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Rural Broadband Study Finds Huge Returns for Indiana

by Emma Hopkins-OBrien

Published: Friday, December 7, 2018

In a recent study conducted to estimate the value of investing in broadband access for rural consumers, Purdue University's Wally Tyner has found the returns could be immense.

"For every dollar you invest in rural broadband, you get $4 back to the Indiana economy," Tyner said. "That is a pretty good payback."

A thorough and extensive study that Tyner began just a couple years ago found that state and federal governments sponsoring rural broadband could bring huge savings to more than one industry. His study investigated telemedicine, education and farm income, specifically.

Tyner found telemedicine savings was a category which has been studied more thoroughly than others. Scheduling an appointment, spending gas to go to the doctor's office and spending time there is a much more expensive and time-consuming process than using telemedicine or having your initial interaction with a doctor online.

When a group of individuals using telemedicine was compared to a group using conventional doctor's visits, studies have found the medical outcomes are exactly the same, while costs were substantially different—on both provider and patient sides.

How? Tyner said what exams are conducted by nurses at a doctor's office—taking of blood pressure, heart rate, weight and others—can be done at home and even connected to a doctor's office via Bluetooth. Many fewer medical tests are ordered with the more focused approach of telemedicine, and consultations with doctors were cheaper.

"There are tremendous savings," Tyner said. "Say you have a cold, you feel bad, it's nagging, but you don't want to take all the time and expense of going to the doctor. So you just keep living with it. By the time you ultimately go to the doctor, it's serious. If you can just type few keys and talk to a doctor before it gets to that point, you are much more likely to catch illnesses earlier."

Medicaid and Medicare also benefit, as rural broadband access would raise rural incomes, and people would be better able to pay for their own prescriptions.

Education—adult and K-12—also stand to greatly benefit from the use of broadband. Tyner's study made the conservative assumption that teachers would be 5 percent more productive if they could reach students via the Internet. Because wages are a measure of productivity, his study used those numbers to conclude that the benefit to K-12 education financially would be savings of $1.5 million per district in year three of adoption, and much more every year after. That does not factor in savings from the elimination of "snow days," he said. With adult education, the savings multiply into $9.5 million.

When it came to farm income increases, Tyner and his team used the most conservative of assumptions, and he believes that particular category could be revisited for more accurate numbers. Tyner's assumption used only income from crops, and applied an increase of 1 percent to half of crop sales. The savings in year three, in that case, would amount to $663,095.

"Bob Nielson (Purdue corn expert) and others have told me you can get a lot of technology that use broadband, which could make these benefits much higher. We believe this topic can be revisited," he said.

As a whole, access to broadband in rural communities, once implemented, would add $1 billion to the Indiana economy per year, $270 million of which would go to federal and state governments via income tax and other benefits.

The rub to all of this, Tyner said, is that it will absolutely require government intervention to make rural broadband happen.

"How much revenue can the cooperatives get to cover their costs? The answer is only about half," Tyner said. "So we won't get deployments unless the federal and state governments, like they did with rural electrification, pay some of the share."

The good news is that partly due to his study, Tyner said Gov. Holcomb has put $100 million into the state budget this year towards rural broadband. That won't cover all of it, but Tyner said it is a start. At the federal level, he said there seems to also be a general consensus that broadband will be critical to rural communities. After all costs are covered, over a period of 20 years, state and federal governments stand to get a quarter of the total investment—that's $560 million net present value.

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