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Better Broadband Lowers Unemployment Rates, Study Says

Chattanooga’s community owned and operated fiber network resulted in significant gains in local employment, data suggests.

by Karl Bode
|
Jun 6 2019, 1:30pm

Image: Motherboard/Lara Heintz

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Fed up by a lack of fast, affordable broadband, hundreds of US towns and cities have turned to building their own broadband networks. Studies routinely show these networks not only offer faster, cheaper service, locally-accountable networks are less likely to engage in the kind of privacy and net neutrality violations common among private ISPs like Comcast and AT&T.

Boosting access to quality broadband drives major benefits to these regions. Chattanooga’s locally-owned ISP EPB, for example, directly contributed to that city’s renaissance as a regional business hub, with one 2015 study estimating a net gain of between 2,800 and 5,200 new jobs and $1 billion in regional economic benefit.

Researchers from the University of Tennessee at Chattanooga and Oklahoma State University this week released a new study again tying better broadband to lower unemployment.

The study tracked broadband availability and unemployment rates across 95 counties in Tennessee from 2011 to 2016, and found that counties with access to high speed broadband had a 0.26 percentage point lower rate of unemployment compared to low speed counties. Early adoption of faster speeds also aided unemployment rates, researchers found.

“The unemployment differential is greater for counties that adopted high speed earlier,” researchers said. “For instance, counties that adopted high speed in 2011 had the largest differential in unemployment rates in 2016 (1.57 percent) relative to counties with low speed broadband.”

The researchers concluded that “better quality broadband appears to have a disproportionately greater effect in rural areas” that have been historically neglected by private ISPs, many of which received countless billions in taxpayer subsidies over the last decade. Disinterested with the slow return on investment, many private ISPs have let their networks literally fall apart.

Chattanooga’s city-owned ISP was a direct response to state and federal failures to drive more competition to market. The city’s network has proven to be a resounding success, and now offers locals gigabit speeds for $68 a month or 10 Gbps speeds for $299. Consumer Reports last year declared EPB to be the best ISP in America in terms of both price and speed.

Christopher Mitchell, director of the Community Broadband Networks initiative at the Institute for Local Self-Reliance, told Motherboard that EPB not only drove higher employment via its own operations, but also likely contributed to an increase in hiring by regional private ISPs forced to do something arguably alien to them: compete.

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“AT&T and Comcast have probably increased their sales staff and local employees to deal with the competition,” Mitchell said. “So that is an impact on unemployment just among the firms offering broadband services.”

Chattanooga’s investment, for example, forced Comcast to accelerate deployment of gigabit broadband to the city as a result of the added competition. Comcast had previously filed several lawsuits starting in 2008 in an unsuccessful bid to keep the network from being built.

Mitchel conceded that measuring the economic and employment impact of better broadband can be difficult, but said there’s no doubt that the city’s foray into broadband provided profound benefits to the region as a whole.

“I think this field of study is quite complicated but we know that Chattanooga has attracted many new companies to the Gig City precisely because the city has built the infrastructure of the future,” he said. “If it did not increase employment opportunities, that would be shocking.”

Measuring broadband’s economic impact is particularly tricky due to the unreliability of FCC data, which has been routinely criticized for over-stating broadband availability. Attempts to improve US broadband data collection have been routinely stymied by telecom lobbyists who aren’t eager to have deployment and competition gaps accurately highlighted.

“The FCC is still the best source for broadband access data, so regardless of its limitations we are constrained to use it,” study researcher Bento Lobo told Motherboard.

Feeling the heat of added competition, ISP lobbyists have convinced 21 states to pass laws banning or restricting the construction of community-owned networks. When asked, Lobo conceded that these bills may very well be hamstringing state economic development.

“High speed broadband is essential infrastructure and lack of access should be a serious policy consideration,” Lobo said.

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