Panel Paper: Access to Broadband and Its Impact on Brick-and-Mortar Retail Businesses

Friday, November 9, 2018
Jefferson - Mezz Level (Marriott Wardman Park)

*Names in bold indicate Presenter

Rachel Meltzer, The New School and Leah Brooks, George Washington University

High-speed Internet access has transformed the nature of business transactions and the consumption of goods and services. However, access to broadband and high-speed technology is far from universal—the amount and quality of services can be very uneven across neighborhoods in the same city. In this paper we focus on how access to broadband services has affected the viability of brick-and-mortar retail establishments. Access to high-speed Internet can affect retailers in several ways. First, the technology can change the way they do business and broaden their networks. Second, and central to the current analysis, the technology can introduce competition with regards to consumption alternatives for local residents. If residents have access to broadband services then they can purchase goods or services online with more convenience and often for lower prices than what is provided on the streets nearby. And these effects can vary by the characteristics of the local community and the good or service being consumed.

We build a dataset containing the 100 most populous cities in the U.S. and include information on the municipalities and the neighborhoods that comprise them. Most critically, we are able to observe the extent of broadband service and the nature and volume of retail activity over a 15-year period of time when broadband access was expanding (albeit differentially across cities and neighborhoods). We obtain data on the number of broadband providers and the number of household connections from the Federal Communications Commission’s Form 477. We access information on retail establishments (their location and type of good or service) from the Economic Census. In addition, we add in economic, demographic and fiscal data from the U.S. Census, American Community Survey and Census of Governments. We look at variation in retail activity across cities in the sample to test for how changes in municipal-level broadband infrastructures over time affect retail activity. We also look across neighborhoods to test how changes in broadband infrastructure across space affect the nature and distribution of retail activity across the city.

This study has important implications for urban planning, economic development and fiscal policy. Retail activity has long been understood as a critical component of vibrant and productive mixed use communities. Retail businesses affect streetscape vitality, and also contribute to employment and fiscal revenues. Anecdotal and media accounts suggest that threats are real and non-negligible—there are no empirical research studies to date, however, to support these concerns. Our analysis will inform local policymakers and planners as they assess the nature and magnitude of the threats, and how policies can be spatially differentiated and targeted.