Broadband Communities

NOV-DEC 2014

BROADBAND COMMUNITIES is the leading source of information on digital and broadband technologies for buildings and communities. Our editorial aims to accelerate the deployment of Fiber-To-The-Home and Fiber-To-The-Premises.

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18 | BROADBAND COMMUNITIES | www.broadbandcommunities.com | NOVEMBER/DECEMBER 2014 BANDWIDTH HAWK R ailroads. Canals. Harbors. Roads. Airports. Electricity. Schools. Water. And now, broadband. After more than a decade of producing annual issues that highlight economic development, this magazine has progressed from proving that bandwidth produces jobs to proving that more bandwidth produces more jobs. Te evidence, detailed in this issue (p. 92), is overwhelming and disturbing. An exclusive BroadBand Communities analysis of data for all 3,144 U.S. counties shows that counties in the bottom half of their state rankings for access to 25 Mbps download speeds had a population growth of only 0.27 percent from 2010 through the end of 2013. Te top half enjoyed growth of 2.79 percent – more than 10 times greater. In actual numbers, counties in the bottom half of their state rankings added just 134,390 people, and those in the top half added more than 7.2 million. Te counties ranked in the lowest 10 percent for broadband access lost 0.55 percent of their population on average. Te top 10 percent gained 3.18 percent. Te single top-ranked counties in each state grew even faster – 3.61 percent. Most, though not all, of the disadvantaged counties are rural. Teir population densities are low, and the business case for good broadband there is worse than in urban areas. Indeed, for the frst time in the nation's history, from 2010 to 2012 the majority of rural counties lost population. Many would say that's tough, but capitalism is a hard taskmaster. If it is more efcient for people to live in cities, why should anyone try to interfere? Here's why: • First, the regulatory system is rigged against rural areas; the game isn't fair. • Second, when rural residents have to move to cities, new infrastructure must be built in cities to accommodate them. • Tird, any policy that fosters income disparities reduces countries' potential for economic growth. • Fourth, if you eat food, you depend on people being able to live, work and communicate in rural areas. Tat's where the farms are. Te Organization for Economic Cooperation and Development says reducing income inequality would boost economic growth. Countries where income inequality is decreasing grow faster than those with rising inequality. Te United States lost between 6 and 10 percent of its pre- recession growth to inequality. Te impact of inequality on growth stems from the gap between the bottom 40 percent and the rest of society, not just the poorest few. Te best remedy is to increase access to public services, such as high- quality education, training and health care – the very services broadband can help deliver most efciently. Te study, Trends in Income Inequality and Its Impact on Economic Growth, is available at www.oecd.org/social/ inequality-and-poverty.htm. In developed countries, population change is a good proxy for economic change. Te population grows in regions where there are jobs, and each new job creates more jobs as the newly employed spend their earnings. Te fact that 19 states restrict communities from building their own broadband networks not only hurts communities that lack broadband but also increases the need for public expenditure on schools, roads and other infrastructure in places that are advantaged. It also weakens the capital base of rural lenders because of the defation of rural asset values. Lawmakers say the issue is fair competition. However, the very ability of municipalities to threaten construction of their own systems often rouses private enterprise to improve existing infrastructure. Some incentives exist for public- private partnerships as well. Tese should be improved and backed with access to needed new capital. Public entities "lose" money on schools, roads, police, and fre protection. A public entity merely has to break even on broadband, as it does for water and power. On average, fber-to-the-home deployers can break even today with about eight paying households per road mile. Te national average is almost 50 premises per road mile, of which about 25 would become paying customers. But large corporations cannot merely break even. Tey cannot merely do well. Tey have to do better than their industry peers. Tey can't do that by building in depressed areas. Tat has to change. At the BroadBand Communities Summit in Austin next April, get all the latest data and the latest thinking on all sides of the issue. Your success and the future prosperity of the United States may depend on it. v Contact the Bandwidth Hawk at steve@bbcmag.com. Bandwidth: Good for Rural Residents, Good for the Country The broadband haves and have-nots share the same economy. By Steven S. Ross / Broadband Communities

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