Trender Research™

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The Rural Broadband Stimulus Plan: Who are the True Beneficiaries?

Like all other infrastructure upgrades including civil and otherwise, the initial beneficiaries are the vendors and builders who scramble and join the mad fray to pay-dirt – especially when the government and taxpayers are footing the bill. What continues to be debated is the extent that higher speed Internet infrastructure in most cases equates to jobs and economic stimulation, but also cultural and social stimulation for U.S. rural market areas. The Washington Post did a recent article ( providing contrasting viewpoints of academics, and also pointed out a couple of recent real-world examples. While $7.2 billion is less than one-tenth of the greater economic stimulus plan, the stakes are high for the U.S. rural sector.

The debate stems from claims like that of the Information Technology and Innovation Foundation and similar research organizations that throw out figures like $10 billion investments in this type of infrastructure upgrade produces upwards of 500,000 jobs. They acknowledge that the initial opportunity is for the builders whether fiber lines are being laid or broadband wireless networks are built. It is the follow-on job opportunities and economic improvements theory that high-tech businesses form in the areas and existing businesses benefit from productivity improvements that gets questioned and debated. A Brookings Institution Senior Fellow comments that the idea that some sort of magical economic development occurs as a result can be misleading. What is often lost in the debate is any recognition of the gap that exists for many rural residents of prior exposure to and understanding of multiple technology layers, the business side of technology, and education levels that could place them in competition for jobs beyond electronics assembly lines and technicians. What about middle manager jobs and opportunities to work from home on the Internet?

The article goes on to contrast two rural examples that have varied results. In one’s case in Virginia, the Governor and a House representative helped raise $2.3 million in grant monies to lay fiber optics, and Northrop Grumman (a defense contractor) and the software maker CGI set up facilities and created around 700 jobs with salaries averaging $50,000 a year. What helped, and what is just as important to the success was the conversion of a strip mall into a training facility that enabled residents to upgrade their educations at the same time. Contrast this success example with a tobacco country rural example where less than $1 million was spent upgrading to fiber optic lines for 700 residents, and a corresponding monthly Internet cost to them of $50. It did include, however, enabling some local facilities like the town library to offer free broadband access. While some local businesses cited benefits for them, only one in three homes signed up for service and they estimate only a handful of jobs creation. The reality for certain residents is the affordability of the monthly service fees and premise equipment upgrades to take advantage of the service.

Sometimes lost in the effort in counting the hard-dollar and bottom-line benefits of rural broadband access infusion are the cultural and social benefits that can be lost in the Digital Divide debate. This should be emphasized along with technical education resources to help transform the rural sector into a more highly skilled workforce and ability to contribute in middle management and higher ranks jobs. Most importantly is the Stimulus Plan’s potential for enabling transformation of a U.S. rural populace that are running out of options as their agricultural businesses decline over time.

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