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Program and Impact Summary: Telecommunications and Technology in Appalachia

April 20, 2006

Recognizing the importance of telecommunications and technology to the economic future of Appalachia, the Appalachian Regional Development Act Amendments of 2002, which reauthorized the Appalachian Regional Commission (ARC), created a special program authority for ARC in telecommunications and technology. The legislation outlined four broad areas for ARC's work: increasing affordable access to broadband services, providing training and educational opportunities related to telecommunications and technology, increasing the use of e-commerce throughout the region, and increasing entrepreneurial activities within Appalachia in the technology sector.

Funding History

The 2002 legislation authorized $33 million over five years for the telecom program. Through the first four years of the program, the Commission spent $32.2 million on activities related to the special authorization. This has been matched by $6.5 million in other federal funds, $10.3 million in state dollars, and $41.3 million in local match. The activities funded through these grants are projected to leverage an additional $61.7 million in private investment.

Consequently, ARC's $32.2 million has leveraged an additional $119.8 million in public and private funds for telecom activities in Appalachia—a leverage ratio of almost $4 for every $1 of ARC money.

Program Accomplishments

Through more than 250 projects over the past four years, ARC's investments have had a significant impact in strengthening and diversifying the region's economic base. These projects are projected to have the following outcomes upon completion:

  • 2,600 jobs created and 2,100 jobs retained
  • 21,000 workers with improved skills
  • 45,000 students served with enhanced academic offerings
  • 65 community and regional plans for telecommunications networks and applications
  • 300,000 citizens participating in telecommunications programs
  • More than 100 non-profit and public organizations with updated software from Microsoft.

Program Activities

ARC has funded a broad range of activities to carry out the telecommunications program authority. Projects emphasize innovative, regional approaches.

Improving Telecommunications Access
ARC projects expand access to telecommunications within Appalachia by helping create community broadband networks that can be used by all sectors within the community, piloting the use of emerging technologies, installing fiberoptic rings, and equipping industrial parks and business incubators with broadband technology. In doing so, ARC has encouraged the use of all types of technologies—cable, DSL, fiber, wireless, and satellite.

Projects include a regional fiber network across northeast Mississippi; wireless demonstrations in rural New York, Ohio, Pennsylvania, Virginia, West Virginia, and Georgia; and a regionwide effort in Kentucky to compile an inventory of broadband access across the 51 Appalachian counties and work with the private sector to substantially increase broadband coverage. In Maryland, a county-wide high-speed wireless network, funded by ARC over several years, now serves over 4,500 customers, and over the past several months, an average of 6–8 new businesses have joined the network each week. In addition, two Internet service providers have announced plans to serve the county.

The agency has also implemented a robust program of strategic planning, "demand aggregation," and technical assistance that enhances the ability of communities to attract private investment for deploying broadband services and prepares communities to take economic advantage of the technology. As a result of these efforts, in Ohio the number of telephone central offices that are enabled with DSL jumped from 46 in 2002 to 168 in 2004, while in New York three local development districts are working with local telephone companies to create a regional broadband network reaching across the state's Southern Tier.

Finally, ARC encourages all basic infrastructure projects to consider whether a telecommunications component would enhance the value of the project.

Deploying Telecommunications Applications
Much of ARC's funding has gone for telecommunications applications that enable communities to capitalize on broadband access. Distance learning, telemedicine/telehealth, workforce development, and e-government activities frequently garner Commission support. By demonstrating concrete uses of technology, these application-oriented projects also help generate increasing demand for technology within the community. This increased demand, when coupled with other telecommunications activities in the community, frequently spurs private competition and enhanced service.

To help make these projects sustainable, ARC requires that networks include more than one type of service. In Delhi, New York, for example, a wireless broadband network, anchored at the local college, links the high school, a senior citizens' center, the state Department of Transportation regional office, the community library, village and county government offices, and the SUNY Delhi campus. Because of the availability of broadband, the town is now considering establishing a technology-oriented business incubator.

Slightly more than half of ARC's telecommunications projects have included a telemedicine or telehealth component, often linking rural clinics with the medical staffs and resources of more urban hospitals. These grants improve access to health care, reduce health care costs, and improve the quality of health care by facilitating collaboration between general practitioners in rural settings and specialists in more urban environments.

Distance learning projects are often used by rural school districts to help meet the requirements of the No Child Left Behind Act, while e-government encourages the use of technology by local governments to more efficiently deliver services to their citizens. In Pickens County, Alabama, an economically distressed county, an ARC-funded fiber network combines both distance learning (linking the only Spanish teacher in the county with three rural schools), and e-government (networking the sheriff's office, criminal justice facilities, and human services).

