{ "id": "R46108", "type": "CRS Report", "typeId": "REPORTS", "number": "R46108", "active": true, "source": "EveryCRSReport.com", "versions": [ { "source": "EveryCRSReport.com", "id": 610595, "date": "2019-12-09", "retrieved": "2019-12-13T15:01:33.577675", "title": "Demand for Broadband in Rural Areas: Implications for Universal Access", "summary": "As of 2019, over 20 million Americans\u2014predominantly those living in rural areas\u2014lacked access to high speed broadband service according to the Federal Communications Commission (FCC). Federal subsidies underwritten by taxpayer funds and long-distance telephone subscriber fees have injected billions of dollars into rural broadband markets over the past decade\u2014mostly on the supply side in the form of grants, loans, and direct support to broadband providers. \nYet, adoption rates have leveled off after more than a decade of rapid growth, even as broadband providers have extended service to remote and hard-to-serve areas. The overall share of U.S. adults using the internet has not grown significantly since 2013, according to the Pew Research Center\u2014a trend reflected in rural broadband subscription rates, which continue to lag significantly behind rates in urban areas.\nObservers note that weak demand in nascent broadband markets makes it more difficult for federal agencies to elicit private-sector program participation and investment in high-cost, high-risk rural areas. Even in subsidized markets, broadband infrastructure buildout ultimately rests on business decisions made in the private sector. On average, rural areas are less wealthy than urbanized areas, and have older populations with lower educational attainment\u2014factors which negatively correlate with demand for broadband service. Related barriers to adoption, such as lower perceived value, affordability, computer ownership, and computer literacy, have persisted over many years.\nMarkets tend to be highly localized. Those with favorable geography and demographic profiles often have higher demand, and thus present relatively attractive investment opportunities, for broadband providers. However, the federal government has found it difficult to incentivize sustained private-sector investment in more isolated and sparsely populated locales where it is clear that new or upgraded service will be costly to provide, and may fail to attract a large number of new paying subscribers.\nOverall, current federal spending on affordability and adoption programs amounts to less than one-quarter of total spending for rural broadband expansion. The FCC\u2019s Lifeline program reduces monthly subscription costs for qualifying low-income households, but enrollment rates are comparatively low. No major federal programs currently support consumer outreach and education, although certain federal grants may use funds for related activities. Other programs to support broadband buildout to schools, clinics, and other community institutions have improved access for residents of rural areas, but it is not clear that these programs have affected overall market demand.\nBroadband advocates frequently identify broadband enabled services like telemedicine and precision agriculture as potential demand drivers. However, lower rates of health insurance coverage in rural areas and certain state regulations limiting Medicaid reimbursement for telemedicine services may depress demand growth and private sector investment in broadband. Likewise, high up-front costs and unfamiliarity have hindered adoption of precision agriculture technology by small producers in isolated rural areas.\nFederal broadband programs have generally been agnostic to the demand side of rural broadband markets, based on the implicit assumption that demand for broadband service will quickly emerge as broadband providers extend new or upgraded service to these locales. Program rules typically require broadband providers to extend service availability to a certain area within a certain timeframe, but they generally do not require them to achieve specific market development goals for adoption and usage. The FCC has expressed concern that some subsidized providers may lack incentive to develop markets in their service areas. \nOptions for congressional consideration include measures to address obstacles to adoption and additional incentives for private sector investment in the rural broadband sector. These may include expansion of end-user subsidies, both within the broadband sector and other sectors that utilize broadband-enabled technologies. Congress may also consider measures to encourage broadband providers to increase investment in persistently underserved rural areas and more aggressively develop nascent broadband markets. These may include adjustment to subsidy rates and program rules, including introduction of adoption milestones for subsidy recipients. Additionally, Congress may consider measures to increase education and outreach.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "https://www.crs.gov/Reports/R46108", "sha1": "9fe4bb7f03d1a36e4fb10835ca8db922089db7ee", "filename": "files/20191209_R46108_9fe4bb7f03d1a36e4fb10835ca8db922089db7ee.html", "images": { "/products/Getimages/?directory=R/html/R46108_files&id=/2.png": "files/20191209_R46108_images_671e60357ee100da94fd525fffca3d1ce8927c32.png", "/products/Getimages/?directory=R/html/R46108_files&id=/1.png": "files/20191209_R46108_images_121581a07c26aae3f4900cca3095423ae2dc8379.png", "/products/Getimages/?directory=R/html/R46108_files&id=/0.png": "files/20191209_R46108_images_39c4e8bef184a9dde560aa53810a5bb10a9a160e.png" } }, { "format": "PDF", "encoding": null, "url": "https://www.crs.gov/Reports/pdf/R46108", "sha1": "8e319f448a196e972ea288cf2c03f50067946fa3", "filename": "files/20191209_R46108_8e319f448a196e972ea288cf2c03f50067946fa3.pdf", "images": {} } ], "topics": [] } ], "topics": [ "Economic Policy", "Science and Technology Policy" ] }