Market considerations drive the adoption and diffusion
of new communication and information technology. The diffusion
process, however, is neither uniform nor continuous across
regions, income groups, ethnic groups, and economic activities.
Rural and poor communities, in general, lag richer and urban areas
in new telecommunication technology; the less returns a service
provider is likely to reap in a location, the less likely they will
invest in that location. The Communications Act of 1934 and subsequent
laws and provisions, including the Telecommunications Act of 1996,
have sought to address this through what are called universal service
provisions (see the Rural
Telecommunication Policy chapter).
Business and entrepreneurial demand for telecommunication services
varies by type of economic activity. This demand exhibits one of
the Catch-22s with respect to communication and information technology
for rural areas: demand must exist to spur private investment in
technology, but the technology must be in place to spur demand.
The demand for communication and information services by the private
sector comes from a number of economic factors:
"Lone Eagles" are individuals who are able to conduct
private consulting, investment activity, and other business pursuits
from any location. While their numbers are small in rural communities,
they tend to have high incomes and are sought by many communities. For
rural areas, they are most common in locations where good communication
and information infrastructure exists, such as telecommunication equipment
able to handle high volumes of data transmission.
Telecenters, telecottages, telecommuting, and other trends show
some promise for rural areas, but again their numbers are small in rural
areas. In the national economy, telework has been a slow but growing
upward trend. On any given day approximately 2-3 percent of the U.S.
workforce telecommute (2004). Approximately 16 percent of all workers
worked at home some of the time during 2002.
New markets for existing rural businesses, including farms,
also hold some promise. Niche markets, such as organic farm goods, is
one such sector. The use of the Internet, at some point in the future,
may become a necessary condition for continued business activity.
Telecommunication-dependent firms tend to cluster in telecommunication
service-rich urban areas. Nevertheless, some telecommunication-dependent
firms, such as catalog retail operations, do function in rural communities,
but only those with sufficient communication and information infrastructure.
The Internet has developed into a robust channel for commerce, with transactions
increasingly taking place on it. Annual U.S. Internet commerce (e-commerce)
exceeds $1 trillion. Manufacturer’s e-commerce shipments in 2003
were $843 billion, 18 percent of all manufacturer shipments. Food, beverage,
and tobacco manufacturer shipments were $107 billion, 21 percent of manufacturer
e-commerce shipments. Retail sales, including expenditures for travel,
on the Internet were $143 billion in 2005.
Businesses, consumers, and governmental entities have garnered economic
gains from the Internet. The Internet offers small- and medium-sized firms
some of the advantages that large firms have long held. It increases their
access to information and can make it easier to get into additional markets,
be they regional, national, or international. Large firms have reaped
gains from using the Internet. Some large firms, for example, had been
using dedicated electronic-data-interchange (EDI) systems for years to
communicate with primary suppliers. Moving their EDI system over to the
Internet helped reduce their overhead and potentially opened their system
to more suppliers.
Consumers have also been reaping some economic benefits from the Internet.
A great deal of information is readily available covering a range of interests
or concerns, from government programs and consumer products to the most
trivial of facts and fiction. Information overload was one problem that
surfaced early for Internet users. Search engines, such as Google, however,
have been developed to address this challenge through their capabilities
in narrowing the focus of information searches.
Federal, State, and local governments have gained by the reduction in
cost-of-service delivery to their constituents. Government grant
and loan programs have increasingly occurred through the Internet.
Various governments and government associated organizations distribute
information through the Internet with cost saving relative to mail
distribution and contributing to the critical mass needed to bring
advanced telecommunication services to rural communities. Extension
agent offices, for example, become customers for service providers.
The more customers, and potential customers, that a service provider
can address, the more profitable a location.
