“Small ” Broadband Providers and Federal Assistance Programs: Solving the Digital Divide?

Abstract. Recent data from the Federal Communications Commission allows for examination of the location decisions of “small ” broadband providers, i.e. those with less than 250 subscrib-ers. While anecdotal evidence suggests that small providers may be serving disadvantaged or underserved areas, the data indicates that more than two-thirds service urban areas and see-mingly choose areas with high demand potential. This paper models the location decision of these small providers and analyzes whether they are influenced by federal assistance pro-grams such as USDA broadband grants and loans. The results suggest that while small pro-viders do tend to locate in urban areas with higher levels of education and income, they also favor rural areas with high levels of Hispanics and African-Americans. No statistical impact is found for the federal-level policies included in the analysis, implying that the focus of these programs may be on the wrong areas