Technology Use among Rural Nevada Businesses

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1 February 2013

2 Rural Nevada represents a large and vibrant portion of the state and its economy. Rural Nevada counties (those that are not a part of a Metropolitan Statistical Area) encompass just over 95,000 square miles, or approximately 86% of the state s land area (Figure 1). 1 In 2009, rural Nevada counties produced $1.4 billion in exports, three-quarters of which were manufactured goods; this accounted for 15.6% of the state s output that year. 2 Figure 1. Rural and Non-Rural Counties in Nevada Washoe Humboldt Pershing 5 RENO Churchill CARSON CITY 5 Lyon Douglas Mineral Lander Eureka Elko White Pine Among the findings from this survey: Rural Nevada businesses have adopted technology at a rate similar to businesses in non-rural parts of the state. Approximately 87% of rural Nevada businesses use a computer and 74% use broadband. Technology utilization rates are lower among rural Nevada businesses than non-rural businesses. Only 52% have a business website, only 28% allow employees to telework, and only 4% subscribe to voice over Internet protocol (VoIP) service. Rural Nevadan businesses earn approximately $320 million annually in revenue from online sales, based on selfreported annual revenues. Symbology Rural Non-Rural Esmeralda Nye Lincoln LAS VEGAS 5 Clark A high concentration of businesses in rural Nevada are in the service, traditional, and manufacturing sectors, and these businesses adopt and use technology at lower rates than similar businesses in non-rural parts of the state. Only 72% of businesses in these sectors in rural Nevada have adopted broadband, and only 49% report that they use a website. The creativity and entrepreneurial potential of rural Nevadans has not gone unnoticed by national leaders. In fiscal year 2012, the United States Department of Agriculture (USDA) Rural Development fund allocated over $240 million to rural Nevada communities, with its Business Development program awarding just over $115 million in guaranteed loans, grants, and direct loans to support new businesses in rural parts of the state. 3 Broadband can do much to help businesses in rural Nevada become more successful and profitable. In a 2008 study, Connected Nation found that a seven percentage point increase in the use of broadband in the state could result in an economic boost of almost $1.2 billion, including over 23,000 jobs saved or created. 4 As part of its 2011 Business Technology Assessment, Connect Nevada examined technology adoption and use among rural businesses in the state. 5 Broadband can provide benefits such as increasing efficiency, improving market access, reducing costs, and increasing the speed of transactions and interactions. 6 However, in order to fully take advantage of these benefits, rural businesses need to not only adopt this technology but also fully utilize the tools that broadband makes available. 1 U.S. Census, American Fact finder, Population, Housing Units, Area and Density: 2010 County Census Tract, 2010 Census Summary File 1 (2010), 2 Brookings Institute (2011), Unify, Regionalize, Diversify: An Economic Development Agenda for Nevada, papers/2011/11/14-nevada-economy 3 Nevada News Bureau (October 6, 2012), USDA Gives Rural Nevada $240 Million Boost, 4 Connected Nation (February 21, 2008), The Economic Impact of Stimulating Broadband Nationally. connected_nation_eis_study_executive_summary_ pdf 5 Connect Nevada, 6 Federal Communications Commission (2010), The National Broadband Plan, 2 February 2013

3 Technology Adoption Technology has the potential to revolutionize business practices across all of Nevada, and rural businesses are making as much use out of computers and broadband as their urban and suburban competitors (Figure 2). Computer usage is slightly higher among rural businesses in Nevada, while broadband adoption is only three percentage points lower when compared to businesses in non-rural parts of the state. However, Connect Nevada s 2011 Business Technology Assessment shows that approximately 14,000 businesses in the state of Nevada are without the power of broadband; this includes approximately 2,500 rural businesses. Figure 2. Technology Adoption among Nevada by Location Rural Non-Rural 87% 85% 74% 77% Computer Usage Broadband Adoption Among the nine states surveyed by Connected Nation in 2011, Nevada ranks in the middle of the pack in terms of broadband adoption among rural businesses. On average, 72% of rural businesses surveyed by Connected Nation report that they subscribe to broadband, just below the broadband adoption rate for rural Nevada businesses (Figure 3). However, in states such as Texas and South Carolina, over 80% of rural businesses report that they use broadband, indicating there is some room for improvement in rural Nevada. Figure 3. Broadband Adoption among Rural by State Connected Nation Rural Average Alaska Florida Iowa Michigan Minnesota Nevada South Carolina Tennessee Texas 62% 72% 67% 69% 67% 74% 72% 74% 82% 81% As part of the Lyon County School District s Computer Centers for Rural Nevada project, the Walker River Paiute Tribe Technology and Learning Center offers digital literacy training for community members and small businesses February 2013

