Can Broadband Save Rural America?

By Rick Schadelbauer

No doubt about it—rural America is shrinking. Over the course of the past century, as our economy has evolved from primarily agrarian to manufacturing to high-tech, the percentage of Americans living in rural areas (generally defined as areas with population densities of less than 1,000 people per square mile, and towns and villages with populations less than 2,500) has steadily fallen. According to the 1900 census, 60% of all Americans lived in rural areas. By 1950, that percentage had fallen to 36%. And by 2000, only 21% of the nation’s population was considered rural.

If this migration from rural America is to be slowed or reversed, the key will undoubtedly be jobs. In today’s information economy, many jobs can be done from virtually anywhere—as long as the worker has access to state-of-the-art broadband services. Absent the availability of high-quality broadband, however, rural America will not be able to leverage its estimable strengths to lure companies and workers.

Toward that end, two major initiatives have recently been taken that could dramatically hasten broadband deployment in rural areas. The first is $7.2 billion in funding made available through the American Recovery and Reinvestment Act of 2009 (ARRA) for loans and grants to qualified broadband infrastructure projects, with the specific goal of expanding broadband access to unserved and underserved communities throughout the United States. The second is the FCC’s recently unveiled national broadband plan, which sets as a goal ubiquitous broadband deployment by 2020. Together, these two initiatives have the potential to dramatically affect broadband deployment in—and, consequently, the economic future of—rural America.

Years Away From Extinction?

Often, the best and brightest rural students go off to college in urban areas, and never return. In a recent article in The Chronicle of Higher Education, Patrick J. Carr and Maria J. Kefalas wrote that “by the 21st century the shortage of young people [in rural America] has reached a tipping point, and its consequences are more severe than ever before. Simply put, many small towns are mere years away from extinction, while others limp along in a weakened and disabled state.”

Carr and Kefalas addressed the problem in detail in their book “Hollowing Out the Middle,” and propose a number of potential solutions for slowing, if not reversing, the rural exodus. These include offering aggressive tuition breaks for medical students who commit to return to rural areas after graduation, embracing immigrants in rural areas and focusing curricula at the local community college level on skills and knowledge—such as computer technology, green energy and sustainable agriculture—that will better serve those rural students who are likely to remain after graduating.

The availability of high-quality communications technologies also is key. Widespread broadband availability not only plays a significant role in the solution to the problem of people leaving rural areas, but it also would benefit current rural residents. As Carr recently told Newsweek, “You don’t have to build amenities just to lure people. You should be building amenities for everybody. Having digital infrastructure and having abundant opportunities for leisure should be something for the commonweal.”

Good News

On a positive note, today’s young people don’t seem to be taking the brain drain as a foregone conclusion. According to the Foundation for Rural Service’s “2009 Rural Youth Telecommunications Survey,” 60% of respondents indicated that they would consider living in a rural area after graduation, while only 13% ruled out the possibility altogether. Tellingly, however, 45% said that the availability of a variety of telecommunications services would be an important factor in determining where they will eventually live. Asked what they considered “essential” telecommunications services, 66% of survey respondents chose broadband Internet, second only to the 82% of survey respondents who cited cellular telephone service.

Clearly, young people don’t have an aversion to rural America per se. What tends to lure them away are the opportunities to be found in the cities that simply don’t exist in rural areas. Bringing some of those opportunities to rural areas—while maintaining the unique qualities of rural living—will play an important role in slowing, if not fully stemming, the tide of rural youth moving to the cities.

The Rural Advantage

Proponents of rural America have long cited the numerous advantages to living in less populous areas: lower housing costs, lower crime rates, less traffic, better air quality and an overall lower cost of living. “Our community has great schools, an airport 10 minutes away, and low housing costs,” said Wayne Pearson, former president of the Smethport, Pa., Chamber of Commerce. “You can buy a four-bedroom house in Smethport for $70,000.”

There is much in rural America to lure businesses, as well. “Businesses are attracted to our area today because we are one of the few places in the nation that remains above the economic fray,” said Kelvin L. Hullet, president of the Bismarck-Mandan, N.D., Chamber of Commerce. “Our real-estate prices are stable, we had limited exposure to subprime mortgages, our unemployment rate is one of the lowest in the nation and the community continues to be ranked in the Forbes Inc. top 5 places for small businesses.”

“We’re promoting Smethport as a place to run an Internet business and, eventually, retire,” said Pearson. “Telecommuting is the future of the workplace. As the next generation of managers takes control, the concept of ‘face time’ will not be nearly as important as it has been in the past. If you can do your job from anywhere, why not choose small-town America?”

