FCC dataset in lengthening our broadband access data over the period 2011–2015. Extending the dataset improves the precision of the estimates. Our panel regressions control for potential selection bias and reverse causality and show that broadband speed matters: unemployment rates are about 0.26 percentage points lower in counties with high speeds compared to counties with low speeds. Ultra-high speed broadband also appears to reduce unemployment rates; however, we are unable to distinguish between the effects of high and ultra-high speed broadband. We document beneficial effects of the early adoption of high speed broadband on unemployment rates. Better quality broadband appears to have a disproportionately greater effect in rural areas.     

Population grid-based assessment of the impact of broadband expansion on population development in rural areas

This paper estimates the effect of the expansion of broadband infrastructure, which enables high-speed Internet, on population development in panel of Finnish areas in the period 2010–2018. The study differs from previous studies in that it uses accurate statistics on the availability of broadband in 1 km * 1 km population grids. Therefore, the impact of broadband availability on rural development is evaluated more accurately than previously. The results of the Difference-in-difference (DiD) regression analysis show that the availability of broadband reduces depopulation of remote and sparsely populated rural areas. In this respect, the telecommunication policy in Finland has been successful, and the findings encourage the expansion of broadband infrastructure in rural areas.     

User motivation for broadband: A rural Danish study

The diffusion of broadband has gained much research attention, in particular in relation to the urban-rural divide. However, research has focused primarily on the supply side of broadband roll-out, while the demand side has been somewhat neglected. This article illustrates the complexity of broadband adoption and argues that a rural adoption approach needs to draw on existing social meaning systems. By focusing on the user motivation for broadband, this article presents findings from a qualitative study of rural residents. Means-end theory was used as a framework for understanding these motives. Furthermore, the article adapts the FCB grid as a tool for both public and private providers of broadband to examine effective rural promotion strategy.     

The Digital Divide and Other Economic Considerations for Network Neutrality

In its 2016 Broadband Report, the Federal Communications Commission (FCC) recognizes that a rural/urban digital divide remains prevalent—especially with respect to broadband adoption. It also highlights several policies that the FCC has undertaken purportedly to reduce the divide, including the 2015 Open Internet Order (OIO)—in which the stated intent is to enforce “network neutrality.” However, long before the OIO, studies have raised concerns that network neutrality policies will discourage investment by internet service providers (ISPs) in broadband infrastructure, to the detriment of broadband accessibility, and may increase average consumer costs—both of which would only further exacerbate the digital divide. In this paper, we provide a holistic analysis of the effects of net neutrality on the digital divide; in doing so, we draw from recent economic research on this issue. Our goal is to present a range of economic considerations that should be taken into account when evaluating the overall impact of the OIO, with particular attention to its impact on the digital divide.     

Who replies to consultations,and what do they say? The case of broadband universal service in the UK

Over the last decade or so, access to broadband services has become increasingly important. While many in the UK already benefit from the provision of broadband, some, especially those located in more rural and remote areas, do not – they may not be able to access the Internet and when they do, their connection and consumer experience may be poor. After trying to resolve this through a stream of different initiatives, the UK government announced a broadband universal service obligation (USO) of 10 Mbps in late 2015. Ofcom, the telecommunications regulator, launched a consultation in April 2016 and sought the views of interested parties. The consultation attracted considerable interest, but after the submissions from orchestrated campaigns are discounted just over 100 responses remain. But who contributed and what did they say? To explore these two questions, this paper adopts a qualitative approach, using NVIVO, to analyse the responses to the consultation. We show that contributions were highly diverse, reflecting both the complexity of the issue as well as its politicised nature. A lack of agreement among the responses is revealed and divergent views on key issues like the appropriateness of 10 Mbps, whether this should change, how it should be funded or what technologies should be used exist. In this paper, we provide a critical discussion of and derive implications for the broadband USO. We tentatively conclude that those in rural and remote areas that the USO intends to help are caught between two countervailing forces – speed and cost deployment – that interact to ensure that whatever resolution to provide broadband access, some will likely be unhappy.     

At home on the outstation: Barriers to home Internet in remote Indigenous communities

Indigenous Australians living in remote areas have little access to the Internet and make little use of it. This article investigates the various dimensions of Internet take-up in remote Indigenous communities in Australia and considers the implications for broadband policy. It focuses specifically on the circumstances and experiences of three remote Indigenous communities in central Australia. Residents in these communities provided significant insight into the social, economic and cultural aspects of communications access and use. This evidence is used to examine the drivers and barriers to home Internet for remote Indigenous communities and to discuss a complex set of issues, including: the dynamics of remote living, economic priorities, cultural engagement with technology, and the characteristics of domestic life in remote Indigenous communities.     

Estimating willingness-to-pay for broadband attributes among low-income consumers: Results from two FCC lifeline pilot projects

Recent studies have confirmed that broadband adoption (as opposed to simply having access to broadband infrastructure) is positively linked with economic growth. In light of this, federal policy efforts have switched from focusing mainly on the provision of infrastructure to more explicit adoption-oriented efforts. One of those efforts was the Federal Communications Commission’s (FCC’s) Low-income Broadband Lifeline Pilot Projects, which ran from 2013 to 2014. The program worked with 14 private telecommunications firms to subsidize household broadband adoption for low-income households by providing discounted monthly and equipment costs. Low-income households are an important component of the broadband adoption puzzle: between 2003 and 2013, the adoption gap between low-income and high-income households actually increased by 5% points. This paper focuses on two specific FCC Broadband Lifeline Pilot projects that allowed consumers to make choices among different options, such as data allowance, speed, and wireless vs. wired connections. Conditional logit models are used to develop estimates of consumer’s willingness-to-pay for specific broadband attributes. The results indicate that low-income consumers have a preference for smartphone connections (versus aircards) – and that this effect is even more pronounced for those households earning less than $20,000; that low-income consumers have a preference for wired connections (versus wireless); and that there is evidence that low-income consumers are willing to pay for an extra GB of data each month – but not for the speed of their connection.     

Broadband expectations and the convergence of ranks

Broadband Internet service to widely held to be a significant contributor to economic development and global competitiveness, and comparison of adoption rates across countries are common. This paper presents evidence that the relative broadband Internet adoption ranks across the Organisation for Economic Co-Operation and Development (“OECD”) countries are converging to the wireline telephone adoption ranks in the mid 1990s. This was a time when wireline telephone service had reached maturity, but before consumers began to abandon traditional telephone services for mobile services and Internet telephone technologies. As such, in the absence of better data on household adoption, wireline telephone rank is a useful proxy for a country's ultimate fixed-line broadband penetration rank. Having such an educated guess available regarding broadband rank should reduce the amount of anxiety over rankings, since similar rankings across the two services implies suitable broadband performance. Large departures, alternately, may be a cause for concern or delight. Like prior analyses, the findings suggest that the adoption of communications services is largely an economic and demographic issue.