Out of Control Policy Blog

Broadband Means Jobs, Or Not

The Washington Post today features a Page 1 story by Cecilia King that applies a classic lab test scenario to rural broadband: Two nearby towns in southwest rural Virginia were wired with high-speed fiber lines using public grants. In one community, Lebanon, two companies moved in creating 700 new jobs. In another, Rose Hill, just a “handful.” Furthermore, in Rose Hill, just one in three households signed up for broadband service

The article rightfully questions whether the deployment of broadband infrastructure by itself stimulates economic growth, the main assumption behind the $9.2 billion the federal stimulus plan to bring broadband to rural areas of the U.S.

"For the idea that some sort of magical economic development will occur, there is no evidence that that can happen," said Robert W. Crandall, a senior fellow at the Brookings Institution who has studied the issue.

Some potential subscribers may not see the benefit of getting online, while others may not be able to afford the monthly service fees. Residents with limited exposure to technology and low education levels may struggle to meet the job qualifications of tech-sector positions.

"You can't just drop an Internet line and expect jobs growth. Getting broadband access is only the first part," said Larry Irving, former head of the National Telecommunications and Information Administration.

The disparity between broadband uptake between the two towns points to more complex factors, including relative education levels of the area population. Past studies looking to connected broadband development with economic growth, such as this West Virginia study, have shown that the while broadband and economical development sometimes correlate, a causal relationship is difficult to pin down. There are also demand-side issues, such as perceived household benefits, that can’t be addressed by simple laying fiber. Generally, where there’s economic growth, there more often tends to be higher graduation rates and a friendly climate for entrepreneurial activity. Broadband simply adds to the favorable mix, but may not be spark.


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