Study: Broadband Providers Target Areas of Expected Economic Growth

WASHINGTON, January 15, 2010 – Authors of a new study focus on California in their efforts to determine whether broadband boosts local economic development and found it’s tough to determine because broadband providers target areas where they expect high economic growth anyway.

Researchers at the Public Policy Institute of California took a look at the expansion of broadband Internet service providers and reviewed the increase of jobs and wages to see if broadband affected employment. It became clear through research that the highest speeds are often in the most densely populated areas.

The researchers were able to determine that “broadband providers are explicitly targeting areas where they expect higher economic growth: Later employment growth does not predict earlier broadband growth. The evidence also indicates that population growth is not the main driver.”

However, the report “Does Broadband Boost Local Economic Development” does not dismiss the funding of broadband expansion. While there may not be a direct impact on jobs, it found that broadband does improve citizens’ overall quality of life and empowers them with overall better access to information.

To put together the study, researchers looked at maps dated Aug. 10, 2009, which show large rural and mountainous areas in the state without broadband access.

The fastest service, which is more than 100 mbps, is available in parts of the Sacramento metropolitan area. Service at speeds of 10 to 100 mbps is available throughout much of urban southern California, as well as Bakersfield and Napa and Solano counties. Speeds of 5 to 10 mbps are offered in most of the Bay Area, including Silicon Valley. These differences demonstrate that even among places with broadband availability, speeds can vary considerably. Much of the state appears to have no service at speeds of at least 500 kbps, which meets the definition of unserved or underserved.

The state has its own internal mapping initiative and broadband expansion programs that predate the recent American Recovery and Reinvestment Act. The original broadband expansion program was the Teleconnect Fund, which was established in 1996 to help get Internet access to schools, libraries and non-profits.

In 2006, the California Public Utilities Commission created the California Emerging Technology Fund and the California Advanced Services Fund. AT&T and Verizon as a provision of their merger requests with SBC and MCI, respectively, funded the programs via a $60 million contribution.