Federal broadband investment and rural business formation: Evidence from rejected applicants

Does federal money for rural broadband change the economies of the places that receive it? Any answer rests on a comparison between funded places and unfunded ones, and the unfunded side of that comparison is this paper’s subject. The 2009 American Recovery and Reinvestment Act allocated $7.2 billion to expand broadband access in rural and underserved areas through two parallel programs, the US Department of Agriculture Broadband Initiatives Program (BIP, $2.5 billion) and the National Telecommunications and Information Administration Broadband Technology Opportunities Program (BTOP, $4.7 billion), which together funded broadband-infrastructure projects across 2447 U.S. counties between 2010 and 2017. Because no public file records who sought these funds and lost, evaluations of such programs have had to build comparison groups from eligibility: places that were rural enough, underserved enough, and unfunded. But eligibility data record who could have applied, not who did. This paper therefore asks two questions. How much of a standard county-level eligibility-based control group consists of places that in fact sought the money and were denied? And what changes when the comparison is drawn instead from the denied applicants themselves? The answers, in brief: nearly half, and very little.