Rural Broadband Internet Access Supply and Demand

Internet use has grown rapidly over the last 15 years and so has its integration into the rural economy. Connecting to the Internet via high-speed technology such as DSL lines, cable, satellite, and wireless networks increases bandwidth and makes the Internet much more useful to businesses, households, and governments. Rural households are almost as likely as urban households to use the Internet. Broadband Internet access in rural areas has been less prevalent than in much more densely populated areas of the country. Evidence suggests that the difference may lie in the higher cost or less availability of broadband Internet access in rural areas. The paucity of national geographically-specific data, however, presents a challenge in trying to analyze questions of broadband take-up. Data from the June Agricultural Surveys, however, address this. The other difficulty has been obtaining local price in demand analysis. We use ARMS and industry data to develop local broadband service price indices. We use descriptive statistics and binomial logit models in our analysis. The data shows sharp differences in conversion rates across the country, and when also considering the changes over time giving some credence to the common hypothesis that people do choose to use broadband if given the option. Farms were unlikely to make the direct jump from no Internet use to Internet use with broadband access; farms that already had Internet access were more likely to convert to broadband Internet access. Some of the farms that did not convert already had broadband Internet access by 2005, roughly 24 percent of all farms using the Internet in 2005. The preponderance of DSL service for farms indicates both the mostly rural location of most farms as well as Internet users finding satellite a less desirable option. While broadband Internet access availability is necessary for take-up of broadband Internet access, there are other factors that are also limiting broadband Internet use such as price of access, age of user, household income, and educational attainment.