MoBroadbandNow Regional Disparities in Broadband Speed and Cost in Missouri An Analysis of Broadband Pricing Data The fourth in a series of MoBroadbandNow reports addressing the broadband challenges in Missouri January 2014
This report was prepared by the State of Missouri Office of Administration Information Technology Services Division (MoBroadbandNow Initiative) under award 29-50-M09022 from the National Information and Telecommunications Administration (NTIA), U.S. Department of Commerce. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the NTIA or the U.S. Department of Commerce. ii
Regional Disparities in Broadband Speed and Cost in Missouri 1 Executive Summary In 2009, Gov. Nixon set a goal to expand broadband access to 95% of Missourians by 2014, from a base level 79% (a goal that has been met as of 2013, access levels are above 97%). Since that goal was set, the MoBroadbandNow initiative has worked to collect and analyze data from Internet Service Providers and Missouri businesses and residents in order to better understand broadband access and adoption in Missouri. This paper the fourth in a series presents an analysis of Internet pricing and speed data in order to better understand regional and county-level disparities in broadband cost and speed, and how broadband cost and speed correlate to economic and demographic factors, including median household income, population density and rurality, population change, and number of businesses. The data was obtained from Telogical Inc and covers a one year period from April 2012 to March 2013. The report finds that when analyzing speed and cost, disparities continue to exist in Internet access in Missouri across counties and regions, and between rural areas and urban ones. Several key illustrations of this include: Internet speed is lower in rural areas, in areas with lower average household incomes, and in areas experiencing population loss. It is higher in higher density areas, areas with higher concentrations of businesses, and areas with higher household incomes and areas experiencing population increases. Moving up an Internet speed tier costs more at lower speed tiers than at higher speed tiers. This reflects that in some areas (rural areas) the cost of even a basic Internet connection is very high. Monthly average price does not vary greatly across regions, but the average speed across regions varies meaning in regions with lower speeds, the costs per megabit is higher. The percentage of household income spent on Internet is lower in regions with higher median household incomes than in regions with lower median household incomes, even though the Internet speeds offered are lower in regions with lower median household incomes. 1 Authored by Shriniwas Gautam, and Timothy Haithcoat, Geographic Resources Center, University of Missouri with support from Anna Read and Damon Porter in the MoBroadbandNow Program Office.
The promotions offered by the Internet Service Providers are generally more attractive for regions that have higher median incomes and higher average speeds (mbps). More information on MoBroadbandNow and previous reports can be found on www.mobroadbandnow.com. 2
About MoBroadbandNow: MoBroadbandNow was established by Gov. Jeremiah W. (Jay) Nixon in 2009 as a public-private partnership initiative to expand and enhance broadband accessibility and adoption in Missouri. Gov. Nixon regards broadband accessibility and adoption as fundamental to Missouri s future and global competitiveness, in much the same way as the railroad, and the interstate highway system were to their historic periods. As a result, Gov. Nixon set an ambitious goal to increase the number of Missourians with broadband accessibility from the initial level of 79% in 2009 to at least 95% by the end of 2014. Analysis of the broadband mapping data from June 2013 (in addition to other data collection efforts of MoBroadbandNow program) indicate that this goal has been achieved. The definition of the digital divide is evolving from solely a gap in digital adoption, to a gap in digital opportunities. i Initially, the digital divide indicated a gap in Internet adoption, and more recently researchers are suggesting that adoption gaps, especially in developed counties, are disappearing as more and more people are connected to the Internet. In Missouri, over 97% of the population is estimated to have access to Internet/broadband (based on June 2013 data submission to the National Telecommunications and Information Administration) compared to only 79% in 2009. However, the Internet opportunities Missourians have depend on where they live and work, what digital knowledge and skills they have, along with what type of Internet connection (technology, speed and the cost) is available to them. This paper focuses on the regional disparities in cost and speed of Internet in Missouri. MoBroadbandNow