Independent, Local Broadband and Business Performance: A Multiple Case Study

Abstract

Prior research has supported the notion that affordable, business-class broadband access is critical for businesses to thrive well into the 21st Century. For places that are still unserved and underserved by broadband providers, some local conglomerates, often spearheaded by local governments, have taken it upon themselves to provide broadband access through a municipal or public-private partnership model. A question remains as to whether these independent models are primarily used by specific types of businesses, or associated with certain business-related internet activities (including non-use) and self-reported improvements in business performance. Our previous research has already shown that differences exist in terms of business user satisfaction between these independent models and more mainstream, national broadband providers. Local businesses who used mainstream internet providers reported mixed satisfaction vis-à-vis businesses using independent local providers, even though research on residential users showed satisfaction scores for local providers as being uniformly higher than their mainstream counterparts. (Fortunato et al. 2013, under review).

This paper uses primary survey research of local businesses of various sizes from a six-site multiple case study from Maine, Pennsylvania, and Wisconsin to examine the relationship between use of a local, independent provider and business performance, when compared to businesses using mainstream providers, and those who do not use broadband at all. The analysis examines whether the choice of a mainstream or local provider has also influenced business activities, and self-reported business performance, on several metrics such as increased sales and reduced operational costs. Other control variables, such as the length of time in business, size of business, and number of employees telecommuting or working remotely via internet will also be examined. Additionally, the paper examines differences in attitudes about broadband use in business, such as the importance of reliable, affordable broadband to succeed, across users of mainstream and independent local services, and those businesses that do not use broadband at all. While the implications of the digital divide are well-understood, this paper attempts to uncover associations that may suggest the impact of local, independent broadband delivery on overall local business effectiveness. This case study is not generalized to all business broadband users, but the paper aims to fill an important gap in the research where a more complete understanding of the impacts of local broadband development is required. We then detail the resultant implications of the study’s findings with regard to local, state, and federal economic and business development policy in an attempt to understand the value of independent broadband development compared to mainstream service proliferation, and whether policy could – or should – broaden its focus on independent service provision.

Reference:

Fortunato, M.W.P., Alter, T.R., Sterner, G.E. III, McPhail, L.G. and Schwarz, M.R. (2013). "Imperative Opportunity: The Risks and Rewards of Independent Local Broadband Development." Economic Development Quarterly, Under Review.

Keywords: broadband, rural broadband, municipal delivery, public-private partnership, business broadband, economic development, regional development, development policy, broadband policy

JEL Classification: H54, O18, O33, O38, O51, R58