The South Shore of northern Wisconsin — where Bayfield County meets Lake Superior — is known for its natural beauty. Summer used to be the main tourist season, except for the occasional year when the Apostle Islands ice caves attracted cold-season visitors. But things are different now.
“A huge impact of the broadband expansion up here was that we’re now getting year-round visitors,” says entrepreneur J Erin Hutchinson. “During the pandemic, people were looking for an escape from the cities and discovered the South Shore as a destination, in part because Minnesota’s North Shore was getting crowded.” High-speed internet allowed people to work from their destination of choice.
This has changed not only tourism but also broad swaths of the local economy — a big deal for Bayfield, whose manufacturing sector is much smaller than in neighboring Ashland and Douglas counties. Remote work, fostered through broadband access, spurred the housing market and related businesses. And buying homes (or land to build on) is more appealing when local companies can help with short-term rentals while the owners aren’t using the property themselves. At her property management company, Hutchinson has noticed a big change in the importance of broadband to her clients. “People interested in renting a summer cabin didn’t use to ask about high-speed internet,” says Hutchinson. “Now it’s the first question I get.”
Bayfield County — one of Wisconsin’s least populated counties at about 11 people per square mile — is a perfect example of the difference broadband can make. Its main internet service provider is Norvado, a telephone cooperative established in 1950. Decades after the company’s founding, the conversion of telephone lines to fiber optic cables became a new income stream, and Norvado received federal broadband grants to improve and expand that infrastructure. Hutchinson, who moved to the area in 2016 from California’s Silicon Valley, saw that money put to good use. “Just anecdotally, I bet 75% of the people I knew up here five years ago complained about not having broadband,” she says. “Now I can hardly think of anybody.”
But not all of Wisconsin’s 72 counties have been as lucky as Bayfield. That’s something CALS researchers and their partners at the UW–Madison Division of Extension are working to change.
The Federal Communication Commission defines broadband as an internet connection with at least 25 Mbps (transfer of “megabits per second”) of download speed and at least 3 Mbps of upload speed.
Availability vs. Adoption
The issue of greater access to high-speed internet in urban than in rural America has received much media attention and spurred federal and state efforts to improve the country’s broadband infrastructure. Nationwide, 77% of households in counties that are completely rural or have an urban population below 2,500 have internet compared to 87% for counties with metro populations above one million. (In Wisconsin, those figures are 81% and 88%.) Lower population densities deliver less return on investment for internet service providers, and the cost of laying cables is higher in remote areas due to fewer roads and longer distances between homes.
But Steven Deller, a CALS professor of agricultural and applied economics and extension specialist, is more concerned about a larger gap. “There are many pockets of low-income people who can’t afford broadband regardless of where they live,” he says. From the most rural to the most urban counties, only 57–69% of households that earn less than $20,000 have internet access compared to 92–96% of households earning more than $75,000.
That income gap means building up the infrastructure to improve availability is only the first step. “Since cost is a huge barrier, the mantra ‘if you build it, they will come’ doesn’t apply here,” says Deller. Instead, the policymakers charged with allocating federal and state dollars to the nation’s broadband- deficient counties need to improve adoption. To do so, they will require two equally important pieces of information: accurate maps of existing broadband service and a reliable estimate of people’s ability to pay for internet service once it arrives.
Deller is working with Extension geographer Matt Kures on the first part. The current maps from the Federal Communications Commission (FCC) are unreliable because they are based on service providers’ subscription information. In practice, this means an entire neighborhood is marked as “having broadband” even if only a single household is in the provider’s database. Extension is partnering with the Public Service Commission’s Broadband Office to improve the FCC maps and fill the actual service gaps.
The second part — estimating internet affordability — is a research project for Deller’s graduate student, Mckenzie Boyce. She started her Ph.D. program in agricultural and applied economics in fall 2022, and she’s focusing on community economic development. Her interest in broadband is both professional and personal.
“I have plenty of first-hand experience with internet challenges from growing up in rural northern California in a town of 1,000 people,” she says. “When I woke up in the morning, I never knew whether I would have internet that day — or how long it would last.”
Soon after Boyce arrived on campus, she began working with Deller and extension specialist Kristin Runge PhD’17 to develop the Wisconsin Broadband Survey. Runge oversaw its distribution to a representative sample of residents. Next, Boyce and Deller used statistical “willingness to pay” models to analyze the survey responses from 703 Wisconsin households.
Willingness to pay estimation is a popular strategy for determining the value of goods and services that aren’t sold in retail markets, such as parks, lakes, and other natural resources. In this case, it will help target broadband expansion efforts to each county’s demographic and socioeconomic profile.