4 Satisfaction with Broadband Service While rural businesses have adopted broadband and other technologies at rates similar to those in non-rural parts of the state, there are some differences in how satisfied these businesses are with their broadband service. Approximately 8% of rural Nevada businesses that have broadband are not satisfied with their service, compared to 4% of businesses in nonrural parts of the state (Table 1). Table 1. Satisfaction with Broadband Service among Nevada How satisfied are you with your current Internet service? Rural Non-Rural Very Satisfied 54% 63% Somewhat Satisfied 38% 33% Not Satisfied 8% 4% Additionally, only 54% of broadband-connected rural businesses report that they are very satisfied with their service, compared to 63% of non-rural broadband-connected businesses. Technology Use While technology adoption among rural Nevada businesses is comparable to businesses in other parts of the state, there are some key differences in the way these businesses utilize technology (Figure 4). Over one-half (52%) of rural Nevada businesses have a company website, while only 4% subscribe to voice over Internet protocol (VoIP) service. In addition, only 28% of rural businesses allow employees to telework, compared to one in three non-rural businesses (33%). Figure 4. Technology Usage among Nevada Rural Non-Rural 65% 52% 28% 33% 4% 15% Website Usage Allow Teleworking Subscribe to VoIP Service There are also key differences in how rural Nevada businesses utilize a host of online applications (Table 2). in rural Nevada are more likely to use the Internet to purchase or place orders for products or services than those in nonrural parts of the state. Over nine out of ten Internetconnected businesses in rural Nevada go online for this important business function. However, rural Nevada Approximately 5,000 rural Nevada businesses are significantly less likely to market and advertise products and services online, an application that could potentially increase revenues and make more consumers aware of their goods and services. businesses use websites to attract new customers and advertise their products. 4 February 2013

5 Table 2. How Internet-Connected Nevada Use the Internet Which of the following activities does your business currently conduct using the Internet? Rural Non-Rural Purchasing or placing orders for products or service 92% 79% Communicating with your current customers 73% 79% Researching ways to make your business more efficient 63% 74% Marketing and advertising of products and services 54% 68% Billing or bill payment 55% 55% Selling or accepting orders for products or services 45% 50% Providing customer support for your products or services 41% 50% Accepting real-time payments such as credit card and debit payments 28% 38% Advertising current job openings 24% 38% Accepting job applications 20% 35% Bidding on contracts 24% 32% Additionally, businesses in rural Nevada are significantly less likely to use the Internet to attract a more talented workforce by advertising current job openings and accepting job applications online. Online Revenues in Rural Nevada The Internet provides businesses the potential to sell goods and services not just locally, but to also reach a national and even global market. By the end of 2012, J.P. Morgan estimated that the global online e-commerce revenue market would reach approximately $820.5 billion, including $212 billion in the United States alone. 8 Across Nevada, over one-third (34%) of rural businesses earn revenue from online sales (Figure 5). These online sales represent approximately $320 million in annual revenue for rural Nevada businesses. Online sales represent approximately $320 million in annual revenue for rural Nevada businesses. Figure 5. Revenue from Online Sales among Nevada Rural 66% Do not earn revenues from online sales 34% Earn revenues from online sales 8 J.P. Morgan (January 3, 2011), Nothing But Net: 2011 Internet Investment Guide, 5 February 2013

