STUDY: Expanding broadband linked to economic growth

Bowling Green, KY (September 22, 2021) - For 20 years, Connected Nation has stressed the value of connectivity for families, businesses, and communities. When we say “Everyone Belongs in a Connected Nation,” that is more than a tagline. It is a reminder that at every level of society, the ability to access and use technology in meaningful ways can make a difference in people’s lives. 

One way that we help empower households and communities is through the Connected program. Through this paradigm, Connected Nation works with a community to identify their unique strengths and challenges and to help them design a plan addressing the needs of their citizens, businesses, and public- and private-sector establishments to improve technology access, adoption, and usage. By helping communities fill in their technology gaps, Connected Nation strives to develop tools that will help the community thrive.

This is not a fast process, nor will every community see the same results. Not every community will start at the same point in its journey, and different communities will see different benefits. Connected Nation has long argued, though, that taking steps to identify and address the technology needs of a community will help communities as they go into a future that is going to demand greater technology skills and improved service availability.

But measuring this impact is not easy. Every community is unique and faces its own challenges. Many of the tools that communities have at their disposal do not result in fast remedies. Infrastructure must be planned, purchased, and incorporated into the existing broadband network. Educational efforts to align residents’ technology skills with workforce demands require time, teachers, spaces, and support from the community. The impact of new technology on the community and its workforce may not be seen for years. As such, claiming any one enterprise as the sole cause of a benefit that is years in the making is challenging, if not impossible.

Despite this daunting challenge, Connected Nation has a unique opportunity in Michigan to compare  communities that participated in the Connected program against the state average. As one of the states with the longest continuous engagement via Connected Nation Michigan, data exist going back far enough to determine how well communities perform after participating in the current iteration of the Connected program. The fact that there is a sufficient number of communities to make such a comparison over a number of years (2017-2019) means that enough data is available to see how these communities compare to the statewide average in terms of economic, technological, and residential growth. 

No comparison will correlate participation in the Connected program with any one socioeconomic improvement rate. Still, positive changes among these communities would show how communities that focus on improving broadband technology access, adoption, and usage tend to see above-average improvements over time. Doing so would strengthen Connected Nation’s argument that for communities of any size to thrive in the future, broadband technology must be part of their economic development and planning process. 

KEY FINDINGS

Connected Nation measured the average change in a number of long-term measurements in communities that participated in its Connected program and compared those communities to the statewide average. In each of these areas, Connected communities outpaced the statewide average:

• Unemployment rates
• Employment specifically in the Information sector
• In-migration (measured as the percent increase in the number of households)
• Median household income growth
• Fixed broadband access growth
• Fixed broadband competition growth
• Fixed broadband adoption

Many of these changes required long-term efforts from communities, and often the impacts of such efforts are not immediately visible. Still, these findings support Connected Nation’s assertion that sustained, targeted efforts to promote broadband access, adoption, and use will have long-term benefits for communities and residents alike.

CONNECTED EXPLAINED

The Connected program is a facilitated broadband and technology planning effort designed to address the most pressing technology challenges facing communities today. Through the program, Connected Nation offers communities the opportunity to measure their supply, demand, and use of technology with unprecedented data gathering, analysis, and planning. This assessment uses residential, business, and sector surveys to provides insight into the local technology ecosystem, identify gaps and opportunities, and support the development of an actionable technology plan to improve the community’s standing in the digital economy.

Connected’s strategy is to combine local data about broadband adoption and usage with an analysis of available broadband infrastructure to help communities identify their greatest technology needs. Connected Nation then uses that information to collaborate with local leaders to identify next steps and develop a customized technology action plan that the community can use to take the next steps in increasing broadband access, adoption, and use. These increases, though they may not always show immediately, can be the foundation upon which communities can prepare to increase their digital presence and ensure that all of their residents have the opportunities afforded to them by being part of the digital world. 

This study measures some of those impacts now that sufficient time has passed to allow those results to be visible.