s first report, Dissecting Missouri s Digital Divide, analyzed data from MoBroadbandNow s 2011 residential survey of broadband use (June 2012) and reported a broadband adoption gap of 19 percentage points between Missourians living in rural areas and those living in nonrural areas. ii The second report in the MoBroadbandNow series, Building Digital Inclusion: Broadband and Missouri s Public Libraries, discussed Missouri s public libraries and their role in providing access to the Internet (October 2012). iii The third report in the series, Understanding Internet Non-adoption: Fulfilling Missouri s Digital Promise, released in January 2013, addressed the subject of technology non-adoption and explored reasons for non-adoption in Missouri s regions and across different demographic groups. iv 3
While previous reports did address the issue of a digital divide, this report Regional Disparities in Broadband Speed and Cost in Missouri, the fourth in the series, attempts to explore the issue of a digital divide in terms of speed and cost disparities of broadband in Missouri rather than adoption rates. This paper presents regional disparities in Internet speed and cost, and their relationship to population density, income levels, and number of businesses. Gaining an understanding of the regions (counties and planning regions) that lag in terms of broadband speed (or have higher costs) is critical to future efforts by policy makers and Internet Service Providers (ISPs) to effectively address disparities in regard to their impact on both broadband provision and adoption at both the local and regional levels. Cost of Internet in Missouri The 2011 Missouri Broadband Residential Survey (MoBRS) indicated that the availability (including availability of desired technology and speed) and cost of broadband are two major reasons for broadband non-adoption. ii The survey results also showed Missouri residents to have low satisfaction rates with the cost and speed of their Internet connections. This is also true for Missouri small businesses based on results from an online business survey. 2 In this regard, this paper will present an analysis of Internet price and speed using data from Telogical Inc. The data were collected at the zip code level and based on 40 ISPs for a one year period (from April 2012 to March 2013). This report will make a comparison of the Internet price and speed in Missouri based on different geographies (counties, planning regions and rural-urban classifications) and speed tiers. Average monthly Internet price in Missouri Cost is one of the major hurdles in the adoption of both basic Internet and broadband in Missouri. iv The average downstream speed is 8.54 mbps while the average upstream speed is 1.14 mbps for Missouri. The average advertised standard monthly price for Internet access is $45.57, and the average monthly promotional price is calculated to be $26.44 (with an average promotional discount of $ 19.13) as indicated in Table 1. 2 Broadband and small business survey report (yet to be released) 4
Table 1: Average price for Internet service in Missouri (April 2012 to March 2013) Variables Price ($) Average price per mbps (PPM) 25.32 Average advertised standard monthly price (average ASMP) 45.57 Average promotional monthly price (PMP) 26.44 Average advertised standard monthly price first year 48.26 Average standard monthly price with promotion first year 35.63 Average total cost of ownership for first year 579.14 Average total cost of ownership with promotion for first year 427.52 The Figures in Table 1 are the averages for the state of Missouri (based on data from 40 providers) for a twelve month period. These prices vary considerably across providers, geography, and based on the National Telecommunications and Information Administration (NTIA) speed tiers (Table 2). The data is aggregated to the county level for most of the analysis presented in this report; however, aggregation based on NTIA download speed tiers, provider and type of technology and maps are presented where relevant. In this analysis, we focus on two variables price per mbps and advertised standard monthly price but also examine other price related indicators when relevant. The Average Promotional Monthly Price (PMP) and the Average Price per mbps (PPM) show greater fluctuation over the period of analysis compared to the average Advertised Standard Monthly Price (ASMP) even though all three measures of prices show an increase. There is a gradual rise in the average price for Internet services over the twelve month period (irrespective of speed or type of technology). The ASMP increased by slightly more than $3 (7%) in March 2013 compared to April 2012; however, the PMP and the PPM increased by almost 17% and 24% respectively during the same period. The difference between the ASMP and the PMP was the highest in August (a difference of $22) and lowest in the month of September (a difference of around $15). On an average this difference was around $19 for the twelve month period. The increase in PMP in September compared to the previous month (August) was the highest -- a 37% increase as shown in Figure 1. 5
