Internet Use Vital to Rural Economy, USDA Report Finds

WASHINGTON, March 3, 2009 – Most rural Americans do not subscribe to high speed internet services, according to an Agriculture Department report released last week.

WASHINGTON, March 3, 2009 – Most rural Americans do not subscribe to high speed internet services, according to an Agriculture Department report released last week.

“Rural Broadband at a Glance,” published last Thursday by the Agriculture Department’s Economic Resource Service, cites Census Bureau data that showed a 12 percent gap in in-home internet access between urban households and their rural counterparts. Of urban households, 64 percent have broadband versus 52 percent for rural households.

Still, most of those rural households can only access the Internet through a dial-up connection, said the report. That leaves them unable to use many rich content applications – or even most anti-virus software.

The number of broadband service providers operating in rural areas increased rapidly between 2000 and 2006, said the report. The Federal Communications Commission said that there has been a 60 percent increase in the availability of broadband between 2000 and 2006.

However, the FCC source data used to calculate broadband availability determines such availability by the number of providers within a given zip code.

The methodology has been criticized for its tendency to overcount broadband penetration, particularly in rural areas. Within rural areas, ZIP codes can be quite large. As a result, the statement that broadband services are available somewhere within a ZIP code does not necessarily reflect its availability everywhere within the ZIP code.

The lack of more granular data makes it difficult to truly determine the availability rural broadband, said the report.

Still, the researchers found government policies designed to increase the penetration of high-speed access – like the FCC’s Schools and Libraries program and the Agriculture Department’s telemedicine and distance learning programs – have increased availability and sometimes made prices more competitive, said the report.

Those programs focus on providing access to individuals instead of targeting households or business owners. Meanwhile, rural businesses like farming have adopted internet at an amazing rate, said the report.

Even without broadband access, the Internet allows farmers to reduce the cost of reaching larger markets, enables more efficient commercial relationships, and increase competition among banks, shippers, and other far-flung business that service rural America.

And despite the problems of relying on dial-up access, rural Americans are still hungry consumers of internet services. Increased access to broadband could bring important benefits to both the economy of rural America and its residents’ quality of life, the report said.

In 2005, 30 percent of farmers used the Internet for business purposes. But only two years later, that number had more than doubled to 63 percent of farmers. Despite the lack of widespread rural broadband, online wholesale markets for farm products was only 3 percent of that total market in 2003. Those 3 percentage points account for $3.7 billion in trade.

And the percentage of all wholesale transactions conducted online was 13 percent, for $386 billion. And as broadband has spread, the report found, the relatively few rural retail businesses with broadband access have used it to increase operational effectiveness and exploit market niches.

Quality of life is also improved by access to rural broadband, the report said. Online purchases now replace the once-common Sears and Roebuck catalog, and broadband facilitates price discovery and consumer information gathering, particularly in the real estate and automobile markets.

Broadband access has other benefits for rural Americans in a declining economy, the report said. Besides allowing people to find jobs through teleworking, the authors found that broadband allows access to health care by use of telemedicine programs, reducing costs and travel time.

And researchers found high-speed Internet facilitates greater civic participation and community engagement, including access to government services that increasingly are migrating from paper to online forms.

Broadband Breakfast Club

March Meeting: Broadband Competition: Do We Have It, and How Do We Get More of It? presents the March meeting of the Broadband Breakfast Club at Old Ebbitt Grill on Tuesday, March 10, 2009, at 8 a.m. Because of the Commerce Department/Agriculture Department/FCC Public Meeting on broadband stimulus from 10 a.m. to 11:30 a.m., the Broadband Breakfast Club will adjourn at 9:30 a.m.

  • NEW! – James Baller, President of Baller Herbst Law Group, will provide a brief summary of the progress of the U.S. Broadband Coalition
  • Art Brodsky, Communication Director, Public Knowledge
  • Kathleen Ham, Vice President, Federal Regulatory, T-Mobile USA
  • Brent Olson, Assistant Vice President, Public Policy, AT&T
  • Emmett O’Keefe, Director, Federal Public Policy,
  • Scott Wallsten, Vice President for Research and Senior Fellow, Technology Policy Institute

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