Fiber Broadband Boosts Income, Investment, and Business Investment in Rural America
Peer-reviewed economic study compared three different types of rural counties
Fiber broadband delivers economic benefits to communities, but how much of an uplift does the technology deliver to rural areas? A peer-reviewed economic study released on September 30, 2024, “Beyond Connectivity: The Role of Broadband in Rural Economic Growth and Resilience” by the nonprofit Center on Rural Innovation (CORI) provides evidence that fiber-fed broadband experiences enabled by local providers in those communities deliver a significant economic impact to better connected areas while enabling access to additional services that allow users to effectively leverage that resource. Meanwhile, comparable unserved communities experience economic stagnation with a loss of jobs, businesses, and population.
The study found that rural counties with high broadband adoption rates of over 80% have significant advantages over those with low usage, including 213% higher business growth rates,10% higher self-employment growth rates, 44% higher GDP growth rates, and 18% higher per capita income growth rates. These factors translate to attracting and retaining more businesses, generating more startup businesses, and an environment that fosters the growth of local businesses resulting in a stronger and more dynamic local economy.
“CORI’s economic study underscores the positive impact that reliable, high-quality, fiber-based connectivity can have on the success of our families, businesses and communities,” said Gary Bolton, president and CEO, Fiber Broadband Association. “Every community — especially those in rural environments — needs access to reliable, high-speed broadband services to compete in today’s digital economy and access modern applications for health care, education, employment and more.”
The study, sponsored by Fiber Broadband Association member Calix, NTCA–The Rural Broadband Association, and the Fiber Broadband Association, used primarily post-pandemic data from 2020-2022.
“Notably, we find evidence that existing residents are the primary beneficiaries of these economic gains (rather than new arrivals),” commented study author and economist Amanda Weinstein, Ph.D., director of research at CORI, in a press release announcing the research. “In stark contrast, areas with the lowest levels of broadband utilization have lower income growth rates and are more likely to experience business closures and population decline. These findings highlight the critical importance of both expanding broadband access and fostering its effective utilization to drive economic growth, enhance resilience, and build a more prosperous future for rural communities.”
Based in Vermont, CORI has been partnering with rural leaders to build tech economics that support scalable entrepreneurship and lead to more tech jobs in rural America. The non-profit has been working on how to close the rural opportunity gap since 2017, with reliable high-speed broadband availability among its top concerns.
“If you saw the divide that emerged after the 2008 recession between urban and rural places, you can trace that back almost completely to the winners and losers the tech economy as well as globalization fueled by technology and automation,” stated Matt Dunne, founder and executive director of CORI. “We believe that you can take that head on, and in the age of the internet, there should be no limit to where tech economy jobs and startups can take place. Now, of course, you need to have some fundamental pieces like broadband to be able to be on a level playing field, as well as [have] things like co-workspaces, vibrant downtowns, and then the kinds of programming that would support tech talent development so that there’s more of that talent locally, even working for non-tech kinds of organizations or helping with startups.”
How much does high broadband adoption benefit rural counties? If you start at the most basic level of the individual, per capita income growth rates were18% higher from 2020 to 2022 for high broadband utilization counties, amounting to an increase of nearly $500 per person each year on average for county residents. For a household of four people, that translates to $2,000 per year on average – a significant amount in a rural setting.
“You’ve got individual wealth creation with that income increase and then you’ve got longer term community wealth creation with those business starts,” said Dunne. “Those business starts are what really moves the needle in strengthening the local economy.”
As noted earlier, higher broadband adoption rates lead to jobs being created in two different ways. Rural counties with higher broadband use saw more businesses opening, while similar counties with low broadband utilization lost an average of three or more businesses each year. Losing businesses typically means fewer jobs for residents, leading to a noticeable population decline.
Broadband also aided individuals and businesses through remote work and collaboration. Workers didn’t have to live close to an urban center and the availability of remote work widens the pool of potential employees far beyond those available within practical commuting distance.
A 10% higher self-employment growth rate for those counties with high broadband adoption translates to significantly more business startups, since the utility significantly lowered barriers to starting a business for rural residents. Entrepreneurs are able to use broadband to get access to global markets and essential resources for operation and growth, such as banks, small business loans, and venture capital. In addition, broadband is a tool to conduct market research, leverage e-commerce platforms, and deploy digital market strategies to expand their customer base.
The cliché of a virtuous cycle may not quite apply, but certainly high broadband use generating higher per capita growth rates, higher business growth rates, and higher –self-employment growth rates led to higher GDP growth rates, which creates a stronger and more dynamic economy that in turn fosters local businesses and innovation.
It wasn’t just the medium of fiber and physical connectivity that led to increased success, but all the involved parties in the community working to get the most out of the resource for the benefit of the community, such as the efforts co-operatives are making to educate their members and businesses about the benefits of broadband.
“We saw all these outlier communities and places where the broadband and fiber seem to have a really outsized impact,” said Weinstein. “The broadband service providers were not only contributing big investments in fiber and broadband, but they went further to actually create partnerships in the community that would help incubate those business startups. They had additional services, products, and programs that they provided to help businesses. They had additional partnerships with the community and places like the Chamber of Commerce, and worked with the [local] university to create that incubator.”
One service provider featured in the report that is delivering outsized community impact is Paul Bunyan Communications in Beltrami County, Minnesota. Paul Bunyan supports initiatives such as the firm’s GigaZone Gaming Championship and TechXpo, and Greater Bemidji’s LaunchPad, a business incubator.
“They have the largest eSports championship in any rural community in the country,” said Weinstein. “It’s exposing a lot of kids to these technologies, and they are pairing it with a technology expo, where new tech companies are there to showcase what they do. As the technology gets integrated with young people, broadband adoption rates for households go up because they’re helping expose the adults in their home to this technology – they’re not using their allowance to pay for broadband at home – it’s their parents).”