Figure 1: Monthly price of the Internet in Missouri Price based on different NTIA speed tiers: The average downstream and upstream speeds for Missouri are 8.54 mbps and 1.14 mbps respectively. It is important to examine how Internet pricing varied based on speed. NTIA defines 11 different speed tiers as shown in Table 2. In this paper, the download speed is considered as the indicator of speed because several providers included in the dataset did not report upload speed consistently over the twelve month period. Table 2: NTIA download speed tiers NTIA Download Speed Tier NTIA 1 NTIA 2 NTIA 3 NTIA 4 NTIA 5 NTIA 6 NTIA 7 NTIA 8 NTIA 9 NTIA 10 NTIA 11 NTIA Download Speed Tier Definition Less than or equal to 200 kbps Greater than 200 kbps and less than 768 kbps Greater than or equal to 768 kbps and less than 1.5 mbps Greater than or equal to 1.5 mbps and less than 3 mbps Greater than or equal to 3 mbps and less than 6 mbps Greater than or equal to 6 mbps and less than 10 mbps Greater than or equal to 10 mbps and less than 25 mbps Greater than or equal to 25 mbps and less than 50 mbps Greater than or equal to 50 mbps and less than 100 mbps Greater than or equal to 100 mbps and less than 1 gbps Greater than or equal to 1 gbps 6
Figure 2 shows that the average price per mbps is inversely related to Internet speed (NTIA speed tiers). The increase in the average PPM for speed tier NTIA 2 when compared to speed tier NTIA 3 is as high as $85.50. Similarly, the switch from NTIA 1 to NTIA 2 costs even more at $236 (which is a nearly 200% increase). This shows that the switch from a lower speed tier to the next speed tier is very costly at lower speeds, but a similar switch is far less costly when made between higher speed tiers. This may indicate the fact that in some areas (particularly rural), the cost of having even a basic Internet connection is very high, and those who have Internet are paying an extremely high monthly price, which then translates to a high price per mbps. This may be why providers are reluctant to invest in these less attractive markets as they have to charge a very high price (per mbps) to recover their fixed costs. It should be noted that the price here is not the monthly price of these connections but the price per mbps, and it also does not mean that areas that have a high price per mbps do not have high speed Internet -- it simply means they pay higher prices for this service. Figure 2: Price per mbps based on NTIA download speeds Contrary to the PPM trend across NTIA speed tiers, the ASMP and PMP both gradually increase with the rise in speed tiers moving up to higher speed tiers from the NTIA 3 speed tier. However, the move from NTIA 2 to NTIA 3 is an exception (see Figure 3). The value of total promotions compared to the advertised standard monthly prices is lowest at the NTIA 2 speed tier ($6.50, which is lower than NTIA 1 speed tier where the value of promotion is almost $14 per month). A possible reason for this may be that most satellite Internet access falls in or around this speed tier and promotions for satellite 7
connections are limited. The average satellite Internet speed in the United States is about 1Mbps for downloads and 200Kbps - 0.2 Mbps for uploads. 3 With the exception of NTIA 2 speed tier, the value of discount increases with the increase in the speed tier. NTIA 9 speed tier has the highest promotional value to the customers (promotional discounts of $40 per month). Figure 3: Price by NTIA download speed tiers Regional Planning Commission level analysis: There are 19 planning regions in Missouri, and these regions show a great variability in their Internet speed and price (see Figure 4). The Mid-America Region (which includes Kansas City) and the East-West Gateway Region (which includes St. Louis City) have the highest download speeds at above 10 mbps and upload speeds of more than 1 mbps. Price and speed in general do not show the expected correlation. The regions with higher download speeds also have higher upload speeds (correlation of more than 0.8); however, the relationship between speed and ASMP is very weak (correlation of 0.24) and is generally flat across the 3 http://science.opposingviews.com/internet-provided-via-satellite-faster-dsl-17303.html 8