METHODOLOGY

For this study, Connected Nation reviewed seven economic and technological factors that are measures of the growth and health of communities and have been shown to be impacted by technology adoption and usage: 

• Unemployment rate change
• Changes in employment in the Information sector¹
• In-migration (increase in the number of occupied households in a community)¹
• Income (measured as changes in median household incomes)¹
• Fixed residential broadband adoption (households subscribing to DSL, Cable, or Fiber internet service)¹
• Fixed residential broadband access (access to DSL, Cable, or Fiber internet service by one provider)
• Fixed residential broadband competition (access to DSL, Cable, or Fiber internet service by two or more providers)²

Connected Nation measured the average change in these statistics across 12 counties who participated in the Connected program (referred to as “Connected communities”) in 2017: Benzie, Gogebic, Iron, Lapeer, Leelanau, Manistee, Mason, Mecosta, Newaygo, Oceana, Osceola, and Ottawa counties. Though communities in other states participated in the Connected program during this time, Connected Nation focused on Michigan as a state with one of its longest ongoing partnerships in improving broadband access, adoption, and usage; in addition, Michigan had the largest number of communities participating in the program, providing a more robust sample size for comparison. 

This study focuses on communities that participated in the program in 2017 because the best source of data for several of these socioeconomic factors, the United States Census Bureau’s American Community Survey 5-year estimate, currently reflects data from 2019 as its most recent dataset. This makes it possible to compare community changes against a statewide average over a two-year period. Because many of these factors change slowly over time, such an extended period is necessary to accurately determine whether participation in a program such as Connected truly had an impact. Because 2019 is the most recent data available for this dataset, examining communities that participated in the program in 2017 allows for enough time to see any potential impacts using the most up-to-date information available.

Connected Nation is not implying a direct causation between participation in the Connected program and their economic growth through this study. Each community faced its own unique technological hurdles and had differing levels of success addressing those barriers. Connected Nation does believe, though, that by focusing on broadband access, adoption, and usage as economic development drivers, communities stand a better chance at competing and thriving in the years to come. As such, policymakers in these communities are set apart from their peers by their decision to prioritize technology and broadband, and this study is intended to determine how well they fared compared to their peers in the same state that experienced similar state policies and regulation with regard to communications and broadband infrastructure.     

EMPLOYMENT

The two-year period between 2017 and 2019 was one of economic rebuilding in Michigan; as the country climbed back from the Great Recession, the state experienced rapid employment growth.

While unemployment dropped across the state, it shrank even faster in Connected communities (Figure 1). 

While unemployment dropped by 0.8 percentage points statewide, the average unemployment rate dropped more than twice as fast in Connected communities. In those communities, during the same time period, unemployment rates dropped on average by 1.7 percentage points.

While employment grew overall, employment in the Information sector dropped in Michigan during this time. The rate of decline in this sector was less dramatic in Connected communities than it was statewide (Figure 2).

During this time, employment in the Information sector only decreased by 6.4% in Connected communities, while at the same time it dropped by 7.6% statewide. This suggests that although communities that focus on broadband access, adoption, and use will still face the same pressures as the rest of the state, focusing on broadband as an economic development priority may help minimize that negative impact seen by other communities in the state.

HOUSEHOLDS

Expanding broadband access and adoption is not an end, but rather a means to improve lives and provide opportunities to community residents. Improved access to technology can make communities more inviting for new families and help current residents stay where they live by creating more job and entertainment opportunities. The impact of these improved opportunities can be measured both in the rate of in-migration as well as the median household income for communities.

Michigan’s population grew slightly between 2017 and 2019; during this time, the number of households grew by 1.2%. In Connected communities, however, this figure jumped by 1.6%, or 33% faster than the statewide average (Figure 3).

While many factors affect a homebuyer’s decision on where to live, broadband availability and the ability to access high-speed internet services for work and entertainment plays a role in home selection. As such, it makes sense that communities that focus on improving broadband for their residents would attract more new homeowners than would areas where access to affordable broadband is not prioritized.

Connected communities also showed a faster rate of growth in their median household incomes (Figure 4).

