From Foresight, No. 45
published 2006
Though the Internet has been used most commonly for e-mail correspondence, a process generally requiring little bandwidth, the Web has become an increasingly utilized means of delivering multimedia content, from music, animation, and television programs, to college courses, remote database management, and even medical treatment. The bandwidth required for accessing such data-rich material taxes—if not exceeds—the capacity of dial-up modems. Broadband technology, however, allows for data transfer rates much faster than dial-up modems, enabling access to the Internet’s most robust content.
While often touted anecdotally for its convenience and capabilities, broadband’s effects on communities have received coverage more qualitative than quantitative. But a recent study from the Massachusetts Institute of Technology highlights economic gains attained in communities with available broadband. The study’s authors compare economic indicators in zip codes with available broadband and those without, spanning 1998 to 2002. Areas that offered high-speed Internet access by December 2003 outperformed the other communities, experiencing significant benefits in real estate values and job market growth. In communities with broadband, rental property rates rose 6 percent higher in 2000, the number of establishments and the proportion of IT-intensive establishments grew an additional 0.5 percent, and the employment rate received a 1 percent boost.(1) Though the results underscore the economic promise of high-speed Internet access, the promise will prove hollow if available broadband goes unused.
LaGrange, Georgia, represents a real-world example of broadband’s potential to transform a region’s economic outlook. Through a public-private partnership, the city installed two broadband networks during the 1990s and began offering free broadband to the entire community in 2000, earning it the Intelligent Community of the Year Award for 2000. The new infrastructure empowered LaGrange to attract IT companies, resuscitating a struggling economy that had long been dependent on the cotton market.(2) With the implosion of tobacco sales, LaGrange offers what could be a model for many of Kentucky’s communities.
In recent years, Kentucky has made great strides in expanding the availability of broadband Internet (see Figures 1 and 2). In December 1999, roughly 79 percent of the state’s population resided in zip codes where high-speed Internet access was available—though broadband was not necessarily available everywhere within these zip codes. Five years later, the proportion had grown to 98 percent of Kentuckians. But much like measures of income and educational attainment, the state showed a distinct urban-rural gap.
Figure 1: Number of High-Speed ISPs, by ZIP Code, December 1999
Figure 2: Number of High-Speed ISPs, by ZIP Code, December 2004
In December 1999, only 18 percent of Kentucky’s rural zip codes had at least one broadband Internet Service Provider (ISP), far behind the state’s metropolitan areas, 68 percent of which had at least some broadband coverage. Micropolitan areas and small towns also fell well below larger cities, but ahead of the rural regions.(3) By 2004, metropolitan and micropolitan zip codes were virtually tied—at 99 and 97 percent, respectively—as were small towns and rural areas—83 and 85 percent, respectively (see Figures 3 and 4). In the competitor states—which are listed in Figure 5—the percentages of metropolitan and micropolitan zip codes with at least one ISP were virtually identical to their Kentucky counterparts—99 and 96 percent, respectively. But small towns (94 percent) and rural communities (90 percent) fared far better.
Figure 3: Percentage of Kentucky Zip Codes with at Least One High-Speed ISP
Figure 4: Percentage of Zip Codes with at Least One High-Speed ISP, All Competitor States
Whereas Kentucky’s coverage rose dramatically, broadband use remained in the cellar. According to the Census Bureau, only 12 percent of Kentucky households had broadband in 2003, at a time when 98 percent of the state resided in zip codes where it was available (see Figure 5). Indeed, Kentucky lagged behind both the nation and most competitor states in terms of at-home high-speed Internet access. More recently, a survey by the University of Kentucky’s Gatton School of Business reported that 24 percent of adult Kentuckians have broadband at home. That same survey found that among Internet users in Kentucky with dial-up modems, the most common reasons for not switching to broadband concerned not its lack of availability, but rather its cost and an apathy to the technology.(4)
Figure 5: Percentage of Households with Broadband Internet, 2003
An initiative led by ConnectKentucky is at work to bring broadband coverage and use to the entire Commonwealth by 2007. Though statewide, the campaign operates on a county-by-county basis, seeking solutions for providing broadband coverage, raising awareness of the technology, and driving up demand for its availability. Though Kentucky ranks 42nd in the nation in terms of home Internet use, ConnectKentucky’s program stands as one of the nation’s leading efforts to cultivate the implementation of broadband technology.
Bringing broadband to rural areas and small towns, however, often faces an uphill battle, sometimes quite literally. Telecommunications companies often balk at the cost of connecting small towns to their networks out of fear that utilization will be insufficient to provide a return on their investment. Mountainous terrain, which dominates Kentucky’s eastern landscape, compounds the expense of connecting communities, making broadband access even more difficult to attain.
Kentucky’s small towns need not wait for the large telecoms to come calling. Some, like LaGrange, are taking the initiative and building their own networks. In this respect, Glasgow, Kentucky, has proven to be one of the state’s most innovative communities. The Glasgow Electric Plant Board serves not only the town’s power and cable television needs, but also supplies its broadband, and remains a city-run entity. Not only can Glasgow enjoy the advantages of high-speed Internet access, it also reaps the benefits of owning its broadband infrastructure.
Though the spread of high-speed Internet availability remains crucial, policymakers must additionally work to expand the actual use of broadband, addressing both its cost and the need to inform the populace of its benefits. Political, civic, and business leaders must recognize that in the 21st century, broadband will become as essential to an area’s economic well-being as traditional utilities. These leaders, in turn, must get involved in the process of both bringing high-speed Internet access to their areas and raising the public’s awareness of how this technology can improve their lives and transform their communities. Only then can the true promise of broadband be fulfilled.
* Mr. Schirmer is a Research Assistant with the Kentucky Long-Term Policy Research Center. Return to text.
1 William H. Lehr, Carlos A. Osorio, Sharon E. Gillett, and Marvin A. Sirbu, “Measuring Broadband’s Economic Impact,” Oct. 2005, Massachusetts Institute of Technology Program on Internet and Telecoms Coverage, 22 Nov. 2005 http://itc.mit.edu/itel/docs/2005/MeasuringBB_EconImpact.pdf. Return to text.
2 Greg Laudeman, “Usefulness: An Issue Lost in the Digital Divide,” Rural TeleCon ’05, Rural Telecommunications Congress, Lexington Convention Center, Lexington, Kentucky, 10 Oct. 2005. Return to text.
3 The 2000 standards of the United States Office of Management and Budget define metropolitan as an area containing a core population of at least 50,000 people; micropolitan areas contain more than 10,000 but fewer than 50,000 residents. Return to text.
4 Terry L. Childers, “The Fifth Annual UKeComm© Tracking Study,” 2005, Von Allmen Center for Electronic Commerce, University of Kentucky, 25 Nov. 2005 http://www.ukecomm.org/Downloads/UKecomm_ 2005_Survey.ppt. Return to text.