regions (between $40 - $50 per month). The exceptions to this are the Harry S Truman Region ($55.45) and the Mid-America Region ($52.52). The Mid-America Region has the highest average speed and so it is expected for this region to have among the highest monthly prices. The Harry S Truman Region, on the other hand, is 15 th out of the 19 regions in speed rankings, but has the highest montly price, which is inconsistent with expectations. Overall, the PPM has an inverse relationship with speed (correlation: -0.41), though it fluctuates quite a bit across the regions without following a pattern in relation to the average regional Internet speed. The Mid-America Region has the highest average monthly price but has the lowest average price per mbps with the highest average speed. The Northeast Region has the lowest average speed with the highest average price per mbps; however, overall this region has the lowest average monthly price. As is indicated by the MoBroadbandNow mapping initiatives, the Northeast region also has poor provider choice and the Internet services that are available fall primarily in the lower speed tiers. 4 4 http://mobroadbandnow.com/maps-and-data/maps-and-data-overview/ 9
MARC East West Pioneer Trails Meramec Lake of Ozarks South West Boonslick Kasinger Basin S C Ozark Bootheel MOKAN Ozark F Hills Mid Missouri Green Hills H S Truman North West South East Mark Twain North East Up and downstream speed (mbps) Internet Price ($) Speed and price of Internet by planning regions in Missouri 14 12.91 66.57 70 12 55.45 60 52.52 10 47.73 50 42.89 8 7.03 40.44 40 6 5.02 30 4 16.91 3.53 20 11.17 12.63 2 2.24 0.63 0.61 10 0 0 Average price per mbps Average upstream speed (mbps) Average downstream speed (mbps) Average advertized standard monthly price Figure 4: Speed and price of Internet by planning regions in Missouri The customer base is an important determinant for Internet Service Providers in assessing the return on investment of providing Internet services to a community or region. Depending upon the demand (determined by the size of the population and willingness/ability to pay for services), providers are likely to decide what services to offer (speed, price range, technology etc.). Figure 5 shows the regional disparities in population density and Internet price, as well as speed. The overall trend line shows the average speed of Internet falling as population density and household income decrease. However, the ASMP is less responsive to both population density and household income at the regional level. Given the significant inverse relationship between population density and proportion of the rural population at the regional level (correlation of -0.7), that Internet speeds are lower in rural areas is expected. Again, on an average the household income also is lower for regions that have lower average Internet speed. This may indicate that the ISPs provide Internet services of different kinds (technology 10
and speed) at different prices (price discrimination based on speed) such that customers ability to pay for the Internet services determines the type of services offered. Figure 5: Regional population density, income, Internet price and speed Given that speed comes at a price and the income level of the region s residents is an indicator of ability to afford Internet, a positive association is expected between price and the speed of connection. Also, the ability to afford high speed Internet is expected to increase with an increase in household income. The linear trend line of average speed at the regional level shows a decease with the decrease in the median household income; however, the speed line in the graph fluctuates considerably in relation to the downward sloping income line (see Figure 6). 11
Figure 6: Average speed and household income at the regional level As stated earlier, there is considerable variation across regions in terms of characteristics of Internet service like speed and price, as well as in socio-demographic characteristics like income and population density. The ability to pay for Internet service decreases with the increase in the price of Internet, and cost has been indicated as one of the most important determinants for non-adoption of Internet in Missouri. IV 12
In this regard, the promotions offered by the ISPs can be incentives for Internet adoption. Figure 7 depicts the variation in the value of promotions offered and the share of household income that goes to pay for Internet in each region. The value of promotions range from $14 (which is 40% of the ASPM) in the Pioneer Trails Region (with an average download speed of 10.14 mbps) to $33.37 (which is 60% of the ASPM) in the Harry S Truman Region (with an average download speed of 5.02 mbps). In the planning regions that have higher median household incomes (like East-West Gateway and Mid-America), households spend less than 1% of their household income on Internet. On the other hand, in regions including Northeast, Ozark Foothills and South Central Ozark that are more rural, have lower median household income, and have slower Internet, pay around 2% of their household income for Internet. While promotional discounts can be seen as an incentive