Producer Network Effects for Rural Economic Development: An Investigation into the Economic Development Potential of Information Production as a Firm-Level Effect of Broadband Telecommunications in Rural Areas

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Virginia Tech


Broadband telecommunications infrastructure is considered to be an economic development necessity by a significant number of policymakers and economic development professionals, particularly in rural areas. Across the United States, a considerable amount of money is being invested in the deployment of broadband networks based, at least in part, on the premise that economic development benefits will obtain. However, there is a general lack of academic theory explaining the mechanism(s) by which broadband telecommunications can produce economic development results.

The purpose of this study is to investigate the impacts of broadband at the level of the firm. It adopts as its central working hypothesis the "Producer Network" concept originally developed at Virginia Tech, which suggests that economic development benefits may result from Internet users having access to multiple megabits-per-second of symmetrical, affordable bandwidth. It employs a qualitative grounded theory methodology to identify firm-level effects of broadband use.

The study's findings revealed that a majority of businesses in the case study communities were using much slower Internet connections than had been hypothesized, were using third-party, off-site web hosting, and did not believe they needed "Big Broadband." Informants to the study believed that the economic development potential of broadband in the short term depended on the ubiquitous deployment of affordable connectivity, and were more concerned with reliability than bandwidth.

The study concludes that the "Producer Network" is better understood as a long-term goal than as a model to explain the current firm-level applications of the commodity Internet. It suggests that policymakers should consider broadband not as a panacea for economic development, but as a tool whose potential for impact is influenced by a number of economic, political, social, and cultural forces originating at the community, national, and global levels. Based on the literature review and the field research, it proposes a general model for broadband telecommunications in rural economic development.



Producer, Internet, Virginia, Rural, Telecommunications Infrastructure, Content Production, Producer Network, eCommerce, Broadband, Economic Development