Lack of access to cloud computing can hamper rural innovation

Lower broadband access rates in rural Americas are interfering with the adoption of cloud computing, a major factor in business innovation, according to a new study from Penn State and the National Science Foundation.

If you don’t have broadband, you can’t do cloud computing, said Timothy Wojan, who co-authored the study and is a fellow at the National Center for Science and Engineering Statistics (NCSES). People who lack high speed broadband cannot adopt this new way of doing business.

In cloud computing, users store applications and data on remote servers and gain access to that information over the Internet, rather than through a local hard drive. Requires a fast and stable internet connection.

Cloud computing gives businesses lower upfront costs for computer hardware and software, leaving them more leeway to experiment with new innovation strategies, Wojan said.

Cloud computing shows a strong correlation with innovation, according to the study. Innovation rates between urban and rural businesses that have cloud computing are nearly identical, Wojan said. Similarly, urban and rural businesses without cloud computing also have similar rates of innovation.

The study defined innovation as any marked change in business operations, such as bringing new products to market, updating marketing strategies, revamping quality assurance control, and optimizing service delivery. It means healthy businesses.

There are a lot of good ideas out there in rural areas, but what the digital divide suggests is that many rural businesses may have less capacity or ability to leverage those innovative ideas, Wojan said.

The digital divide is due to the fact that the internet is much less accessible, slower and more expensive in rural areas on average than in urban areas.

Speeds have improved. It’s gotten better every year, Wojan said. It has traditionally been a last mile problem, as getting high speed broadband to rural areas is a very expensive thing to do.

The more urban a county, the more likely businesses are to use cloud computing. The chart shows the percentage of businesses using cloud computing according to the Rural Urban Continuum Codes, a system created by the USDA Economic Research Service. The counties on the left side of the graph are more urban; the counties on the right side of the graph are more rural. (Data taken from “Experimenting in the cloud: The digital divides impact on innovation”, Telecommunications Policy, August 2023)

The bipartisan infrastructure deal, approved in 2021, has accelerated the process. The bill includes provisions to increase broadband access in underserved or underserved areas and set aside $43 billion to ensure that Americans in every locality have access to high-speed Internet. This is hoped to greatly reduce the digital divide, Wojan said.

We’re in the early days of rolling out that funding so far, a lot of the funding has gone to planning. Some of it, in better-prepared states, has actually gone into starting putting fiber on poles and connecting people, said Matt Dunne, founder of the Center on Rural Innovation (CORI) and a former Vermont state representative. It’s super exciting to see that progress, but it’s going to be a multi-year effort. Similar to rural electrification, this won’t be an easy process, but we’re excited to see it continue to accelerate.

CORI serves as an advocate, educator and partner in bridging the digital divide. We do this in a variety of different ways, from helping states with their state plans, to helping regions and counties be able to address federal funding challenges and make sure they are able to realize that potential, Dunne said. We work hard to help rural communities have the infrastructure in place so that everyone from businesses to home consumers can have access to fast fiber broadband.

Despite the challenges, Dunne said change is coming to rural broadband. I would say the progress made today is still pretty rapid, Dunne said. Having spent nearly all of my adult life working on this particular subject, it’s a great time for the United States

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