Could Google's Broadband Announcement Have an Impact on Local Economic Development?

Internet search giant Google has announced that the company is planning to build and test extremely high-speed broadband networks in one or more trial locations in the U.S. Participating communities would have access to fiber-to-the-home connections similar to those that connect many research universities. Google plans to consider communities for the pilot program based on a number of factors, including the level of community support, local resources and regulatory issues and the current level of broadband services available.

The announcement coincides with the Federal Communications Commission's (FCC) development of a national broadband plan. The plan could make the installation of fiber networks a national priority. Despite the potential of fiber-to-the-home networks to boost national competitiveness, a recent report finds that Google's fiber initiative might have limited impact on local economic development.

Google is promising speeds of up to one gigabit per second through fiber connection, more than 100 times faster than the connections most Americans currently use. Widespread use of fiber-to-the-home would make a variety of new applications possible, particularly video services like IPTV and 3D medical imaging. Faster speeds could also serve as an enticement for businesses seeking high-speed connections for research and bandwidth intensive operations. The company has not yet announced its pricing model, but promises that the service would be offered at a competitive price.

Google's announcement comes as the FCC is finishing work on its National Broadband Plan, which will be released next month. Last year's Recovery Act tasked the FCC with devising a plan to accelerate broadband deployment across the U.S.. On Wednesday, the FCC announced that the plan, when released, will encourage the creation of ultra high-speed testbeds, similar to those being proposed by Google.

Google's initial comments on the FCC plan recommended new fiber installations in communities across the country. The three-point framework submitted by the company included the installation of broadband fiber as part of every federally-funded infrastructure project, the deployment of broadband fiber to every library, school, community health care center and public housing facility in the U.S., and new incentives for providers to install multiple lines of fiber as new networks are rolled out. The Google pilot program may help the FCC achieve these goals by linking the company's fiber initiative to the plan's testbed program.

Ambitious broadband deployment goals, such as the 100 million households at 10mbps goal suggested by the FCC and the universal 5mbps level suggested by Google, have gained caché recently due to a slew of reports documenting the declining international competitiveness of U.S. broadband. Comments submitted by the Information Technology and Innovation Foundation on the FCC plan note that the U.S. has fallen to the middle ranks among OECD countries in broadband adoption, price and speed. There is a broad consensus that increased deployment and competition would benefit the national economy, according to the ITIF submission.

The issue, however, is not so clear in terms of what high-speed deployments, such as those being offered by Google, mean for local economic development. In a recent article from the Public Policy Institute of California, Jed Kolko argues that although there is a positive relationship between broadband expansion and local economic growth, the economic benefits to residents is limited.

Increases in the availability of high-speed connections are associated with population growth, according to the report. As a result of the population growth, local employment rates tend to remain static despite the increase in broadband availability. High-speed connections also appear to have little impact on average wages. Broadband availability and higher speeds can fuel economic growth, but this is more likely in regions that already have strong information technology sectors and those that have low population densities. Kolko notes that higher speeds might have other social or economic benefits, such as improved health care or higher property values, but deployment would not necessarily benefit current residents.

As many communities are currently putting together submissions for Google's pilot program, local TBED groups would do well to consider what they would like to achieve through their broadband expansion efforts. Participating in the pilot program could offer a national spotlight for a community and its high-tech sector but may not translate into economic development if the local tech economy is not yet ready.

Read "Does Broadband Boost Local Economic Development?" at:http://www.ppic.org/content/pubs/report/R_110JKR.pdf

Read Google's announcement and instructions for how to apply for the pilot program at: http://www.google.com/appserve/fiberrfi/public/overview.