The EDA Center | at the University of Minnesota  
Commentaries on Greater Minnesota

Periodically we will present commentaries on topics of interest to community and economic developers across rural Minnesota. Below is a list of all commentaries with the most recent listed first.

 

Commentaries
The Broadband Buzz in Minnesota
July 2009
Jack M. Geller, Ph.D.
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If you think about it, there has been a persistent buzz in Minnesota regarding broadband deployment for quite a while now. As many communities know, the Grand Rapids-based Blandin Foundation has sponsored a program to encourage broadband utilization across rural communities for the past several years. In 2008 the state commissioned a group named Connected Nation to create maps that document the Internet connections and speeds all across the state. Also in 2008 the Legislature established a 26-member Broadband Task Force, charged with making recommendations to the Governor and Legislature in the development of a statewide broadband plan. And now as part of the Obama Administration's stimulus package, more than $6 billion has been appropriated toward helping communities across the country jump on the digital bandwagon.

The apparent reason for all of this attention to broadband deployment and utilization is the belief that as our economy continues to transform from one that produces goods to one that delivers services, access and utilization of a wide variety of Internet technologies will create broad economic opportunities. For example in a May 2009 report, titled "Bringing Broadband to Rural America," FCC Commissioner and Acting Chairman Michael Copps cites a study that concludes that communities that have access to broadband services grew disproportionately in employment, the number of information technology-oriented businesses, and the number of businesses overall. Further he suggests that just as rural electrification created a new group of home appliance for consumers, so will a broadband-connected rural America want Internet Protocol (IP)- enabled phones, smart meters, telehealth, distance learning, video relay services, online music, streaming movies, interactive gaming, and a host of other broadband-related products and services. "Simply put, broadband buildout to rural Americans promotes and encourages sustained economic development, to the benefit of us all (Copps, 2009 p.8)."

Given the continuing attention to the relationship between broadband deployment and economic activity in rural areas, The EDA Center at the University of Minnesota, Crookston conducted an assessment of the adoption and utilization of Internet technologies among businesses across rural Minnesota. Working in concert with Minnesota's Regional Development Commissions approximately 700 rural businesses were surveyed this spring to learn about their use of Internet technologies, the impact it has on their business and their plans for the future. And while the report is not due out until the end of the summer, here's a preview of a few of the more salient findings.

The first highlight of the study is simply that 89 percent of the businesses surveyed reported that they had a least one computer at their business connected to the Internet. In 2004 the Center for Rural Policy had conducted a similar study surveying 275 rural businesses and reporting an Internet adoption rate of 65 percent. So clearly, the adoption curve for Internet connectivity has made significant gains in the past five years. Further, while 61 percent of those Internet connections were broadband connections back in 2004; today 95 percent of rural businesses that are online are connecting with some type of broadband connection. Again, that's pretty good progress in 5 years.

A second highlight addresses the question of affordability, as many are concerned that both rural businesses and rural households have to pay higher costs for their broadband service. Here the findings suggest that the median price paid by rural businesses is $50 per month. But more importantly, business owners were asked their thoughts about the price they were paying for their broadband service. And it is here where we see that 15 percent reported that the price they pay is "very affordable" and 58 percent report that the price is "about right." Almost one in four businesses (24.2%) reported that the price they pay is "too high" and only three percent characterized the price they pay for broadband as "outrageous." So overall, it is appears that 73 percent of rural businesses do not appear to be overly concerned about the price.

Finally, the study also queried rural businesses about their satisfaction with the speed of their current Internet connection. Here we find a rather mixed bag of news, where 84 percent of businesses report that their current connection speed is adequately meeting their current needs. However, when asked whether they believed that their current connection speed would meet their needs 2 years from now only 35 percent answered yes; while 32 percent answered no and 33 percent were unsure.

So what can we learn from all of this? Well, based upon the maps that can now be found at www.connectmn.org, it appears that compared to many other states, rural Minnesota has a fairly good broadband network in place to build upon. Further, based upon the data collected this spring from rural businesses, the majority do not appear to be overly concerned about their current connection speed, nor the affordability of their service. However, it also appears that Minnesota broadband providers cannot afford to be complacent in their efforts to continually upgrade their speeds and their service. With only 35 percent of rural businesses believing that their current Internet connection will meet their needs in 24 months, there's plenty of work to be done.

Geller is professor & head of the Arts, Humanities & Social Sciences at the University of Minnesota, Crookston. He also serves as the director of the federally-funded EDA Center at UMC. He can be reached at gelle045@umn.edu

This document was prepared by the University of Minnesota, Crookston under award number 06-66-05709 from the Economic Development Administration, U.S. Department of Commerce. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the Economic Development Administration or the U.S. Department of Commerce.

The University of Minnesota is an equal opportunity educator and employer.

 
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