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Broadband Internet Service in Rural and Urban Pennsylvania

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Broadband Internet Service in Rural and Urban Pennsylvania Broadband Internet Service in Rural and Urban Pennsylvania: A Common Wealth or Digital Divide? The Center for ural Pennsylvania A Legislative Agency of the Pennsylvania General Assembly Broadband Internet Service in Rural and Urban Pennsylvania: A Common Wealth or Digital Divide? A report by Dr. Amy K. Glasmeier and Lawrence E. Wood EMS Environment Institute Pennsylvania State University Project members Lee Carpenter and Andrew N. Kleit, EMS Environment Institute, Pennsylvania State University and Sharon Strover, University of Texas September 2003 This project was sponsored by a grant from the Center for Rural Pennsylvania, a legislative agency of the Pennsylvania General Assembly. The Center for Rural Pennsylvania is a bipartisan, bicameral legislative agency that serves as a resource for rural policy within the Pennsylvania General Assembly. It was created in 1987 under Act 16, the Rural Revital- ization Act, to promote and sustain the vitality of Pennsylvania’s rural and small communities. For more information, contact the Center for Rural Pennsylvania, 200 North Third St., Suite 600, Harrisburg, PA 17101, telephone (717) 787-9555, fax (717) 772-3587, email: [email protected]. TABLE OF CONTENTS Chapter I. Introduction ......................................................................................................... 5 The Growth and Importance of the Internet and Broadband ............................................ 5 The Digital Divide and Rural America .............................................................................. 7 Chapter II. The Internet: From the Backbone to the Last Mile ............................................... 9 The Internet Backbone ................................................................................................... 9 The Middle Mile........................................................................................................... 10 Last Mile Providers in Pennsylvania .............................................................................. 10 The Cable Industry ..................................................................................................11 The Telephone Industry - DSL ................................................................................ 12 Wireless Broadband ............................................................................................... 14 Satellite .................................................................................................................. 15 Chapter III. Analysis of Broadband Supply in Pennsylvania .................................................. 17 Data Collection and Analysis......................................................................................... 17 Broadband Availability by Cable and Telephone Providers............................................. 18 Socio-Economic Characteristics Associated with Broadband Availability........................ 20 Summary and Interpretation of Findings ........................................................................ 21 Large Providers ...................................................................................................... 22 Small Providers ...................................................................................................... 23 Chapter IV. Demand for Broadband Services...................................................................... 26 The Costs and Benefits of Broadband Service............................................................... 26 Survey of Business Internet Use .................................................................................... 28 Chapter V. Conclusions and Policy Recommendations ......................................................... 31 Conclusions .................................................................................................................. 31 Recommendations ........................................................................................................ 32 References ..................................................................................................................... 34 Appendices Appendix A. Speeds and Costs of Broadband Services....................................................... 35 Appendix B. Broadband Supply Analysis ............................................................................ 36 Key Definitions ............................................................................................................. 36 Methodology ................................................................................................................ 37 Appendix C. Business Survey ............................................................................................. 40 Appendix D. Monopoly, Competition, and Regulation: Application for Broadband ............... 42 Appendix E. The Policy Environment for Broadband Telecommunications in Pennsylvania .... 46 4 The Center for Rural Pennsylvania CHAPTER I . INTRODUCTION Since the early 1990s, the Internet has grown in States’ population currently uses the Internet on a use and importance as an information, entertainment, somewhat frequent basis, and Internet use is growing and business medium. While only a decade ago many at the rate of 2 million new users each month.2 While people had not even heard of the Internet, today they email remains the primary application for most go online and do so at broadband speeds. A broad- residential users of the Internet, people are increas- band connection allows Internet users to employ ingly going online for product and service information, advanced applications that are otherwise unavailable to make purchases, and for health and medical or ineffective through a dial-up connection. As information. Furthermore, with the Internet’s ability to broadband increases in importance, it is fundamental provide up-to-the-minute information, the American to assess how its availability may vary, specifically in population is relying on the Internet more and more relation to issues such as income, race, and geo- as a source for news and entertainment, at the graphic location. For rural areas in particular, the expense of television and other information media. In availability of broadband can be especially important fact, studies indicate dramatic increases in Internet to improving education, healthcare, and business use during major national and worldwide events.3 As opportunities. an information and entertainment medium, the Rural broadband availability is particularly signifi- Internet is in many ways unmatched, and while many cant in Pennsylvania, where close to a quarter of the residential users still use a dial-up service to connect state’s population live in rural areas.1 The focus of to the Internet, many applications are unavailable or this Center for Rural Pennsylvania sponsored re- too slow without broadband speeds. Like the use of search project was to assess the availability of the Internet more generally, the use of broadband broadband services in rural areas of the state. The services is growing significantly. report examines the extent to which telephone Digital As the Internet has increased in importance for the Subscriber Line (DSL) and broadband cable modem residential user, it has become essential for many services are deployed throughout rural Pennsylvania institutional and business users, and business demand and compares this deployment with that in the state’s for broadband is increasing. Business users often more urban areas. DSL and cable modem services depend on the Internet for communication, accessing are the most widely used and economically viable and transferring information and data, advertising, broadband options for many residential and small sales, and purchases. Businesses that wish to trans- business users. As this report demonstrates, many of fer large amounts of data effectively are especially Pennsylvania’s rural residents had limited or no dependent upon broadband rather than dial-up access to these services at the time the data was services. Having a particularly reliable broadband compiled. connection is essential for businesses that could lose thousands of dollars or more in sales if their Internet THE GROWTH AND IMPORTANCE OF service is down for even a few hours. Last year, E- THE INTERNET AND BROADBAND commerce sales in the United States were estimated For most Americans and many people around the at $45 billion, and E-commerce has been steadily world, computer use has become a part of everyday increasing as a percent of total sales for American 4 life. Approximately three-quarters of the United businesses over the past few years. 1 Rural residents as reported in the 2000 Census. In this analysis, broadband availability is assessed for residents living in three types of geographic areas: metropolitan, non-metropolitan urban, and non-metropolitan rural. Appendix B more fully explains these designations. 2 According to Greenspan (2002) in September 2002, 72 percent of the U.S. population had used the Internet at least once within the previous 30 days. Growth rate available at http://cyberatlas.internet.com. 3 U.S. Department of Commerce (2002), Cyber Atlas Staff (2003), and CyberAtlas Staff and Mark Berniker (2003). 4 Cox (2003). Broadband Internet Service in Rural and Urban Pennsylvania: A Common Wealth or Digital Divide? 5 WHAT IS “BROADBAND”? The Federal Telecommunication Standards Committee notes that the term “has many meanings depending upon application,” while the International
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