To estimate willingness to pay (stratified by household income), the researchers provided eight realistic broadband packages of varying speeds and reliability, each at three price points, from which survey respondents could choose. For example, package 1 options ranged from $75 for 50 megabits per second (Mbps)/occasional outages to $150 for 300 Mbps/rare outages; the range for package 6 was $20 for 25 Mbps/occasional outages to $100 for 100 Mbps/rare outages. For all scenarios, respondents could also choose not to purchase any service.
Some of the main findings: Lower-income households (annual income below $35,000) are willing to pay $46.72 per month for 25 Mbps services compared to $165.76 for higher-income households (above $150,000). The respective numbers are $10.85 and $38.48 per month for services with fewer outages, suggesting that many consumers value speed more highly than reliability. In addition, rural residents chose to not purchase internet services less frequently than urban residents.
“These results will help local officials decide whether to seek out additional funding to reduce the monthly cost of internet and by how much,” says Boyce. “For example, we can predict for each county how many more people would likely sign up if the monthly cost was $75 instead of $120.”
That information is critical for two parties: the communities planning to apply for federal broadband funds and the regulators that oversee this effort. “The Governor’s Task Force on Broadband Access [formed in July 2020 to advise the governor and the Wisconsin State Legislature] is eagerly awaiting our WTP results,” says Deller.
And there’s a third interested group: internet service providers who build the infrastructure and care about their return on investment from future subscriptions. They play an especially important role because communities need to partner with specific providers to be eligible for federal infrastructure grants. According to Deller’s analysis of 2016 national FCC broadband data, a commercial provider’s decision to invest in a new region depends mostly on three factors: population density, educational attainment, and household income. Higher values provide greater incentives for providers to spring into action.
⊕ Cover Story Sidebar: An Encouraging Mechanism for Broadband Expansion
Like the Norvado telephone cooperative in northern Wisconsin, electric utilities can help bring broadband to rural areas more quickly than large commercial providers.
A Boon for Entrepreneurs
Economic growth can help reduce the income gap that contributes to the urban-rural digital divide. Two of the building blocks of economic growth are human capital and entrepreneurship. The latter is of particular interest to Tessa Conroy, an associate professor of agricultural and applied economics and an extension specialist.
On a per-capita basis, rural counties have similar levels of entrepreneurial activity as their urban counterparts; but, Conroy says, they are more frequently held back by a lack of broadband access. And broadband, she adds, is not the only factor that has changed the nature of American entrepreneurship since the 1990s. The share of women-owned businesses has also grown, from 26% in 1997 to 36% in 2012.
This prompted Conroy to study the role of broadband and gender in rural entrepreneurship. She analyzed businesses launched between 2005 and 2007 in 1,990 nonmetro U.S. counties. The reference point for her analysis was a typical rural county with 25,000 residents, an average of 1.4 broadband providers, and 228 new business launches per year. Conroy found that an above average number of broadband providers in an otherwise similar county caused 85 additional business launches, for a total of 313 per year. This effect was about four times larger than that of banks offering above-average loan amounts.
Digging deeper, Conroy found this was primarily due to a strong causal relationship between broadband access and women-owned businesses in remote rural areas without paid employees. The ability to include these “nonemployer” businesses in her dataset was especially important to Conroy because they are more likely to be owned by women, regardless of where they live. Studying these businesses helps her understand differences between male and female entrepreneurship.
“Policies that support entrepreneurship often focus on job creation via businesses with paid employees, but this implicitly disadvantages women-owned firms,” says Conroy. “Our study showed that we can support a more diverse set of business owners more equitably by expanding broadband access.”
The study reaffirmed Deller and Conroy’s earlier work: Broadband is increasingly relevant to rural entrepreneurship and boosts rural economic growth. Not surprisingly, it is also positively correlated with housing values. Deller’s analysis of the 2016 FCC broadband data showed that a 10% increase in coverage of at least 0.2 Mbps is associated with a $661 increase in the median rural house value.
Broadband also supports economic growth in a sector of particular relevance to Wisconsin: agriculture. Online marketplaces provide new opportunities for farmers, especially those in remote rural areas, to sell their products directly to consumers. For example, Hutchinson, the South Shore entrepreneur, started a nonprofit online marketplace for farmers, artists, and artisans in the Herbster area in 2020. And precision agriculture — the use of networked technology to generate the same output with less input — relies heavily on broadband.
More workers capable of operating such modern agricultural technology will be needed in the future, and broadband helps educate that workforce. An analysis of U.S. counties by Conroy, Deller, and their Extension colleagues showed that counties with more broadband access had higher average thirdgrade reading test scores and a greater proportion of college-educated adults.
Health Boost via Broadband
Human capital, another pillar of economic growth, includes education and labor market participation, and someone’s physical and mental health can impact their ability to pursue professional training and employment. But agricultural and applied economics graduate student Vikas PD Gawai noticed a dearth of studies on broadband and mental health in the economic literature. He talked to Deller about combining national broadband and health outcome data to see if the two factors were related.
