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Appalachia, a 200,000-square-mile region that follows the spine of the Appalachian Mountains from southern New York to northern Mississippi, substantially lacks adequate access to a robust telecommunications infrastructure and the local capacity to use technology effectively for economic development.

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AUSTIN, Texas—Appalachia, a 200,000-square-mile region that follows the spine of the Appalachian Mountains from southern New York to northern Mississippi, substantially lacks adequate access to a robust telecommunications infrastructure and the local capacity to use technology effectively for economic development.

These were the conclusions of a study prepared for the Appalachian Regional Commission (ARC) by University of Texas at Austin Professors Michael Oden (Community and Regional Planning) and Sharon Strover (Radio-TV-Film and director of the Telecommunications and Information Policy Institute).

The report also underscores the potential contribution information technology can make to the region’s economy and highlights steps that can help narrow the gaps that separate Appalachia from the rest of the nation.

The Appalachian Region has a population of about 23 million people and includes all of West Virginia and parts of twelve other states: Alabama, Georgia, Kentucky, Maryland, Mississippi, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee and Virginia. Forty-two percent of the region’s population is rural, compared with 20 percent of the national population. The region’s economic fortunes were based in the past mostly on extraction of natural resources and manufacturing. The modern economy of the region is gradually diversifying.

Concerned that Appalachia is failing to reap the benefits of the telecommunications revolution, the ARC commissioned a study of the availability and use of telecommunications in the region. According to Drs. Oden and Strover, “Links to the Future: The Role of Telecommunications and Information Technology in Appalachian Economic Development” provides the most detailed regional analysis of telecommunications barriers and opportunities yet conducted for any portion of the United States, incorporating data from the Federal Communications Commission, a review of state regulatory policies, interviews with service providers and local case studies.

“This study demonstrates how crucial information and communications technology is to economic development,“ said ARC Federal Co-Chairman Jesse L. White Jr. “We need to pay attention to the lessons it draws for us so that Appalachia will not be left behind. Our region deserves nothing less.”

“The authors show that Appalachia has not been given the opportunity to participate in the information revolution to the extent that other regions in the country have,” said Gov. Donald Sundquist, ARC states co-chairman. “But it shows the steps that can be taken to rectify this situation.”

Major telecommunications gaps plague the region

According to Strover, the competition policy promoted by the 1996 Telecommunications Act is not working well for rural Appalachia. “Broadband services are not reaching those regions,” she said.

Many parts of Appalachia — especially the more rural areas — have lower penetration rates of home computers, Internet access and even basic telephone service than the national average.

DSL-capable lines, a lower-cost broadband technology favored by small and medium-sized businesses in the rest of the U.S., are not widely available in Appalachia, and cable modem service is spotty at best. While many central offices of telecommunications providers are DSL-ready, many are not yet offering such services. In addition, the backbone providers’ trunk lines and nodes are not plentiful in much of Appalachia, increasing costs to the companies that want to provide those services to customers. More advanced technologies are not on the immediate horizon for its rural areas.

The researchers also found that Federal Universal Service funding of E-Rate and Rural Health programs showed lower per-capita allocation of funds in Appalachia than in the nation as a whole ($12.76 per capita compared to $20.05 per capita for the U.S.).

Locally based businesses have difficulty understanding and evaluating technology needs and choices, integrating new technology into their business plans and implementing new technologies in ways that improve competitiveness. This lack of information, combined with access barriers, limits the effective adoption of information technologies and services across Appalachia.

The regional economy pays the price

Advanced telecommunications at prices affordable to local businesses is a significant barrier to economic development in parts of the ARC region. In rural parts of Appalachia, broadband access for business may cost up to $2,500 a month, while similar service in urban areas can cost as little as $150 per month. There are few competitive pressures for the pricing of telecommunications services.

The region also had slower growth in information technologies. While Appalachia shared in the late 1990s boom in Information Technology (IT) industries, the region’s employment in these industries still lagged behind the nation, growing 46 percent compared to the national rate of 53 percent. Technology barriers have a profound effect on the growth and diversification of locally based manufacturing, service and trade sectors.

For example, Oden said, “In manufacturing, branch plants have largely relied on parent companies to provide access in training. However, locally owned small-and medium-sized businesses are at a disadvantage because they can’t rely on local expertise and can’t command volume discounts from telecom providers.”

Limited telecommunications access and use is a particular problem for the health care sector in rural communities. Both larger hospitals and rural health clinics have difficulty getting broadband access to offer new telemedicine services and meet the administrative demands of major provider networks.

Key recommendations

To address the gaps and capitalize on the opportunities disclosed by the research, the study recommends various strategies for aggregating demand, expanding technical assistance to the region, sharing information on model programs and working within individual states to track regulatory and program efforts that can be harness to the goal of enhancing broadband opportunities.

The report is available from the Appalachian Regional Commission (www.arc.gov) in Washington, D.C.

For further information contact: Dr. Michael Oden, 512-471-0121; and Dr. Sharon Strover, 512-471-6667.