"The Economic Impact of Rural Telecommunications: The Greater Gains."

The Hudson Institute last week released the attached Economic Policy/Briefing Paper, "The Economic Impact of Rural Telecommunications: The Greater Gains." http://www.matr.net/files/EconEffectofRuralTelecoms-HudsonInstFRS-101111.pdf

Briefly, the study finds that rural telecommunications companies contribute $14.5 BILLION annually to the economies of the states in which they operate, including 70,700 jobs in 2009. Significantly, only about one-third of the economic benefits of rural telecom capital and operational expenditure accrues directly to rural economies. That is, nearly two-thirds of rural telecom investment, $9.4 BILLION, redounds to the benefit of urban areas.

In a state-by-state analysis, the study finds over $200 MILLION economic impact in Montana alone, of which more than $137 million accrues to rural economies in Montana.

These findings are consistent with MTA’s data. For example, MTA has found that rural telecom providers in Montana employ over 1,000 Montana citizens, with a payroll of over $50 million. They invest over $70 Million each year into our state’s telecommunications infrastructure. They’ve deployed over 14,000 miles of fiber optic facilities, providing access to advanced communications services to over three-quarters of their business and residential consumers, and often to as much as 100% of their consumers, many of whom have access to gigabit-level broadband capacity The telecom services these companies offer enable a broad spectrum of economic activity in Montana, including advanced applications for health care, emergency service, commercial activity, education, and entertainment, among other things.

The Executive Summary of the Hudson study is below (complete study is attached).

* Rural telecommunications companies contributed $14.5 billion to the economies of the states in which they operated in 2009. Of this, $10.3 billion was through their own operations and $4.2 billion was through the follow-on impact of their operations. The cumulative $14.5 billion can be referred to as "final economic demand."

* While the industry’s output is telecommunications services in rural areas, the economic activity it generates accrues both to the rural areas served and also to urban areas as well.

* Surprisingly, only one-third (34 percent or $4.97 billion) of the $14.5 billion final economic demand generated by rural telecom companies accrues to rural areas; the other two-thirds (66 percent or $9.57 billion) redounds to the benefit of urban areas.

* The rural telecommunications sector supported 70,700 jobs in 2009, both through its own employment and the employment that its purchases of goods and services generated.

* Jobs supported by economic activity created by rural telecommunications companies are more concentrated in urban areas: 54.3 percent are in rural areas; 45.7 percent are in urban areas. Relatively higher wages in the telecommunications sector drive this result.

* This level of economic activity and employment is consistent with the values underpinning access to advanced telecommunications and advanced services in all regions of the nation, as supported by the Universal Service Fund (USF).

* If USF support declined or disappeared, the result would draw from two scenarios. In one, companies would raise prices paid by customers and rural users would pay more for telecommunications service. In the other, companies would cut capital investment and the network would shrink over time.

Please feel free to call or rely if you have any questions or comments.

Best regards,

Geoff Feiss

Montana Telecommunications Association

406.442.4316 (office)

406.594.0424 (mobile)

Serving Montana’s telecommunications industry since 1954