“I had seen a 2022 paper in a top economics journal showing that the rollout of social media at U.S. colleges had a negative effect on the mental health of young adults, especially girls, due to frequent social comparisons,” says Gawai. “That made me wonder about the relationship between broadband and older adults.” He thought internet access might improve the wellbeing of seniors by increasing their social connectedness.
The Health and Retirement Survey (HRS) provided Gawai with a high-quality source of health outcome data. Launched in 1990, the survey’s University of Michigan researchers contact the same 20,000 participants — a nationally representative sample of adults over age 50 — every two years to ask questions about their health and economic circumstances. For those who apply for access, the HRS data is provided at the U.S. Census tract level, a county subdivision with an average of about 4,000 residents.
Gawai combined this so-called panel dataset with the staggered rollout of fiber optic internet between 2010 and 2018, according to the FCC. The proportion of Census tracts with access to fiber internet grew exponentially, from 20% to 75%, during this time. Although the FCC maps are imperfect, Gawai says the information about the year in which at least one household in a Census tract received fiber is considered to be reliable.
Next, Gawai calculated an index of social connectedness for the HRS participants that he could track from 2010 to 2018. Before broadband became available, averaging that index across Census tracts produced a number close to zero. After the arrival of broadband, the number did not change immediately, but it began to grow and was significantly greater than zero about six years later.
“I think that makes sense because many older people are less tech-savvy than younger populations, and it may take them a while to learn new things, such as emailing, texting, or making video calls,” says Gawai.
His parents in India, where Gawai grew up, are a perfect example. “Once they had broadband access, my sister taught them how to make WhatsApp video calls, and now they call me every week,” he says. “That’s just one example of being more connected when you cannot see people in person.”
In another analysis, Gawai analyzed the number of self-reported symptoms of depression, such as restless sleep and feeling sad or lonely. A binary variable, with the value 1 meaning at least five of eight symptoms and 0 meaning zero to four, is positively correlated with a clinical diagnosis of depression, according to mental health researchers.
Gawai identified a 10%–15% decrease in depressive symptoms six to eight years after the arrival of broadband. Interpreting this relationship as causal requires assumptions that are difficult to test, meaning that other, unmeasured factors may also play a role. However, says Gawai, the observed increases in several health-related variables — social connectedness, online health literacy, and the use of health-related apps — suggest plausible mechanisms for mental health improvements. The link between broadband and depression was stronger in rural than urban Census tracts and also stronger in women, who are more likely to use the internet to seek health support and research medical information.
Mental health is only one part of the equation. In another ongoing project, Deller is using U.S. county health rankings, compiled annually since 2010 by the UW Population Health Institute, to analyze the link between broadband, physical health, and life expectancy. Preliminary analyses suggest that access to broadband has a positive effect on health, but this varies across the country. For example, the relationship holds for the northern parts of the Upper Midwest but not for New England. Deller hopes to tease out some potential reasons for these spatial differences.
Knowledge to Action
With such a wide range of broadband-related benefits, taking research findings beyond the walls of CALS is a top priority. Deller likes to think of this as a three-pronged approach. Part one consists of building a research foundation for quantifying the impact of broadband. Studies of rural entrepreneurship and housing values have already been published; analyses of other outcomes, such as health and remote work, are in the pipeline.
Part two involves providing data to policymakers to inform their decisions and funding allocations. That includes more accurate coverage maps and the willingness-to-pay survey. Part three builds upon the long-standing partnership between CALS and Extension. Extension specialists regularly attend community meetings all around the state to speak with local leaders and the general public and share evidence-based advice on how to expand each county’s broadband infrastructure.
There is no one-size-fits-all approach for that advice, of course. “A rural community in Iowa County is very different from one in Vilas or Crawford, where you have one lake after another, and it’s very difficult to install fiber optic cables,” says Deller.
Figuring out which strategy is most effective in delivering broadband to all Wisconsinites requires a deep understanding of local economies and geographies. Local history is also important: Thanks to the former telephone coop that became Bayfield County’s main internet provider, this community on Lake Superior’s South Shore has become a poster child for rural broadband success stories. With any luck — and the continued support of CALS and Wisconsin’s public universities —the rest of the state will eventually follow suit.This article was posted in Cover Story, Economic and Community Development, Fall 2023, Features, Health and Wellness and tagged agricultural and applied economics, broadband internet, Division of Extension, Extension, Kristin Runge, Matt Kures, Mckenzie Boyce, rural broadband, South Shore Wisconsin, Steve Deller, TDS Telecom, Tessa Conroy, Vikas PD Gawai.