Rural Broadband Remains Spotty
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By Enid Burns | May 8, 2006

Several factors, including geography and population density, account for the 71 percent of American households that either dial-up or don't access the Web from home. A telecommunications report to congressional committees from the U.S. Government Accountability Office (GAO) details barriers to high-speed Internet adoption.

Twenty-eight percent of American households subscribed to broadband service in 2005, about 30 million homes. Of the remaining 71 percent of households, 30 percent subscribe to dial-up Internet service, and 41 percent have no home access. Among broadband subscribers, distribution between cable modem and DSL was almost evenly split. DSL is less likely to serve rural residents; service is only available within a three-mile radius of a central office.

Certain household factors make residents more or less likely to subscribe to broadband services. Households with high incomes are 39 percent more likely to subscribe to broadband than lower-income households. College-educated heads of households are 12 percent more likely to adopt broadband than households headed by someone without a college degree.

While price remains a barrier to adoption, the cost of broadband services has declined over time. Tax is a barrier to subscribing when it equals 10 percent, however when tax amounts to only 5 percent of the rate it doesn't affect subscription rates among rural residents and lower-income households.

Broadband providers are available for all but 1 percent of the country's population. Ninety-nine percent of Americans live in 95 percent of the Zip Codes that have at least one ISP offering broadband access. While it appears companies continue to build out infrastructure for broadband access, geography and population density deter providers from further deployment.

Federal programs like the Universal Service Fund (USF) and the Department of Agriculture's Rural Utilities Service (RUS) have increased the uptake of broadband service in rural areas.

Due to rugged terrain, it's more expensive to deploy land-based broadband in rural areas. The same areas are less populated and return smaller revenues. Broadband providers are more likely to enter a particular market if there's no existing competition, though the land grab appears to be over. By contrast, incumbent telecom and cable providers are likely to roll out or enhance services in markets with new competition.

The GAO conducts data collection using Form 477, a government-mandated survey of telecommunications competition and deployment of broadband services. At a Zip Code level, the FCC collects data based on where subscribers are served, not where providers have deployed broadband infrastructure for the report.


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