President Obama has been talking a lot lately about investments. Not stocks, or bonds, but spending on various projects to create jobs and make us more competitive as a nation. With lots of budget cuts being proposed and negotiated one investment, in network equipment and rural broadband access really would make sense.

The Federal Communications Commission (FCC) defines broadband Internet as transmission speeds of 200 kilobits per second or faster. Current digital subscriber and cable Internet services run faster than that. In comparison, dial-up Internet connections run at 56 kbps, with rural dial-up connections commonly running at 14 kbps.

OK, so why don’t we just let private enterprise install broadband infrastructure in rural America? Initially it’s all about economics. And at the beginning of an investment cycle it just doesn’t make good Return on Investment (ROI) to spend money doing this vs. other opportunities. It takes federal grants to this make this happen because at this point in the cycle the potential demand for the services to deliver the return on investment that private companies are seeking just isn’t there.

To use a historical reference, in the 1930’s only 10 percent of Americans living in rural areas had electricity. The Rural Electric Administration was created in 1935 to use federal resources and taxpayer dollars to bring electricity to rural America. Once the juice got flowing farmers began buying electrical appliances from local stores. They could also refrigerate their crops leading to an increase in sales. Farm production went up and we became the bread basket to the world. It has been federal policy since then to make infrastructure like interstate highways, clean water, hospitals, mail service, phone service, etc., available to rural America.

There’s a lot of business available to be transacted in rural America. Just ask companies like Walmart and fertilizer and see companies. Rural communities are individually small purchasers but group a region of rural communities together and private enterprise will find its way there… if the infrastructure and support systems are in place to do so. And, rural broadband access today is as critical as roads, hospitals, clean water, etc. was many decades ago. Networks, whether wired or wireless, that provide Internet connections will increase not only tech purchases by companies and individuals for network equipment, it will also create a desirable economic stimulus for growth and development.

A study done by The Rural Policy Research Institute, at the University of Missouri, reported that every percentage-point increase in a community’s broadband penetration increased employment in that community from 0.2 percent to 0.3 percent per year. A study by The Information Technology and Innovation Foundation from October 2009 suggested that a one-year, $10 billion investment in Internet broadband connectivity in the United States would create or retain 498,000 jobs. That’s almost half a million jobs!

In 2006, a jointly published study by researchers at Massachusetts Institute of Technology (MIT) and Carnegie Mellon University found that in the five year period between 1998 and 2002 “communities in which mass-market broadband was available by December 1999 experienced more rapid growth in employment, in the number of businesses overall, and in businesses in IT-intensive sectors, relative to comparable communities without broadband at that time.” Broadband Internet connectivity added between 1 percent to 1.4 percent to the overall job growth rate, .5 percent to 1.2 percent to the growth rate in businesses, and, by the year 2000 even helped increase property values more than 6 percent in ZIP codes where broadband was available by 1999.

It seems obvious based on real evidence, not political gimmicks, that introducing broadband Internet to rural areas would have an economically positive affect on all of America over time. These benefits include innovations in transactions between businesses, lower costs, telecommuting, and on-line access to customers and potential employees. And, with access to the Internet at speeds that allow for reliable e-commerce of all types businesses that sell to rural communities via online transactions will also benefit from this currently under served market.
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