Rural Communities Losing $68 Billion in Economic Value Due to Digital Divide, New NRECA Study Finds

Arlington, VA – The lack of broadband access for 6.3 million electric co-op households results in more than $68 billion in lost economic value, according to new research by the National Rural Electric Cooperative Association (NRECA). The new report investigates the cost of the digital divide and the growing economic advantages to America’s rural communities.

The study analyzed the value that households place on broadband access. It noted that households in parts of America with broadband access receive, on average, a benefit of $1,950 annually. Applying this value to 6.3 million electric co-op households without broadband, the study finds a total lost value of $68.2 billion to cooperative members nationwide.

Importantly, the deployment of broadband would be expected to enable additional economic benefits such as expanded jobs, education and economic growth. None of these factors were examined in the NRECA study.

“Closing the digital divide is imperative for rural communities and will help improve the economic outlook for the entire country,” said NRECA CEO Jim Matheson. “Millions of Americans are locked out of the new digital economy simply by virtue of their zip code. Electric co-ops recognize the importance of expanded broadband access and are working to be part of the solution.”

High costs and low population density are two barriers to rural broadband deployment. Nonetheless, roughly 100 electric cooperatives are bridging the digital divide and bringing broadband to their communities.

Electric cooperatives are playing a central role in improving access to high-speed internet in and around their service territories.  For this reason, NRECA has been encouraged by two recent policy changes. Thirty-five electric co-ops will receive funding from the Federal Communications Commission Connect America Fund II reverse auction, which for the first time allowed cooperatives to participate as broadband service providers.

In comments on the Department of Agriculture’s Rural Utilities Service e-Connectivity Pilot Program, NRECA urged the RUS to 1) make 25/3 the minimum standard for an area to be considered served; 2) set 25/3 as the minimum “build-to” standard, but give priority to applications that would exceed the minimum speed and provide symmetrical broadband; 3) make population density a key factor in determining areas eligible for grants; and 4) allow flexible approaches to ensure affordable service.

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The National Rural Electric Cooperative Association is the national trade association representing more than 900 local electric cooperatives. From growing suburbs to remote farming communities, electric co-ops serve as engines of economic development for 42 million Americans across 56 percent of the nation’s landscape. As local businesses built by the consumers they serve, electric cooperatives have meaningful ties to rural America and invest $12 billion annually in their communities.