Magazine article Independent Banker

Connecting Rural America

Magazine article Independent Banker

Connecting Rural America

Article excerpt

Telecommunications are key to bringing the digital economy to rural communities

In an age when farmers trade on the futures market while standing in a wheat field, and small-town doctors download X-rays from hospitals hundreds of miles away, the potential for rural America to benefit from advances in telecommunications seems limitless.

As Internet technology evolves, consumers will continue to enjoy more access to information and new ways of doing business. And as the telecom industry becomes less regulated, consumers are positioned to enjoy the fruits of new competition. But as this "telecom revolution" unfolds, will rural communities enjoy the same benefits as their urban and suburban counterparts do?

Several key telecom issues face communities in rural America-ranging from high-speed data services to e-commerce to telemedicine. Resolving these issues won't solve all of rural America's problems, but in many cases it will help to level the economic playing field between urban and rural regions.

In the near future, enhanced connectivity and information infrastructure will prove crucial to the health of the rural economy. They will be critical not only for development-attracting and retaining residents and businesses-but also for basic sustainability in an ever-changing economic environment. Some of the key issues facing rural residents and policymakers include:

The outlook for rural, high-speed data. Are telecommunications advances creating a digital divide or building a digital bridge between urban and rural America?

The effect of e-commerce on the economy. Will e-commerce help rural enterprises thrive, or will they fall victim to new methods of bypassing the middleman?

Government support for telemedicine and distance learning. Is rural America receiving its share, and are these subsidies going to the areas most in need?

The growth of competition. Competition brings innovation, cost-based prices and greater customer choice. Will rural America enjoy the same competitive benefits as urban residents?

Alternative technologies such as wireless telecommunications. Will satellites and microwave replace wires in the long run?

High-Speed Data Services

The phenomenal growth in the use of data applications-Internet access, telecommuting, e-commerce, distance learning-has led consumers to demand devices that move data faster than ever. Generally referred to as broadband, these high-speed data mechanisms currently serve nearly three million customers across the United States. Industry forecasts predict this number will grow to 16.6 million by 2004.

But broadband deployment represents something of a conundrum for rural policy makers. On the one hand, high-speed data has the potential to make rural areas relatively less isolated, and high-speed applications such as telemedicine might significantly improve quality of life.

On the other hand, rural areas present significant challenges for the telephone and cable TV companies that will provide the high-speed data services. For example, there are physical barriers to deployment, customers are few and widely dispersed, and rural areas seldom represent the most attractive markets. It is no mystery why less than 1 percent of towns with fewer than 2,500 people have any broadband deployment at all.

There are generally three ways to deploy high-speed data on a marketwide basis. Digital subscriber line, or DSL, uses the telephone network. Cable modems use the cable television network. And certain wireless approaches use satellite or microwave technology. Each technology has advantages, but each also has limitations that might deter companies from offering services in rural or remote areas.

For DSL, the key advantage is that it uses the existing telephone infrastructure, which is virtually ubiquitous, even in many remote areas. The disadvantages for rural customers are that many of them live too far from the telephone company's office to receive the service, and the telephone company must achieve a critical mass of customers to offset the cost of deploying additional equipment in the central office. …

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