TVA Rural Studies

Telecommunications and Rural Development:
Threats and Opportunities

Edwin B. Parker
Parker Telecommunications
May 1996

1. Summary

The Information Superhighway is now under construction in many rural communities in the United States. The information services carried over these new digital superhighways will transform rural economies as much as the interstate highway system and the railroads changed rural American communities in earlier times. There is one major similarity and one major difference between the information highways and the ribbons of concrete and steel that make up the physical transportation network. The US economy could not support bringing railroads and multi-lane interstate freeways to every rural community. Those rural communities with good access to the railroads and the interstate freeways became more prosperous than those communities left off the beaten paths. The similarity is that those rural communities with good access to the national and international information superhighways will have stronger local economies than those without good access. The difference is that it is economically feasible for every rural community in the United States, no matter how remote, to have good access to the information highways of the twenty-first century. Some communities will have better access or have it sooner. Which rural communities will benefit the most and the soonest will depend not on Federal or state information highway engineers (or Federal and state regulators), but on local action by local communities.

The Telecommunications Act of 1996 sets in place the ground rules and guidelines for implementation of the national information highways. They will be built by many competitive private enterprise businesses. Telecommunications will no longer be the preserve of regulated monopolies. The new Federal legislation guarantees that the same competitive forces that brought us stunningly rapid change in computer technology will also drive future changes in telecommunications. State laws and regulations protecting local monopolies are no longer valid. Subsidy mechanisms will continue to support the traditional telecommunications goal of “universal service” but in significantly revised forms. Federal Communications Commission regulations and state laws and regulations are in the process of being revised to conform to the new Federal law. These changes will affect some of the details but not the main thrust of this historic change.

The venue for action now shifts to local communities. Those rural communities wishing to take advantage of the exciting new potential for economic development or to protect themselves from being hurt by the changes should move ahead with local action plans. Competitive forces by themselves may be sufficient to create the inter-urban links and urban access lines for new high capacity digital networks. In rural communities the problem will be to bring together enough combined demand from government, business and residential users to ensure that at least one high capacity digital link is available to connect users in their community to the emerging information superhighway. There is so much economic opportunity in urban areas that the major telephone and cable companies are likely to focus their competitive attention there instead of on smaller rural markets. Local rural communities that fail to take action may be left behind. It is currently economically feasible to bring high capacity telecommunications networks to every community in the US. (This is not the same as a longer term goal of bringing high capacity networks to every rural household.) Rural communities that take advantage of the opportunities can remove the traditional barriers of distance and small scale that were barriers to local economic improvement. With sufficiently improved communications, the competitive playing field, instead of being tilted in the urban direction, can now become level. Rural communities can use their environmental and social advantages in competition with urban rivals. Nevertheless, the telecommunications changes will be a two-edged sword. The information superhighways will permit travel in both directions. Small rural markets will no longer be insulated from urban rivals. Rural communities that fail to grasp the opportunities will be more economically disadvantaged than they are today.

Jump to Section:
Contents, (1), 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, App A, Endnotes

Back to the 1996 Rural Telecommunications Workshop Homepage