How Broadband Deployment Supports Innovation in Illinois!

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Bruce Montgomery

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May 24, 2012, 9:22:11 PM5/24/12

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Special thanks to Smart Chicago Collaborative and Broadband Illinois for their insights and data contributions to this issue
In the numbers

How broadband deployment supports innovation in Illinois

Today's economy is driven by massive amounts of information being exchanged among businesses around the world. Companies from startups to major corporations rely on high-speed connections to support new technology, knowledge and data sharing, and collaboration—key components for innovation. For these reasons, the deployment of broadband Internet connections, which are faster and more dependable than dial-up access, has become an important indicator of a state's innovation climate.Studies¹ have shown a strong link between broadband access and economic growth. Therefore, a state's ability to support these connections has a direct impact on its economic growth, business climate, and level of innovation. Illinois has steadily increased broadband access to businesses and residences, but further improvement is needed in both speed and availability.


How Illinois stacks up Broadband deployment (availability) and adoption (subscribers) vary considerably across the country. States with the highest access rates, such as Connecticut, Massachusetts, and New Hampshire, tend to have relatively small rural populations. Despite Illinois' large rural areas, broadband deployment and adoption among its households have kept pace with national levels.

To view larger map, click here The share of broadband subscribers in Illinois increased from 52 percent of total households in 2007 to 69 percent by 2010,² matching the median adoption rate for the country as a whole but still falling behind 23 states. Chicago's broadband levels are similar to statewide figures, with 68 percent of residents using broadband at home, up from 61 percent in 2009.³



Broadband adoption by Illinois businesses In Illinois, commercial Internet subscribers as a share of total subscribers have risen from 14 percent in 2008 to 21 percent in 2010. This rapid growth in commercial connections―more than double the national median growth rate of 2.9 percent during this period―suggests that Illinois businesses are increasingly using the Internet to support commerce, research, and innovation.

The average speed for commercial connections in Illinois equaled the national median for both small and large businesses. However, the average connection speed for Illinois' small businesses is 3.8 mbps, falling short of the 5 mbps level needed to share large amounts of data. Enhancing commercial speed would enable more small companies to provide innovative services in growing fields such as education, energy efficiency, healthcare, and building control and management.⁴


Government support for broadband deployment The American Recovery and Reinvestment Act (ARRA) allocated $4.7 billion to the National Telecommunications and Information Administration to increase broadband access through the Broadband Technology Opportunities Program (BTOP) and Broadband Initiatives Program (BIP). In all, Illinois has received more than $445 million to support its broadband deployment. Due to these efforts, broadband adoption in rural areas has increased considerably, from 35 percent in 2007 to 63 percent in 2010.⁵ At the end of 2010, Illinois ranked ninth in the nation in the number of connections that met the national speed targets set by the Federal Communications Commission (FCC).⁶


While access to broadband has grown in Illinois, the subscribership ratio of connections meeting the FCC household speed target to households is 0.33, slightly below the national median of 0.35, putting Illinois 24th among all states. Since many small businesses are launched out of residences rather than formal offices, greater access to quality broadband connections could provide a boost to these entrepreneurs.


The rise of mobile broadband Based on current trends, mobile broadband networks, which are being enhanced to support smartphones and tablets, will likely replace fixed connections as the preferred mode of accessing the Internet. The Brookings Institution projects that mobile broadband will account for 80 percent of total broadband subscriptions within the next four years.⁷The relatively low cost of mobile technologies has helped improve Internet access. A February 2012 Pew Research study found that nearly 46 percent of U.S. adults have smartphones compared with just 17 percent two years ago.⁸ Statistics on mobile broadband adoption in Chicago indicate a similar trend. In 2011, 40 percent of adults in Chicago used a cell phone to connect to the Internet, up from 26 percent in 2009.⁹As mobile broadband adoption accelerates, it will create opportunities for entrepreneurs and start-ups to develop mobile commerce applications that could redefine industries such as financial services, education, and healthcare.


Looking ahead In the coming years, Illinois will have to expand broadband networks across the state, assist businesses in securing access to high-speed broadband, and track mobile broadband adoption to ensure funds are being allocated to support emerging technologies. ¹ See, for example, Jed Kolko, Does Broadband Boost Local Economic Development? Public Policy Institute of California, January 2010; and Robert Crandall, William Lehr and Robert Litan, The Effects of Broadband Deployment on Output and Employment: A Cross-sectional Analysis of U.S. Data, the Brookings Institution, June 2007. ² Digital Nation: Expanding Internet Usage, National Telecommunications and Information Administration, February 17, 2011. ³ Mossberger, Tolbert and Redlawsk, 2011 Chicago City-Wide Broadband Survey. ⁴ The State of New Hampshire Broadband Action Plan. p. 36. ⁵ U.S. Census Bureau, Current Population Survey. ⁶ The FCC has set targets of 4 Mbps down/1 Mbps up (actual) speeds for broadband availability. ⁷ Testimony by Darrell West of the Brookings Institution to the U.S. House Subcommittee on Healthcare and Technology, February 15, 2012. ⁸ Pew Research Center's "Internet and American Life Project," April 26-May 22, 2011, and January 20-February 19, 2012 tracking surveys. ⁹Mossberger, Tolbert and Redlawsk, 2011 Chicago City-Wide Broadband Survey.

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