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Telecommunications Needs of Greater Minnesota Companies Examined

November 22, 2002

Manufacturing jobs in rural Minnesota numbered almost 120,000 in 2000, a 25 percent increase since 1990, according to a recent study by the Center for Rural Policy and Development and Minnesota Technology Inc., two agencies dedicated to helping industry in Greater Minnesota. Meanwhile, manufacturing jobs in the state's metro area increased only 1.7 percent during the same period, the study shows.

The study was the third part of the 2002 Rural Minnesota Internet Study, an annual collection of surveys designed to monitor computer, Internet and broadband use. Part III examines the telecommunications needs of the state's rural manufacturing firms. A survey of 300 of these firms revealed factors contributing to why some use the technology and others do not.

Ninety-three percent of the surveyed companies reported having an Internet connection, and 28 percent said they buy or sell products through e-commerce applications. Among those with Internet hook-ups, 47 percent said they had a dial-up connection, while the majority of those with a broadband connection (42 percent) reported using either a digital subscriber line (DSL) or a T-1 line.

The findings suggest that companies still using dial-up connections may be doing so due to cost and lack of availability of broadband technology. Between 58-65 percent of those companies equipped with the technology said DSL and T-1 lines were available at a reasonable cost to them. No more than 28 percent of dial-up users, however, believed these broadband services were available at a reasonable cost.

A similar relationship was shown between company size and the use of broadband. Of those firms with $5 million or more in sales, 78 percent said they were using a broadband connection, while only 23 percent of firms with less than $1 million reported using one. Likewise, 81 percent of companies having 50 or more employees said they were using broadband, while only 29 percent of those with less than 10 employees claimed not having broadband.

Companies also described how telecommunications technology impacted their business and their costs. Among the findings, more than half reported the costs of doing business and productivity were affected by an inability to secure needed bandwith. Forty-one percent said such inability has adversely impacted business opportunities, a finding the study suggests "could become a factor in business retention and expansion efforts."

Nearly one in four of the surveyed companies expressed plans to invest in broadband services during the next year. If companies fear losing business opportunities due to their local telecommunications infrastructure, the authors conclude, "they could relocate to areas that better meet their needs."

The Center for Rural Policy and Development, based in Mankato, Minn., is a non-partisan, nonprofit policy research organization that provides its policy makers with an evaluation of issues from a rural perspective. Minnesota Technology Inc. is the state's leading technology-based economic development organization. All three parts of the 2002 Rural Minnesota Internet Study are available at: http://www.mankato.msus.edu/ruralmn/

Minnesota