Businesses and workers cannot embrace rural areas, however, if they are unable to access the same kind of broadband infrastructure there that is available in nonrural areas. All of the natural beauty and affordable real estate in the world can’t make up for the lack of state-of-the- art broadband availability. “As a rural state, broadband is an essential component to doing business [in North Dakota],” Hullet said. “The world is no longer an isolated place and many of our companies are doing business internationally. Reliable communication is imperative to this business model.”

Boomerang Families

Although the rural brain drain may be robbing rural America of its young people, a fair number are returning after experiencing life in the big city. “While rural youth might move away after going to college, once they get married and decide they want to raise a family, we’re seeing them come back,” said Chase Gentry, executive director of the Clovis (New Mexico) Industrial Development Corp. “They realize that they want to raise their children in a small-town atmosphere.”

Kefalas concurs. “There are people maybe with young families or who tried urban living and wanted to opt out and try something else, who could be lured to the region,” she told Newsweek. “Maybe not every 22-yearold, but maybe a 32-year-old who would think, ‘This is great. I can raise my kids, I can buy a gigantic house. And as long as I have the digital infrastructure, I can telecommute. I can have a very good quality of life.’” Absent high-quality broadband access in rural areas, however, there may be no decision to be made.

Broadband to the Rescue

Recognizing the tremendous importance of broadband infrastructure to the future of rural communities, numerous NTCA member companies already have taken significant steps toward bringing broadband to rural America. According to the “NTCA 2009 Broadband/Internet Availability Survey Report,” 98% of survey respondents are offering broadband to some portion of their customer base. Additionally, two programs that are part of ARRA— the National Telecommunications Information Administration’s Broadband Technologies Opportunity Program (BTOP) and Rural Utilities Service’s Broadband Initiatives Program (BIP)—have begun to award loans and grants to qualified broadband infrastructure projects, with the specific goal of expanding broadband access to unserved and underserved communities throughout the United States.

The winners of funding in the early rounds of BTOP and BIP awards already have been announced. For example, Buggs Island Telephone Cooperative (Bracey, Va.) has been awarded a $19 million BTOP grant and $5 million match to bring high-speed affordable broadband services to 15 underserved counties and the cities of Emporia and Franklin in south central Virginia. “We welcome broadband in our community because it will create jobs and improve the overall quality of life,” said Bill Hodge, executive director of the Emporia-Greensville Chamber of Commerce.

Thanks to the funding made possible by the broadband stimulus program, other rural communities will soon be experiencing the opportunities offered by broadband, as well. Clovis, N.M., for example, expects to benefit from the $11.3 million BTOP grant awarded to ENMR Plateau to light a 1,600-mile ring of fiber throughout the state and to construct 74 miles of new fiber. In Steele, N.D., BEK Communications Cooperative received a $2 million grant and $2 million loan to provide fiber to the premises to underserved homes and anchor institutions in Burleigh County. In Peetz, Colo., the Peetz Cooperative Telephone Co. has received a $1.5 million BIP grant to deploy broadband infrastructure in and around the Peetz community. Dozens of other similar awards have been announced that hold the potential for having a significant near-term impact on rural broadband deployment.

The stakes for rural America are quite high, indeed. In a January 2010 Public Policy Institute of California report analyzing the impact of broadband deployment on economic

development, Jed Kolko estimated that during the years from 1999 to 2006, an area moving from no broadband providers to one to three providers would achieve overall employment growth of 6.4%. Kolko also estimated growth in the working age population of 2.4% resulting from the introduction of broadband into an area over the same period. Most employment growth would occur in management of companies and enterprises; utilities; professional, scientific and technical services; finance and insurance; and administrative and business support services. Significantly less growth would be expected in public administration; arts; entertainment and recreation; educational services; manufacturing; and retail trade.

Rural telcos know the communities within their service areas extraordinarily well, and have a proven track record of serving their needs. Small, locally owned companies are uniquely situated to facilitate the deployment of broadband to rural areas. Businesses, in particular, tend to appreciate the personal touch that small rural telcos can provide. “Locally owned cooperatives are at the table working with us, and are able to provide quick solutions to any problems we might have,” said Clovis Industrial Development Corp.’s Gentry. “We can pick up the phone and talk to the CEO any time, day or night. The bigger the company, the harder it is to get someone on the line.”

Up the Road

The migration of U.S. population from rural to nonrural areas is a long-term trend that some claim may threaten the future viability rural America. While broadband provision in and of itself will not be the “magic bullet” that will reverse the erosion of the rural population, it can be an important part of slowing, and potentially reversing, the trends that are working against efforts to make rural communities thrive again.

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