BROADBAND

It makes sense that communities that focus on improving technology will experience larger-than-average growth in both access and adoption of broadband. While the growth of infrastructure is important, improving broadband access is not the end of the story. For a community to truly benefit from the growth in infrastructure, it is important to ensure that access to high-speed internet is affordable and offers reliable service that will meet users’ needs today and in the future.

As such, increasing broadband access to every household, increasing competition to give residents choices, and addressing the barriers to broadband adoption are all important. These measures can take time. Infrastructure may take years to acquire and install; programs that teach residents digital skills may take months or years to develop and implement; other challenges from weather to financial instability can all affect how quickly a community can improve broadband access and adoption. Maintaining efforts to improve all these factors will pay off, though, and can result in improved access, competition, and adoption of broadband. The vital first step is to prioritize these efforts and incorporate them into community economic development plans.

The first step in getting residents connected is to ensure that they have access to service at speeds of 25 Mbps downstream and 3 Mbps upstream (the current definition of “broadband,” as defined by the FCC). By this measurement, access to fixed broadband service in Connected communities outpaced growth statewide by more than 400% (Figure 5).

The share of households served by at least one fixed internet provider offering speeds fast enough to meet the definition of broadband increased by 9.1 percentage points in Connected communities, compared to only 2.1 percentage points statewide.

Competition is also crucial for broadband service and has been promoted as helping reduce the cost paid by consumers as well as improving the variety of service packages offered by internet service providers. When consumers have more than one choice in broadband providers, they tend to be more satisfied with the service they receive and tend to pay less per month. 

In Connected communities, the share of households with access to fixed broadband offered by two or more providers grew slightly faster than in other parts of the state (Figure 6).

The share of households that had access to competing fixed broadband providers statewide grew by 7.6 percentage points; by comparison, in Connected communities, the share of households that could choose between two or more fixed broadband providers grew by 10 percentage points.

Increased access to broadband will not benefit residents or communities, however, unless households subscribe to those services. Improving broadband adoption may require a number of steps, depending on the needs of the community, from increased awareness of low-cost broadband programs to digital literacy training or assistance purchasing the devices needed to go online. Those efforts take time, ingenuity, and information to be successful.  

Communities that worked with the Connected program took the initiative to prioritize broadband adoption among their residents, and the result was higher-than-average growth in fixed broadband adoption among these counties. Fixed broadband adoption in Connected communities grew at a slightly faster rate than the statewide average (Figure 7).

Though the difference is small, the fact that Connected communities are more rural than the rest of the state suggest that in many cases, they had more obstacles to overcome. Broadband adoption in rural portions of the state tends to be lower, but in this case, the Connected communities took a step toward closing that gap. Over time, it is possible that they will succeed in doing so.

CONCLUSIONS

Broadband access, adoption, and usage can result in numerous benefits for communities, but they must prioritize efforts to realize those gains. When broadband is incorporated into community development and equity efforts, only then will that growth be seen.

This study shows that in Michigan, communities that prioritized developing and promoting residential broadband outpaced the state average in terms of household incomes, employment growth, and in-migration. These and other measurements of community well-being support Connected Nation’s argument that targeting efforts that will increase broadband access, adoption, and use will have long-term benefits, particularly for rural communities. These benefits may not be seen in a matter of weeks, but this study shows that taking steps to prioritize technology can help communities grow today and prepare for the future.

Resources:

1. Data source: United States Census Bureau’s 2017 and 2019 American Community Survey 5-year estimates
2. Data source:  Federal Communications Commission (FCC)’s December 2017 and December 2019 fixed broadband deployment comparison of ADSL, Cable, and Fiber at speeds of at least 25 Mbps downstream and 3 Mbps upstream
3. The Information sector is defined as the North American Industry Classification System (NAICS) two-digit supersector 51 as identified and used by the United States Bureau of Labor Statistics (BLS).

About the Author: Chris McGovern is the Director of Research Development for Connected Nation. Chris works with Connected Nation staff and external stakeholders to develop research deliverables and provide critical analysis. He uses qualitative and quantitative techniques to interpret data, formulate reports, and make substantiated recommendations based on research findings.