for Internet adoption, the promotional offers available from the ISPs do not show much correspondence with the population density or household income at the regional level (see Figure 6 for regional income). County types and Internet price and speed: There are several different methods of county classification, including metro and non-metro, Rural Urban Continuum Codes (RUCC), and Urban Influence Codes (UIC). Based on the metro and nonmetro classification of Missouri counties, 34 of the 115 counties in Missouri are non-metro while the remaining 81 are metro counties. As with the regional level pricing, the county level average PPM also shows great variation, with a maximum of $125.11, a minimum of $8.44, and an average of $27.73. The metro counties had almost the twice download speed at almost half the price available in non-metro counties, based on price per mbps. The ASMP, however, was only marginally higher for non-metro counties. Still, non-metro areas pay a higher price for their Internet despite their lower download speeds (see Figure 8). 13
Figure 7: Percentage of Income spent on Internet and value of promotion based on regions 14
Figure 8: Price and speed of Internet in metro and non-metro counties in Missouri The metro non-metro classification of counties is binary. Given the considerable variability across counties that are non-metro counties, analysis based on further disaggregation of the counties rather than just metro and non-metro counties will be more meaningful in showing the disparities in price and speed of Internet in Missouri. The USDA divides the US counties into nine groups called Rural Urban Continuum Codes (RUCC) based on the size of the population and type of adjacent counties. The description of RUCCs is listed in table 3. Table 3: Description of Rural Urban Continuum Codes (RUCC) Number RUCC (2003) Description for 2003 RUCC of counties 1 County in metro area with 1 million population or more 17 2 County in metro area of 250,000 to 1 million population 6 3 County in metro area of fewer than 250,000 population 11 4 Nonmetro county with urban population of 20,000 or more, adjacent to a metro area 3 5 Nonmetro county with urban population of 20,000 or more, not adjacent to a metro area 5 6 Nonmetro county with urban population of 2,500-19,999, adjacent to a metro area 22 7 Nonmetro county with urban population of 2,500-19,999, not adjacent to a metro area 17 8 Nonmetro county completely rural or less than 2,500 urban population, adj. to metro area 10 Nonmetro county completely rural or less than 2,500 urban population, not adj. to metro 24 9 area When the counties are grouped based on the USDA Rural Urban Continuum Codes (1= least rural, 9=most rural), we find considerable variation in the download speed among the counties. Generally, the average speed of Internet (both download and upload) decreases with the increase in the rurality of the counties with the exception of the group of counties that fall in the RUCC of 3 (the average speed of counties that fall in RUCC 3 is poorer than group of counties that fall in RUCC of 4,5 15
and 6). The variation across the continuum is more pronounced in case of download speed than it is for upload speed (Figure 9). With the variation in the speed of Internet across counties based on their rurality, it is expected that the price would show a similar trend; however, this is not the case. The ASMP and PMP remain relatively flat across the rural-urban continuum. This implies higher cost per mbps for rural counties compared to urban counties, with a difference of almost $36 in price per mbps between the two ends of the rural-urban continuum (see Figure 10). Figure 10 also indicates that there is a gradual decrease in the total value of promotions offered with the increase in the RUCC. Figure 9: Speed based on rurality of counties 16
Figure 10: Internet price based on Rural Urban Continuum The Urban Influence Codes range from 1 to 12, where a lower number indicates greater proximity (adjacent or within a metro) to a metro area while a higher number indicates at a greater distance from a metro area (in some cases micro areas or towns with higher populations). 5 As illustrated in Figure 11, fourteen counties in Missouri that have Urban Influence Code 10 (Atchison, Benton, Carter, Knox, Oregon, Ozark, Putnam, Ripley, Scotland, Shannon, Shelby, Sullivan, Wayne, and Worth) have the highest average price with the lowest speed (and thus pay the highest mbps, higher than the other six counties (Grundy, Harrison, Linn, Vernon, Mercer, and Reynolds) even when they have lower urban influence codes (UIC 11 and 12). 5 See USDA web link for further detail: http://www.ers.usda.gov/data-products/urban-influence-codes.aspx 17
