Demand for Broadband in Rural Areas: Implications for Universal Access

As of 2019, over 20 million Americans—predominantly those living in rural areas—lacked access to high-speed broadband service according to the Federal Communications Commission. 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—mostly on the supply side in the form of grants, loans, and direct support to broadband providers. Yet, 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 US adults using the internet has not grown significantly since 2013—a trend reflected in rural broadband subscription rates, which continue to lag significantly behind rates in urban areas. Observers 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—factors 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.

Options 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.