PDF Ebook Broadband Use by Rural Small Businesses
This study explores two popular beliefs pertaining to the deployment and use of broadband services – first, that these services are enormously important to consumers and the overall economy, and second, that rural deployment and use of these services lags urban broadband deployment and use. If both of these beliefs are true, then it follows that the benefits of broadband services are failing to reach many rural consumers.
While the topic of a digital divide is not new, this research is somewhat unique in that it focuses primarily on rural small businesses’ use of broadband services. Based on the empirical evidence from a survey of small businesses and other research presented in this study, the following are key highlights of the findings:
- • Broadband investment (and more generally investment in information technology) appears to provide substantial benefits to both consumers and the overall economy. Broadband investment and services appear to stimulate economic productivity and output, as well as create jobs.
• This study finds that rural small businesses do not subscribe to broadband services as frequently as urban small businesses do, and finds the difference in broadband use between rural and urban areas to be statistically significant.
• One of the drawbacks of the apparent rural digital divide is that rural small businesses are less likely to benefit from new technologies facilitated by access to broadband services. For instance, this study finds a statistically significant difference in Voice-over-Internet Protocol (VoIP) use between metropolitan and non-metropolitan areas, apparently due to the lack of broadband use in rural areas.
For small businesses, what causes the rural digital divide? This study investigates and finds several factors that contribute to the shortfall in rural broadband use by small businesses. These factors are:
- • Firm Size. Rural small businesses (on average) tend to have fewer employees, which coincides with lower broadband subscription rates and lower spending levels.
• High Cost and Price. According to survey data on small businesses, rural small businesses tend to pay higher prices for broadband services than urban small businesses do. This fact may reflect the added cost of serving higher cost areas and/or a lack of competition in rural areas.
• Price Elasticity. Because broadband services are price elastic, when rural small businesses face higher broadband prices, they tend to demand proportionately less broadband services.
This study also offers indirect evidence that demographic factors play a role in broadband use in rural areas. Evidence shows that broadband users tend to be somewhat more educated, affluent, and young, and these characteristics tend to be more prevalent in metropolitan areas. If consumers in metropolitan areas are more apt to subscribe to online services, small businesses will find broadband services to be a more effective means to reach the public, advertise and sell services, provide product information, and communicate with employees. Therefore, based on differences in demographic characteristics, rural small businesses may not demand broadband service to the same extent as urban small businesses do. However, further evidence and work is needed to measure the extent to which this poses a significant factor.
In summary, there appears to be evidence supporting two commonly held beliefs: first, that broadband services can be beneficial to consumers and the economy; and second, that rural consumers (including small businesses) are not using broadband services to the extent that urban consumers do. Therefore, compared to their urban counterparts, rural small businesses are not seeing the benefits resulting from the investment and use of broadband services. More research is needed to measure the importance that supply and demand-side factors play in causing the rural digital divide.
CONTENTS
Executive Summary
I. Introduction
II. Importance of Broadband Services to Small Businesses
- A. Useful Benefits
B. Empirical Evidence of Benefits
III. Lagging Broadband Deployment
IV. A Survey of Small Business Broadband Use
- A. General Review of Survey Results
B. Does the Rural Digital Divide Apply to Small Businesses?
C. Does the Rural Digital Divide Impede VoIP use?
V. What Causes the Rural Digital Divide?
A. Demand-Side Factors
B. Supply-Side Factors
VI. Conclusions
Posted in :