ARC also provides technical assistance to communities and nonprofit organizations in developing and customizing applications that will improve their ability to provide services over the Internet. Through ARC funding, a local development district in Pennsylvania has helped create almost 40 new Web sites for organizations across an 11-county area.

Fostering E-Commerce and Business Development
ARC has taken a number of steps to boost e-commerce in the region. A grant competition in 2002 focused on helping small arts and crafts businesses boost their sales and income through e-commerce. The ARC-funded Web site of North Carolina's Handmade in America now lists almost 350 local artists and 100 galleries in its searchable database, along with a robust calendar of craft-related events. The Web site has become the primary site for the burgeoning arts and crafts industry in a multi-state region anchored around western North Carolina.

In 2005 ARC pioneered a special E-commerce workshop to help small businesses on Main Street transition to the Internet for business services. The hands-on sessions teach local businesses how to establish a Web site presence and develop an Internet business plan and marketing effort. The workshop has been offered in Georgia, Ohio, Pennsylvania, and West Virginia, with several others planned for the spring of 2006.

ARC emphasizes technology as a tool for diversifying local economies. In a distressed Tennessee county, a technology-based program is helping farmers explore agricultural techniques and market opportunities for new specialty crops, reducing the county's historic dependence on tobacco.

Strengthening IT Sector Jobs
ARC has seeded a number of training activities, working with the region's universities and community colleges, to boost the technology skills of tomorrow's workers. The Interactive Digital Technology Center for Excellence at Ohio University is training students to design, program, and test interactive computer games and software that have applications in education, gaming, and business product development. Sophisticated computer gaming is now a $7 billion business, and is projected to create an average of 150,000 new jobs per year. The center will increase Appalachia's ability to capture a significant number of the new jobs in this industry. The program operates in partnership with Shawnee State University and Washington State Community College.

Advanced technology is a common component in ARC's workforce development projects, which often feature engineering, computer-aided design, and health technology. With ARC support, for example, the community colleges that serve Appalachian South Carolina have significantly upgraded their technology offerings, in part to capitalize on the region's growing automotive industry.

Forging Private Sector Partnerships
ARC believes that engaging the private sector is a critical component to meeting Appalachia's telecommunications and technology needs, and the agency has forged strong partnerships with a number of major technology companies.

As an outgrowth of an ARC wireless demonstration project in Delhi, New York, ARC established a partnership with Microsoft Corporation that has provided state-of-the-art computer software to more than a hundred organizations across all 13 Appalachian states. Microsoft initially committed $1 million in software, but they subsequently increased it to $2 million. At this point Microsoft and ARC have distributed $1.5 million of software, and another $400,000 is in process. ARC works with local groups in identifying software needs. In Ohio, the Ohio Community Computing Network has facilitated the distribution of over $112,000 in software to 8 community computer labs, while in West Virginia, Mission West Virginia, a faith-based organization, has coordinated the distribution of $68,000 in software to church-based community computer facilities across the state, focusing particularly on economically distressed counties.

Parametric Technology Corporation—a leading developer of sophisticated engineering and design software for industry, NASA, and the Department of Defense—as worked with ARC to make their Pro-DESKTOP software available for free to all high schools and colleges in the Appalachian Region that have a faculty member trained in using the software. The software is seen as a perfect design tool for inspiring the next generation of innovators, particularly in science, technology, and engineering. So far 31 community colleges, 4 technology centers, 44 high schools, and I middle school across 9 ARC states have participated in the project. The market value of the software PTC has donated to date is $24 million.

Conducting Regional Research
Research on the nature of telecommunications challenges and opportunities helps inform ARC's funding decisions. The legislative history of the 2002 legislation suggested that ARC continue to examine the region's telecommunications assets and needs. As a result, the Commission undertook an update of its path-breaking 2002 assessment of telecommunications in Appalachia, Links to the Future.

The update focused on analyzing changes in access to advanced information technologies and telecommunications services over the 2001–2003 period. The findings suggest that the pace of change in the adoption of information and communication technologies has been extremely rapid. However, Appalachia still lags significantly behind the rest of the nation in access to cable modem services, DSL services, and other forms of high-speed internet access. In December 1999, 44 percent of Appalachian zip codes had at least one high-speed provider, compared to 60 percent for the nation. In December 2002, the Appalachian percentage had increased to 63 percent—definite progress—but the national rate had grown to 88 percent, actually increasing the gap between Appalachia and the rest of the nation.

ARC Telecommunication and Technology Projects, 2002–2005 (Table)

ARC Telecommunications and Technology Project Funding by State, 2002-2005 (Table)

Appalachian Regional Development Act Amendments of 2002, Section 203