USDA: Rural Broadband Adoption Still Lagging Behind Urban Areas

With the issue of rural broadband access (or lack thereof) already in the news for positive reasons, a recent USDA-published Economic Brief entitled “Rural Broadband At A Glance” says that rural America “may be at a disadvantage in reaping the benefits of recent growth prospects because rural households are still less likely to subscribe to the Internet than are urban households.”

Citing stats from the 2010 U.S. Census Bureau, the report found that 62% of rural households and farms had home subscriptions to the Internet, compared with 73% of urban households. Additionally, with high-speed broadband service the current technology of choice among internet users, rural America is slightly behind its urban counterparts – 96% of urban to 92% of rural household broadband Internet subscribers.

However, according to Current Population Survey (CPS) data, rural Internet subscriber rates are not uniform across the country. On average, rural households in the Northeast and West are more likely to have some form of in-home access to the Internet, while households in the rural South are the least likely. According to several studies cited in the USDA brief, the regional disparity in subscriber rates reflects, to some degree, demographic differences such as income, education, and age. Rural household’s lower broadband subscriber rates may also stem from availability problems in rural settings.

And while broadband availability has become more prevalent in rural areas recently, many challenges remain for expanding service to households in remote areas.

According to the USDA, rural areas have, by their very nature, low population density, and lack the economies of scale that more densely populated urban areas enjoy. This makes the delivery of broadband Internet services more costly per customer, and 27% of rural respondents in the 2010 Census indicated it was too expensive in their area.

Mountainous terrain and increased exposure to harsh weather in some rural areas also drive up the per customer cost of delivering broadband service (although the Raven-designed Google high-tech internet balloons featured on the front page of PrecisionAg.com should help alleviate some of these concerns).

According to the report, the USDA’s Rural Utilities Service (RUS) has been increasing broadband access in rural areas through four programs:

  1. RUS’s traditional rural telecommunication program for improving or expanding infrastructure. The program lent over $5 billion to rural telecommunication service providers for improving and maintaining their communication infrastructure between 2001 and 2010. As part of the loan application, RUS requires that communications facilities receiving RUS financial assistance be capable of providing businesses and households with broadband Internet service.
  2. RUS’s broadband loan program (authorized by periodic Farm Acts—the Food, Conservation, and Energy Act of 2008 being the latest), which lent over $1 billion to rural providers to build broadband-capable facilities over the last decade.
  3. The Community Connect Broadband Grant Program, which services rural communities least likely to receive broadband service, has provided over $122 million in grants during the last 10 years.
  4. The joint U.S. Department of Commerce (USDoC), National Telecommunications and Information Administration and USDA RUS-administered broadband programs resulting from the 2009 stimulus bill provided more than $7.2 billion over 2 years. The USDoC administered $4.7 billion in grants for all parts of the country, while the USDA-RUS administered the remaining $2.5 billion for rural service providers and used these funds to leverage $2.3 billion in grants and $1.2 billion in loans. Most of the funds were used to provide new broadband systems, though $250 million was set aside for programs that directly attempt to encourage broadband Internet use.

In its conclusion section, the report states: “While research suggests that broadband has potential economic value for rural communities, variability in the availability and use of broadband infrastructure across the rural-urban landscape remains a challenge. A major source of the shortfall in rural broadband subscriptions, however, is household preference (driven, to a certain extent, by affordability). Federal, State and local programs are starting to address this issue since broadband’s perceived economic benefits cannot be fully achieved unless it is used. There is also a growing perception that the higher the proportion of households that subscribe to broadband, the greater the benefits for the national and regional economy.”

Go here to access a .pdf of the full USDA brief.

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