Figure 11: Internet speed and price based on Urban Influence code of counties The ten counties with the highest and lowest download speeds (per mbps) are listed in table 4. Seven of the ten counties with the lowest download speeds show a net loss in population between 2000 and 2010. Population loss (on average, at lower rates) is also seen in three of the ten counties with highest download speeds and St. Francois County saw as much as 16% increase in the population even though it is one of the counties with the lowest download speeds. ISPs have less incentive to offer high speed options in counties with higher population loss. This is even more the case in rural counties where the population density is already low compared to urban counties, like St. Louis County, where the population density remains relatively high despite the net loss in population between the 2000 and 2010 censuses. 18
County Av. Download speed (mbps) Av. Stand. Adv. Monthly price ($) Population change (2000 to 2010) County Av. Download speed (mbps) Av. Stand. Adv. Monthly price ($) Population change (2000 to 2010) Table 4: Relative ranking of counties based on speed Ten counties with highest download speed Ten counties with lowest download speed Mississippi 18.1 40.61-0.97% St. Francois 3.79 40.35 15.99% Camden 16.7 40.83 12.44% Adair 3.66 39.51-1.07% Jackson 15.06 56.36 2.14% Clark 3.75 39.08-3.17% Scott 14.78 39.67 0.55% Shelby 3.64 41.31-5.62% Cass 13.51 55.47 24.85% Knox 3.43 39.15-8.16% Lafayette 12.44 51.13-0.51% Putnam 3.36 38.64-7.22% St. Louis City 12.09 42.12 0.75% Pike 3.00 38.52 1.30% Jefferson 11.77 42.12 12.16% Schuyler 2.80 39.83-2.37% St. Louis 11.74 42.18-2.80% Scotland 2.71 38.76-4.60% Johnson 11.23 44.04 10.63% Ste. Genevieve 2.56 38.52 0.32% In 2009, Governor Jay Nixon set a goal to provide broadband access to 95% of the Missourians by year 2014. This goal was achieved in 2012. However, as indicated by the analysis presented in this paper, speed and price of Internet service vary greatly across the state. The question now is what type of access and at what cost rather than whether or not there is access. In this section, the relationships between Internet speed and price, income, and businesses are illustrated. There are two primary sources of broadband demand: residential and business. As indicated in Figure 12, the counties that have gained population over the last decade currently have average download speeds higher than those that have gained population at a lower rate or those that have experienced population loss (with a significant rank correlation, r=0.5). The majority of the counties in the northern half of the state that have low Internet download speeds saw a decrease in population in the between 2000 and 2010. On the other hand the five suburban counties indicated in purple Cass County (adjacent to Jackson County, which is home to Kansas City); St. Charles, Lincoln and Warren (in proximity to St. Louis County and St. Louis City), and Christian County (adjacent to Greene County, which is home to Springfield) that saw population gains of more than 20% over that same period also have a download speed greater than 9 mbps. 19
Figure 12: Population increase and Internet speed in Missouri counties In regard to the relationship between businesses and their demand for broadband speed, counties with a higher concentration of businesses, in general, also have higher average download speeds (with significant rank correlation r=0.42). There are several notable exceptions, inclduding Jasper and Boone Counties, as illustrated in Figure 13. 20
Figure 13: Number of business establishments and Internet speed in Missouri counties There is no significant correlation between the ASMP and the average download speed at the county level. However, a couple of observations can be made based on Figure 14 below: (1) the Northeast region of the state has low prices but also has low speeds; (2) several counties in the Southwest corner of the state pay a high monthly prices in spite of low speeds; and (3) two counties (Mississippi and Scott) in the southeast have relatively lower prices but relatively high speed offerings and the same is true for two counties in central Missouri (Camden and Miller). 21
Figure 14: Monthly price and Internet speed in Missouri counties Another important observation that can be made based on Figure 15 (below) is that the majority of the counties in the northern half of the state have low speeds and low household incomes (with a few exceptions, notably those in proximity to Kansas City and St. Louis City). Most of the counties in south central Missouri, despite low average household incomes, have above average speeds (between 6.35 to 9.44 mbps), while the majority of the counties in Mid-Missouri have below average speeds (4.75 to 6.35 mbps) despite above average household incomes. 22
Figure 15: Household income and Internet speed in Missouri counties 23
