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Broadband as an Economic Development Tool

The potential impact of nationwide broadband today has been likened to the effects of railroads in the 1800s and the similarities are clear: both require substantial infrastructure investment, both provide important connections otherwise not possible, and both improve and sustain new and emerging economic ecosystems.[1] Despite the significant benefits of broadband connectivity, estimates suggest that that there are currently between 35 and more than 42 million households without access to broadband services in the United States. This signals an economic development opportunity for locations not fully equipped with high-speed connectivity to connect their businesses and households to new digital ecosystems.

The current rate of expansion is estimated to be roughly 3 million homes per year which means that it will take roughly a decade to get every home within the United States access to broadband. By state, there are large differences between unserved populations, with the highest percentage of unserved population in Arkansas (45.7 percent) and the lowest percentage of unserved population in Connecticut (1.7 percent). In terms of total population unserved, Texas has the highest number of households with 4.2 million homes without access, followed by 2.4 million homes in California, and 1.8 million in Arizona.

 

Understanding that leaving large pockets of the country without access to broadband is costly to the nation’s overall economic growth potential, various federal government initiatives have recently been rolled out to get more households and businesses in the United States connected.

  • Rural Digital Opportunity Fund was passed by the FCC with $20.4 billion in support for voice and broadband expansion to rural areas in the United States. $9.2 billion in support was approved in December 2020 as part of Phase I and is expected to connect an additional 5.2 million homes over the next decade. An additional $11 billion in support for other census block areas that are partially served or were not selected in Phase I is expected within the end of the year.
  • American Rescue Plan designated roughly $350 million to the states with some dedicated to broadband expansion.
  • The Covid Relief Bill passed in December designates $7 billion for broadband access for low-income homes.

Besides the benefits associated with improved connectivity in many rural and low-income populations around the country, with investment in almost every state in the country, this initiative has the potential to get Americans nationwide employed during the expansion.

Analyzing the impact of just the first $9.2 billion investment from the Rural Digital Opportunity Fund, we find that the roughly $923 million annual investment in broadband will result in nearly 8,000 new jobs, increase GDP by $1.2 billion, and produced a total economic impact of $2.2 billion annually.

 

Locally, Governor Tom Wolf announced last month that $5 million in funding is now available to projects aimed to expand broadband infrastructure to unserved or underserved areas within Pennsylvania, with applications for funding opening last week and being accepted until the end of September.[1] The Unserved High-Speed Broadband Funding Program (UHSB) aims to combat the state’s digital divide and level the playing field for all Pennsylvanians, opening up education and economic opportunities for those not currently connected. While this program will have direct implications for unserved and underserved areas, the cascading implications will have a net positive effect on the Commonwealth’s overall economic growth and standard of living.

 

Rebecca DeJoseph, Director | dejoseph@econsultsolutions.com

Rebecca DeJoseph is a Director at Econsult Solutions, Inc. In addition, Ms. DeJoseph is currently an instructor in Economics and Statistics for The Community College of Philadelphia. Prior to joining ESI, Ms. DeJoseph worked as a senior economist in the Economic Analysis and Information branch of the Bureau of Labor Statistics. In this position, she provided economic analysis of regional labor market data for the media, private business, and general public through customized presentations, reports, and news releases.

 

[1] https://www.governor.pa.gov/newsroom/wolf-administration-5-million-available-to-expand-broadband-in-unserved-and-underserved-communities/

[1] “The Economic Development Benefits of Broadband” Steve Smith June 2017 www.bbcmag.com/economic-development/the-economic-development-benefits-of-broadband

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