Gaps in Broadband Access and Usage:
A Rural and Urban CRA Opportunity

In an increasingly gadget-friendly world, access to high-speed internet is important. Innovation within and the integration of mobile and wired technology now allow individuals to tackle a host of activities. Students can take advantage of Advanced Placement (AP) courses to better prepare for college, the sick can get medical care, and entrepreneurs can sell products across the globe—all via the worldwide web.

Over the last decade, governmental entities and the private sector have worked to expand broadband access throughout the United States. According to a recent report by the U.S. Congress Joint Economic Committee, broadband services are now available to about 90 percent of the American population—a figure that has increased substantially over the last two decades.

Unfortunately, access to this critical resource is not evenly distributed. Due to a lack of population density, rural areas often struggle to attract the investment necessary to build and maintain digital infrastructure. Because of that, almost 40 percent of residents in rural parts of the country do not have access to broadband, making it harder to attract employers and talent.

However, and surprising to some, this problem affects more than just rural communities. While most metropolitan statistical areas (MSAs) offer “near-complete broadband coverage,” that does not mean residents are taking advantage of its availability. For example, less than half of households making less than $20,000 annually have a broadband subscription. Of those who did not complete high school, about 40 percent lack broadband in their homes. About 33 percent of those over the age of 65, 30 percent of African Americans and 25 percent of Hispanics also report not having in-home, wired internet service. Simply put, access to broadband is affected by more than just one's geography.

In congruence with national figures, rural and urban communities within the Federal Reserve's Eighth District face challenges with digital services. Missouri and Mississippi rank among the worst in the nation in terms of providing rural broadband, with 61 percent and 60 percent of rural residents, respectively, lacking access. Additionally, Illinois at 56 percent and Indiana at 51 percent are not too far behind, and well above the national average of 40 percent.

In a more urban context, two of the District's largest metropolitan areas, St. Louis and Memphis, are listed in a similar report for challenges regarding online connectivity. In the St. Louis MSA, almost 20 percent of residents, totaling over 500,000 people, live in “low subscription neighborhoods,” where 40 percent or fewer have an in-home, wireline broadband. This places the region among only 10 MSAs in the country to have over half a million people living in such neighborhoods. The Memphis MSA is listed 11th among the 100 most populous MSAs for having the largest share of residents lacking 10 Mbps (low-speed) internet services.

So, if rural areas and urban areas in the District need help meeting the connectivity challenges of their communities, who might spearhead the solution? Undoubtedly, the private sector will lead because its infrastructure will be providing the service. Governmental entities will also be involved, alongside housing developers, nonprofit organizations and community groups. Moreover, banks subject to Community Reinvestment Act (CRA) examinations also would make good partners. According to the CRA Q&As, investments in, loans to or services for projects aimed at increasing internet access in low- and moderate-income (LMI) urban areas or distressed and underserved nonmetropolitan areas can be credited within the revitalization and stabilization category. In fact, a bank's civic legitimacy, financial resources and long-term perspective should make it a strong member of any coalition pursing a substantive broadband project.

As innovation continues and more pieces of Americans' lives move online, digital infrastructure will play a key role in the vitality of communities. As local, state and federal leaders across industries seek to tackle accessibility and utilization gaps, banks likely will be engaged participants.

Caleb Bobo is an assistant consumer affairs examiner at the Federal Reserve Bank of St. Louis.