Conclusion and Implications The analysis in this report has examined Internet price and speed in Missouri based on the data obtained from Telogical Inc. for a one year period (April 2012 to March 2013), particularly focusing on planning regions and counties At the county level, the average advertised standard monthly price for Internet is $45.57 with an average download speed of 8.54 mbps. The analysis in this paper shows that there is considerable variation across regions in terms of Internet characteristics like speed and price, as well as economic and demographic characteristics including income and population density. Key findings include: Counties located a greater distance from the urban centers also show lower Internet speed and generally pay more per mbps and for the monthly price. Counties that lost population between 2000 and 2010, with a few exceptions, have lower speed offerings than those that gained population. Counties with a higher number of businesses tend to have higher Internet speeds. Counties that have higher median household incomes have relatively higher Internet speeds. In general, the counties and regions that are relatively more rural have relatively lower Internet speeds and pay relatively lower monthly prices for Internet compared to those that have relatively higher Internet speeds; however, rural Missouri pays a higher price per mbps. Generally, the trend is that the monthly price for Internet service in Missouri increases with an increase in the NTIA speed tier; however, the reverse is true for the price per mbps. There is also considerable variation in the price and speed at the regional planning levels. Again, the promotional offers that are available tend to be more attractive for regions that have higher Internet speed, higher income, and higher population density. Internet is not only considered a prerequisite for economic growth but is also an important indicator of the quality and provision of services like education, health and public safety. The quality of Internet service (speed, type of technology and its reliability) determines the ability to fully use the opportunities that are possible with the Internet technology and thus determines the economic activities possible in a given area. The causes and solutions for the digital divide have been the central public agenda since the advent of residential Internet across the world and in the US. While progress has been made in the penetration of Internet service, there is still considerable regional variation in the quality of Internet access. Simply, demonstrating a narrowing gap in Internet access can be misleading, as Internet possibilities are dependent on a range of factors, including the type of Internet that is accessible, speed, and cost. 24
Now that Missouri has surpassed the target set by Gov. Nixon in 2009 (goal: 95% access to broadband by 2014, realized: 97% access to broadband with the June 2013 data collection cycle), the primary focus of broadband policy should be the quality of access rather than simply the access. There is the need to understand the speed and cost of Internet service in the state so as to promote policies that ensure that Missourians have access to Internet that is of reasonable speed and is available at a reasonable cost. Policy that aims to reduce regional disparities in Internet speed and price, rather than just the rate of penetration is increasingly relevant as Internet speed is a key determinant for opening economic opportunities and improving the quality of life for Missourians. Given the fact that providers of Internet evaluate their projects based on their return on investment, it is likely that the areas with higher population density, higher income and higher concentrations of businesses will have access to high speed Internet at competitive prices. However, the customer, particularly those in rural areas, with limited Internet service options may find it hard to find an option that is suitable in terms of speed and affordability. Given the fact that the promotional offers are not necessarily available in low income, low population density areas, policy makers need to consider ways to help reduce the disparity in Internet speed and price in order to bring the benefits of high speed Internet access to all Missourians. i Sciadias, G (ed). (2005). From the Digital Divide to DIGITAL OPPORTUNITIES: Measuring Infostates for Development. Orbicom/ITU. ii Gautam S, T. Haithcoat and D. Porter (2012).Dissecting Missouri s digital divide. http://mobroadbandnow.com/mo-broadband-initiatives/digital-divide/ iii Haithcoat, T; S. Gautam; A. Read; and D. Porter. (2012).Building Digital Inclusion: Broadband and Missouri s Public Libraries.http://mobroadbandnow.com/files/2012/09/Library-Report.pdf iv Gautam, S; T. Haithcoat, A. Read; and D. Porter. (2013). Understanding Internet Non-adoption: Fulfilling Missouri s Digital Promise. http://mobroadbandnow.com/files/2013/01/non_adopters_report_22.pdf 25