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Rural Riddle: Do Jobs Follow Broadband Access?
Two Hamlets That Got High-Speed Lines Show Wildly Different Results

By Cecilia Kang
Washington Post Staff Writer
Thursday, April 23, 2009

In the southwest corner of Virginia, where tobacco farms meet the Appalachian Mountains, two towns desperately in need of an economic boost were given what many had hoped would be a kick-start: access to high-speed Internet.

But there the paths of Lebanon and Rose Hill diverged. One attracted two large companies that created 700 good-paying jobs for residents. In the other, only a few home-based businesses got off the ground.

President Obama has touted broadband as a means toward transforming rural and low-income areas, setting aside $7.2 billion in the stimulus plan to help create jobs and close the "digital divide." He has been joined in his support by a chorus of countries, including Australia, which recently said it would spend $31 billion laying fiber and other networks to get ahead in an emerging high-tech global economy.

Despite the support for publicly funded broadband networks -- and the push by private companies to jump into the fray -- some have questioned whether bringing high-speed Internet has a direct effect on jobs and the economy.

Many high-tech companies have heralded a January report by the Information Technology and Innovation Foundation, a research organization, that stated that an investment of $10 billion in broadband networks across the country would create nearly 500,000 jobs, including the hard-hat jobs digging trenches and laying fiber lines. Other positions would come from businesses that rise from high-tech innovation and better productivity, the report said.

But some economists have questioned such predictions, saying that bringing high-speed Internet to rural areas is much more complicated.

"For the idea that some sort of magical economic development will occur, there is no evidence that that can happen," said Robert W. Crandall, a senior fellow at the Brookings Institution who has studied the issue.

Some potential subscribers may not see the benefit of getting online, while others may not be able to afford the monthly service fees. Residents with limited exposure to technology and low education levels may struggle to meet the job qualifications of tech-sector positions.

"You can't just drop an Internet line and expect jobs growth. Getting broadband access is only the first part," said Larry Irving, former head of the National Telecommunications and Information Administration.

Supporters of broadband as a way to jump-start an economy cite Lebanon as an example of how technology can change a town. High-speed Internet came three years ago after Rep. Rick Boucher (D-Va.), and Mark R. Warner, then governor, helped get $2.3 million in grants to bring fiber-optic pipes to homes and business parks.

The defense contractor Northrop Grumman and the software maker CGI set up facilities and created jobs for about 700 people, with salaries averaging $50,000 a year, Boucher said.

It helped that district planners at the same time converted an old strip mall to a training center that allowed residents to get their high school equivalency diplomas and prepare for jobs as technicians and information technology workers.

"They took a holistic view of its workforce with support programs, and they see it as a long process," said Karen Jackson, director of Virginia's Office of Telework Promotion and Broadband Assistance.

CGI said it was attracted by Lebanon's willingness to train workers and by higher levels of education than in other parts of the region. About 71 percent of Lebanon's residents have a high school diploma, compared with Rose Hill, where only 29 percent do, according to the census.

The story of Rose Hill is more nuanced.

Telecommunications and cable service providers had been unwilling to bring in broadband networks. The costs of laying fiber lines and building cell towers among miles of fallow tobacco farms and through mountainous terrain would never be recovered by subscriber fees, they said.

But two years ago, with the help of Boucher, fiber lines were brought to Rose Hill's 700 residents. The town was able to tap money from a state tobacco settlement fund for broadband projects and a rural telecommunications program run through the U.S. Department of Agriculture.

At a cost of $700,000 for 140 homes, fat fiber-optic pipes came. A local telecom carrier offered in-home service for $49 a month. Free broadband came to the town's library.

One in three homes signed up for the service. Only a handful of jobs were created.

Joan Minor was able to work from her home in Rose Hill, where she writes grants and is paid by the Agriculture Department to run the community's Web site. Mike Bacon kept his franchise with NAPA Auto Parts through a few swift keystrokes.

"It's changed my business, and I'm getting better deals than before," said Bacon, who is now an online bargain-hunter.

Derek Turner, research director for public advocacy group Free Press, said the social benefits of providing broadband to all Americans are enormous, as it would allow people in remote areas like Rose Hill to be engaged in cultural and social trends.

But getting people to subscribe to online services and translating the availability of broadband to economic growth is a harder to achieve.

And the education gap cannot be dismissed, said John Horrigan, director of the Pew Internet & American Life Project.

"It's Economic Development 101 to try to improve the supply of infrastructure to make a locality more attractive for businesses, but you do need a skilled workforce to fully exploit that," Horrigan said. "In rural America, for broadband adoption, skills and relevance still remain a barrier."

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