Report: Texas Economy Benefits More Than Any State By Connecting Rural Residents | Texas Public Radio

Report: Texas Economy Benefits More Than Any State By Connecting Rural Residents

Mar 15, 2019

Rural Texas businesses could gain $3.7 billion for local rural economies — more than any other state — by connecting them with digital tools and broadband internet access, according to a new report.

Online retail sales nearly doubled between 2011 and 2016, and web tools assisted businesses across the commercial sector, according to the report from the U.S. Chamber of Commerce and Amazon. Rural small businesses were often excluded to those gains due a lack of workforce, training programs and broadband connectivity.

More than 25 percent of rural Texans don't have access to broadband Internet, compared to 2 percent of urban residents.

Rural businesses also don’t have the workforce. According to forty percent of rural business owners responding in the report, local talent isn’t available in their communities to create the web sites. They use online marketing, logistical and cloud computing tools to help businesses grow.

"What we saw for Texas, in those rural communities — they could add more than $11.2 billion for the state economy and more than 70,000 jobs over the next three years," said Allison Flicker, Amazon spokesperson.

“It’s huge for businesses and everybody,” said Lonnie Hunt, executive director of the Deep East Texas Council of Governments. Unlike many councils of government across the state, DETCOG lacks any major cities.

“We can’t get a new business to invest in somewhere where they can’t get broadband access. It’s no longer a luxury — it’s a necessity,” Hunt said.

Amazon is underwriting the study, which is in line with other efforts the company has made to increase small business access on their platform, Flicker said.

“A lot of people don’t realize that more than half of the things you see on Amazon are actually sold by small and medium sized businesses,” she said.

Amazon could benefit from raising sales on their platform from more rural online businesses. More rural online businesses also means more possible customers for Amazon Web Services, the largest provider of server space, web hosting, and online tools in the country. AWS earned $25 billion in 2018, more than McDonalds. It represents most of the overall profit for Amazon.  

More than a third of Texas homes don’t connect to broadband. Affordability of access was the leading cause of Texas homes not connecting to broadband.

“In rural communities this is often due to a lack of competition,” said Jordana Barton, senior researcher for the Dallas Federal Reserve Bank. “This study makes the case for investment (in broadband).”

Small businesses made up 65 percent of job gains over the past 25 years but Barton said that skews to urban centers.

"To get some of that benefit for rural America — the unique potential of online access to break down barriers of geography, we aren't realizing the full potential of that," she said.

The FCC keeps a broadband accessibility map for the country, but communities like DETCOG — even they appear to have multiple providers — often are prohibitively expensive, officials said.
Credit FCC

Public-private partnerships engendering more broadband and more training could entice some people to look to rural counties, counteracting the so-called brain drain. Only 16 percent complete college, and many never move back, according to the U.S. Department of Agriculture.

Since 1980, rural Texas has grown slowly, by less than 600,000 people. Its urban cousins have more than doubled, going from 11 to 25 million people, according to the USDA.

“We have 12 counties. Seven of them have lost population since the 2010 census,” Hunt said, who sees the future of his rural swath of Texas in the development of a local broadband consortium, which the county has budgeted a half-million dollars to study.

“We live in a wonderful part of Texas. Beautiful forests and lakes, and good quality clean air and water and good people — but there are no jobs,” he said. “And people are going to migrate where the job opportunities are.”

Paul Flahive can be reached via email paul@tpr.org or on Twitter @paulflahive.