The heterogeneous role of broadband access on establishment entry and exit by sector and urban and rural markets

Broadband access has heterogeneous effects on establishment entry and exit across industries and across urban and rural markets.  Research highlights the following points:

• Broadband increases firm entry and reduces firm exits, raising the net number of establishments in both urban and rural markets;
• Broadband raises net establishment numbers in construction and professional services in both urban and rural markets;
• Net increases in finance and insurance, information, real estate, and arts and entertainment are confined to urban markets;
• Broadband leads to net establishment losses in rural manufacturing and hospitality and in urban retail sectors;
• Broadband causes a net reallocation of educational services establishments from rural to urban markets.

These results suggest that the common argument that the expansion of rural broadband services as an economic development strategy is more complex. For example, the shift from rural to urban educational services implies that rural customers will presumably be accessing more remote providers of training, information technology and business training, and licensing certification over the internet. As a result, this and other examples demonstrate that a seemingly neutral policy of expanding broadband access into a market can have a small overall effect on net firm numbers, but increase net firm numbers in some sectors and markets and reduce them in others.