Broadband’s Real Impact on Economic Development

Sep 14 2012
By Craig Settles

Getting Past the Hype: Broadband’s Real Impact on Economic Development

 

At the time I began community broadband consulting in 2005, one of the stated core benefits of broadband was to improve economic development. Unfortunately, some of the biggest champions of the economic value proposition don’t get it right, and big bucks being spent for broadband may leave communities shortchanged.

In 2006, every mayor who could walk and hold a microphone at the same time preached the gospel of broadband’s economic healing powers, telling constituents “we need muni Wi-Fi to convince kids who’ve gone away to college to move back.” “Muni Wi-Fi will help increase convention business.” They’d proclaim these and other benefits with the force of conviction of true believers.

The kink in the broadband-to-economic development link to this day often is one of exuberance. Specifically, people can overstate the potential outcome for a specific type of technology, or they overstate the expected economic outcome. The problem with getting the technology or the outcomes wrong is that it leads civic leaders to set high expectations that can’t be met, or end of wasting money, or both.

One of the reasons muni Wi-Fi in 2006 failed is that the technology then was not powerful enough to achieve economic outcomes such as making businesses more competitive. These were outdoor networks whose wireless signals couldn’t go more than a few hundred yards, sufficiently penetrate buildings, carry wireless signals back from users to outdoor access points or deliver speeds many businesses needed. Expectations were sky high, as was disappointment when citizens figured this out. (Btw, “muni” is the wrong label since almost all of these networks were owned and run by private companies)

In terms of outcomes, one major public policy error in recent years at all levels of government is politicians and administrators latching onto the idea that a great economic benefit of broadband is helping people find jobs. Subsequently, governments will spend mini fortunes getting people connected to the Internet, a valuable first step but it’s not where the greater goal lies.

Yes, people need Net access to apply for jobs, but they need better education and continual job skill improvement to better compete for those jobs, and advance once they get one. Being helped through the digital doorway without sufficient bandwidth and support programs to leverage broadband’s ability to deliver that education or training diminishes the economic ROI of getting them online. Seeing the digital divide widen rather than shrink likely will produce bitter disappointment from yet another expectation unfulfilled.

Getting to the land that broadband promised

A key lesson I learned writing my first book on broadband (Fighting the Good Fight for Municipal Wireless – out of print) is that political leaders and policymakers need to spend more time with the people who own the broadband issue. Philadelphia leaders in 2004 wanted to build a network to improve economic development in low income neighborhoods. In a series of community meetings city officials proclaimed the value of using the network while sitting in a neighborhood park. Community leaders had to school officials on the fact that “this is very middle class yuppie concept. Our folks do not have little laptops that they can take to the park. The parks are not safe for our kids.” And have you ever sat on a park bench in Philly in January?

In partnership with the International Economic Development Council (IEDC) I conduct annual surveys of their members, people who work every day on improving local economies, to gauge broadband’s economic impact. It’s always informative. In 2006 I learned that bringing kids back after college and generating more convention business were low on the pros’ list of economic outcomes to expect from broadband. Furthermore, fiber rather than WiFi networks were considered good technology for impacting local economies.

The 2011 survey challenged several economic expectations frequently expressed by DC policymakers, the media and quite a few politicians. Only 5% of those surveyed believe that finding a job was how broadband can best help individuals economically. 31% indicated improving job skills and professional development were the best target outcomes, while 25% replied that starting home-based businesses was. Reaching higher education levels and transitioning to a new industry or profession topped the list for 20% and 19% respondents respectively.

The Feds defining broadband as 4 Mbps download and 1 Mbps upload speeds was deemed inadequate by over 90% of respondents for impacting a range of outcomes, including attracting new businesses, increasing startups and improving personal economic development. You can read the full report, but the bottom-line is that those folks proclaiming the local economic values of broadband need to get with the pros for a reality check and expectations alignment.

Beyond the numbers

Besides the raw numbers that these annual surveys generate, I’ve found an immeasurable value in asking an open-ended question each year that allows those working in the trenches to say what they really feel. This year’s survey, which is in progress right now, is no different. I asked, “Do you expect an increase in communities literally taking broadband infrastructure buildouts into their own hands, and if so, how will they overcome funding challenges?”

“Carroll County, MD was one of the first jurisdictions in the state to begin building our own public fiber optic network beginning in 2007. We joined with several other jurisdictions to complete our network as part of a BTOP grant that will be completed by August, 2013.”

“Not in our eight county region, [sic] a local provider received the access rights to the spectrum offered by the federal government and just not rolling out subscription based 4G LTE service to homes and businesses.”

“Grand Rapids Michigan applied for Google Fiber. Since that time we have been discussing the option of a City owned giga-speed network as a wholesale platform for private enterprise to sell services.”

“Funding is, of course, the challenge. We have a project ready to build and it is the funding that is holding us back. Federal and state grants have too many strings and take too long.”

If you are involved with economic development, it would be nice to hear from you in this year’s survey. The survey closes this Monday, September 17.

 

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