6 Technology Adoption by Key Industries in Rural Nevada While the majority of businesses in rural Nevada are in service-based industries, it is also notable that traditional and manufacturing businesses make up a larger share of rural businesses than in the state s metro areas. 9 According to data from the Nevada Department of Taxation, nearly 7% of businesses in rural Nevada are in these traditional and manufacturing sectors, compared to only 2.5% of businesses in non-rural parts of the state (Table 3). 10,11 The percentage of rural businesses in the service sector is similar to the percentage of non-rural businesses; over two-thirds (69%) of businesses in rural Nevada are in the services sector, compared to 65% of businesses in non-rural portions of the state. However, less than 23% of rural Nevada businesses are in the knowledge and technology sectors, compared to almost one-third (32%) of non-rural businesses in these sectors. Table 3. Registered Business Locations with a Sales or Use Tax Account in the State of Nevada Business Sector Rural Nevada Non-Rural Nevada All traditional and manufacturing sectors 6.7% 2.5% Agriculture, forestry, fishing and hunting 1.7% 0.1% Mining, quarrying, and oil and gas extraction 1.4% 0.2% Manufacturing 3.6% 2.2% All service sectors 69.0% 65.1% All knowledge and technology sectors 22.7% 32.0% Unclassified establishments 1.6% 0.4% in the services, traditional, and manufacturing sectors play a prominent part in the economy of rural Nevada. However, technology adoption and usage are lower among rural businesses in these sectors than among non-rural businesses in the same sectors (Figure 6). Only 72% of businesses in these sectors in rural Nevada have adopted broadband, compared to 76% of non-rural Nevada businesses in these sectors. In addition, significantly fewer businesses in these sectors are utilizing broadband for important business functions compared to similar businesses in the rest of the state: only 49% have a website and only 2% subscribe to VoIP service. 9 Brookings Institute (2011), Unify, Regionalize, Diversify: An Economic Development Agenda for Nevada, papers/2011/11/14-nevada-economy 10 Registered Business Locations with a Sales or Use Tax Account in the State of Nevada, Nevada Department of Taxation, were categorized by industry based on North American Industry Classification System (NAICS) code description. 11 For the purposes of this report, Connect Nevada defines businesses in traditional and manufacturing sectors as those classified by North American Industry Classification System (NAICS) code description as the following sectors: Agriculture, forestry, fishing and hunting; Mining, quarrying, and oil and gas extraction; and Manufacturing. in the services sectors are classified as those in the following sectors: Construction; Utilities; Wholesale trade; Transportation and warehousing; Retail trade, Real estate and rental and leasing; Management of companies and enterprises; Administration and support and waste management and remediation; Educational services; Arts, entertainment, and recreation; Accommodation and food services; Other services (except public administration); and Public Administration. in the knowledge and technology sectors are classified as those in the following sectors: Technology intensive; Information; Finance and insurance; Professional, scientific, and technical services; and Health care and social assistance. 6 February 2013

7 Figure 6. Technology Adoption and Use among Nevada in the Services, Traditional, and Manufacturing Sectors Rural Non-Rural 86% 86% 72% 76% 65% 49% 26% 28% 2% 15% Computer Usage Broadband Adoption Website Usage Allow Teleworking Subscribe to VoIP Service The state of Nevada has released an economic development plan that names key industries of importance to the state s economic diversification and development. These include Tourism, Gaming, and Entertainment; Clean Energy; Health and Medical Services; Aerospace and Defense; Mining, Materials, and Manufacturing; Business IT Ecosystems; and Logistics and Operations. 12 The Brookings Institute also identifies Mining, Materials, and Manufacturing; Clean Energy; and Tourism, Gaming and Entertainment as sectors with large concentrations of firms in rural parts of the state on which it may be beneficial to focus economic development efforts. 13 Incorporating efforts to encourage broadband adoption and use in these sectors, particularly among services, traditional, and manufacturing businesses that are important to rural Nevada s sectors still do not use broadband. economy, will need to be a part of any successful economic development efforts. Approximately 2,000 rural Nevada businesses in the Services, Traditional, and Manufacturing Douglas County, Nevada: First Certified Connected Community in Nevada Communities are recognizing that to attract high quality jobs and forward-looking entrepreneurs, they will need to offer more than office space and access to a local highway. Communities must be able to provide the technical resources and know-how to attract these employers. In a networked world, broadband access and its applications, as well as a digitally literate population, are central to economic and workforce development, education, and the realization of more livable, healthy communities. Recognizing these facts, a local committee in rural Douglas County led the grassroots effort to make the county the first certified Connected community in Nevada in December In fact, as a result of Douglas County s hard work, it has become only the second community in the nation to earn that recognition Nevada Board of Economic Development, Moving Nevada Forward: A Plan for Excellence in Economic Development, ShowDocument.aspx?documentid= Brookings Institute (2011), Unify, Regionalize, Diversify: An Economic Development Agenda for Nevada, papers/2011/11/14-nevada-economy 14 Connect Nevada, Nevada welcomes first certified Connected community, 7 February 2013

