Rural Broadband Growth Outpaces Big Cities

While broadband penetration is much higher in metropolitan areas, over the last two years broadband has experienced the most significant gains in rural areas, according to a new study by comScore. Rural markets (defined as having a population less than 10,000) in the United States experienced a 16-percentage point increase in broadband penetration from Q2 2007 to Q2 2009, making it the fastest growing geographic market segment in the nation.

By comparison, micropolitan areas (population between 10,000-50,000) grew 14 percentage points during the same period, while metropolitan areas (population 50,000+) grew 11 percentage points.

“Across the country we have witnessed growth in broadband adoption driven by greater price competition and increased consumer demand, as bandwidth-intense activities like video streaming and peer-to-peer sharing continue to grow,” Brian Jurutka, vice president of telecommunications at comScore, said in a statement. “With low-speed DSL priced at about the same level as dial-up in many areas, there is little incentive for households to remain on dial-up.”

Despite the growth in rural broadband, high-speed penetration rates of 75 percent in areas outside metropolitan areas remains significantly below the national average of 89 percent. According to a 2007 analysis by U.S. Department of Agriculture Economic Research Service, 63 percent of all rural households had at least one member access the Internet, compared with 73 percent of urban households.

Increasing rural broadband is one of the top technology priorities of the Obama administration. The American Recovery and Reinvestment Act approved by Congress earlier this year provided $7.2 billion to the Commerce Department’s National Telecommunications and Information Administration (NTIA) and the U.S. Department of Agriculture’s Rural Utilities Service (RUS) to accelerate broadband deployment in areas of the country that have been without the high-speed infrastructure.

The nation’s largest markets are close to reaching saturation and experienced low single-digit growth over the last years. New York, the largest local market, reached 96 percent broadband penetration in Q1 2009, making it the most wired local market among the largest five. Following New York were Chicago (92 percent), Philadelphia and the San Francisco metropolitan market (89 percent) and Los Angeles (87 percent).

“We are following these developments closely as the market landscape continues to evolve,” said Jurutka. “The consumer has many decisions to make regarding their home Internet service including the initial purchase decision, what price is justifiable and what connection speeds warrant an increased price.”