8 Connected Nation s Connected community engagement program was created to guide communities in their efforts to meet their current broadband needs, while proactively planning to meet the future technological needs of residents, local government offices, educators, employers, and a host of other stakeholders. The Connected program provides a framework around which communities can assess their current levels of broadband availability, adoption, and use. The process helps communities identify their current assets, recognize where improvements can be made, and start designing a path by which leaders can make sure that their communities are ready to meet the needs of future citizens and employers. Once a community has undergone this assessment process, it must prove that it has the current capability to facilitate effective access, adoption, and use of broadband, as well as a well-designed plan to meet the community s future technology needs, before it can receive the Connected certification. Connect Nevada Program Manager Lindsey Niedzielski (left) and Technology Advisor Ariel Martinez (right) present the Connected certification to Community Champion and Douglas County Emergency Services Communications Manager Tammy James at the Douglas County Emergency Operations Center in Minden. The Douglas County Technology Action Plan, developed as part of the Connected program, includes the expansion of digital literacy in the community to build awareness of the benefits of broadband. In addition, to meet the growing need for a digitally literate workforce, Douglas County plans to develop or identify a broadband training and awareness program for small and medium businesses to address those needs. You cannot overestimate the importance of broadband and connectivity to the business community in Carson Valley, said Bill Chernock, Executive Director of the Carson Valley Chamber of Commerce in Douglas County. From the largest multinationals to franchises to medium sized businesses to mom and pop retailers to entrepreneurs working from their homes, the ability to conduct business efficiently over the web is mandatory. The efforts of Connect Nevada here have been critical to getting us on the path to broadband availability in every portion of Douglas County. The ability to conduct business efficiently over the web is mandatory. Bill Chernock Executive Director of the Carson Valley Chamber of Commerce in Douglas County Conclusion Broadband-connected businesses have an increased capacity to reach a wider market for their goods and services, increase operational efficiencies, and reduce costs. Rural Nevada businesses have adopted technology at a rate similar to non-rural businesses in the state and are putting it to good use, as evidenced by the fact that they earn approximately $320 million each year in revenue from online sales. On the other hand, rural Nevada businesses are falling behind in their usage of several applications, like marketing and advertising jobs online, that can have a great impact on their economic success. This is particularly true among rural businesses in the services, manufacturing, and traditional sectors. Rural Nevada is an important region to the state. Improving both the adoption and usage of technology by businesses in this region may have the potential to provide economic benefits to the entire state. 8 February 2013

9 Methodology and Definitions Between October 4 and October 25, 2011, Connect Nevada conducted a telephone survey of 804 Nevada business establishments. Data were collected by Thoroughbred Research Group, located in Louisville, KY. The purpose of this survey was to measure trends in technology adoption; measure barriers to technology adoption; determine how Nevada businesses are using broadband as an engine of economic growth; and measure the average price and speed of broadband service among business establishments across the state. On average, these surveys took approximately nine minutes to complete. Sample quotas were established by company size (5 brackets) and industry sector (8 sectors). Within these 40 cells, a randomly-drawn sample of businesses listed with Dun & Bradstreet was contacted for the survey. Altogether, this sample included 98 businesses with 50+ employees, 156 businesses with employees, 281 businesses with 5-19 employees, and 269 businesses with 1-4 employees. In cases where the respondent s information regarding the number of employees at the establishment differed from the information provided by Dun & Bradstreet, the respondent s answer was used in determining business size quotas. Connect Nevada intentionally over-sampled large businesses to ensure a sample that was large enough to analyze and compare to smaller businesses. In addition to the size and sector quotas, the data were subsequently weighted to ensure that the sample was representative of all employer business establishments statewide, with targets determined according to the 2009 United States Census Bureau s County Business Pattern report, the most recent data that was available at the time the survey was conducted. Weighting of the survey data and research consultation were provided by Lucidity Research LLC, located in Westminster, MD. The survey results were subsequently peer reviewed by experts at the Center of Resource Economics at the University of Nevada, Reno. This sample provides a margin of error of + 4.5% at the 95% confidence level for the total sample of 804 businesses. This sample error accounts for sample weighting, using the effective sample size. As with any survey, question wording and the practical challenges of data collection may introduce an element of error or bias that is not reflected in this margin of error. The Nevada Business Technology Assessment was conducted as part of the State Broadband Initiative (SBI) grant program, funded by the National Telecommunications and Information Administration (NTIA). The complete survey results were peer reviewed, and these analyses will be utilized by Connect Nevada and Nevada stakeholders to help increase adoption and use of broadband by Nevada businesses. The SBI grant program was created by the Broadband Data Improvement Act (BDIA), unanimously passed by Congress in 2008 and funded by the American Recovery and Reinvestment Act (ARRA) in To learn more about Connect Nevada and its programs please visit, or us at To learn more about becoming involved in Connect Nation s Connected program, please visit org/get-connected or us at 9 February 2013

10 APPENDIX A: Select Sample Sizes All (n) Internet-Connected (n) Broadband-Connected (n) Non-Rural Rural Rural in Services, Traditional, and Manufacturing Sectors Non-Rural in Services, Traditional, and Manufacturing Sectors February 2013

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