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Internet Access Is a Key Component of Native American Economic Development
The U.S. needs tech innovations and policy reforms that will expand high-speed internet access to people on reservations
By Jordan K. Lofthouse
November is Native American Heritage Month, which gives us an important opportunity to reflect on the economic status of Native Americans. Many reservations see poverty rates and unemployment rates higher than nearly any other place in the U.S., and the rates on some reservations are on par with those of developing countries.
The persistent and pervasive poverty on reservations is a complex issue deeply rooted in American history. Most economists agree, however, that institutional barriers are the main cause of the slow rates of Native American economic development. These barriers include legal uncertainty, regulatory complexity and a property rights system managed by the federal government, among other issues. An important, but often neglected, economic barrier is the geographic and digital isolation that Native Americans face.
Expanding reliable access to high-speed internet on reservations and in nearby communities will be a key component of long-term, sustainable economic development for Native Americans. Internet access provides many direct opportunities for development: Individuals can create their own businesses, tribal enterprises can find willing customers, off-reservation companies can hire willing employees on reservations, and so on. Internet access can also provide more educational and telehealth opportunities, leading to more productive Native communities.
To increase internet access, policy reforms and technological innovations are necessary. Many federal, state and tribal policies impose unnecessary red tape that inhibits the expansion of infrastructure. However, new technologies can make it easier and cheaper to bring reliable, high-speed internet to isolated Native communities in rural areas. Policymakers across the board need to focus on facilitating innovations while also removing unnecessary legal barriers.
Economic Development and Internet Access
Roughly one-quarter of the total Native American population lives below the federal poverty line, and some reservations have much higher poverty rates. The unemployment rate for all Native Americans in December 2021 was 7.9%—slightly more than double the rate for the overall U.S. population (3.9%).
Relatedly, the median household income for Native Americans is generally much lower than the national average. For example, the median household income for all Americans was $69,021 in 2021. In the same year, the Navajo Nation—the most populous reservation in the country—had a median household income of only $29,884.
Slightly more than 50% of Native Americans live in rural areas, usually on or near reservations, which have limited access to reliable, high-speed internet. The Federal Communications Commission found that, as of 2018, 30.75% of Americans in rural areas and 35.4% of Americans on tribal lands lack access to broadband internet. If we want to improve economic outcomes for Native Americans, providing widespread access to the internet is critical.
Sustainable economic development—for Native Americans or anyone else—results from the combination of entrepreneurship, socially productive institutions and relatively broad access to markets. Every society has entrepreneurs who look for opportunities to innovate and find new ways of providing consumers with what they want. The formal and informal rules that people live by—which economists call “institutions”—channel entrepreneurship into socially productive or destructive forms.
When institutions effectively protect life, liberty and property, as well as uphold contracts, then people can engage in socially beneficial actions. However, when “bad” rules facilitate predation or make it difficult to engage in economic activity, then it is no surprise if economic development is slow or nonexistent.
Even “good” institutions do not guarantee sustained economic development. To achieve the highest standards of living, a society must also have access to broad markets. Modern globalization has led to highly interconnected markets that involve billions of people. These vast markets allow individuals to engage in division of labor more fully, specialize and take part in mutually beneficial exchange on a larger scale.
As a thought experiment, imagine a small group of benevolent geniuses on a desert island. Even with the best ideas and the best rules, they could not reach modern standards of wealth and comfort. They would need to be connected to global supply networks to acquire all the goods that average people are used to consuming daily. Modern prosperity requires the coordination and cooperation of billions of people. A small, isolated society—even if it were composed of the smartest people in the world—could not make itself rich by modern standards.
Any isolated community faces the same constraints as this imaginary island society. When exchange opportunities are limited, people will remain poorer than they could otherwise be. For isolated Native American communities, reliable, high-speed internet access provides a way to overcome that isolation. Individuals and tribal governments can tap into globalized markets and take advantage of the associated benefits.
Benefits of Internet Access
Better internet access can help tribes both directly and indirectly. Internet access provides opportunities for individual entrepreneurs to start their own businesses, for tribal governments to start their own enterprises and for outside companies to exchange with reservation residents. Better internet access also improves access to education and telehealth. Better educated and healthier people are more likely to engage in economically productive activity.
As indigenous lawyer Darrah Blackwater has argued, internet access can “improve the productivity, efficiency, and communication of businesses already located on tribal lands.” It also “helps tribal communities attract new outside businesses that may be looking to expand into tribal areas.”
The internet has provided many opportunities for individuals to start businesses. Many Native entrepreneurs have found success on online platforms such as Etsy, where they sell beadwork, jewelry, crafts, clothing, hats, cosmetics, food, travel cases, rugs and spiritual items, among other goods. These private businesses are often small, but they provide an important source of income for individuals who live in isolated areas with few employment opportunities.
Although individual entrepreneurship is important, tribally owned companies are often more important because they are usually the major source of employment on reservations as well as the major source of revenue for the tribal government. Casinos are well-known tribal businesses, but not all tribes have casinos. Tribal enterprises have grown out of a variety of industries, such as tourism, energy, agriculture, forestry, manufacturing and telecommunications, to name a few. Even fintech is the basis of an emerging tribal enterprise. Like all other modern companies, tribal enterprises need internet access to function well.
Internet access also increases opportunities for business diversity, which is a way tribal governments can avoid putting all their proverbial eggs in one basket, as by investing solely in tribal casinos.
Commerce is a two-way flow, and better internet access enables off-reservation businesses to find willing customers and potential employees on reservations. In today’s world, remote work has become the norm for many; without internet access, Native Americans who remain digitally isolated will be left behind. Currently, Native Americans consistently have fewer opportunities for remote work than white or Black Americans. Increased opportunities for both consumption and production through digital platforms will contribute to the processes of economic development.
Even with internet access, however, sustainable economic development requires an educated and healthy workforce. Reliable internet access provides ways to boost human capital.
More highly educated individuals tend to be more economically productive, have the skills to innovate and be more alert to potential profit opportunities. On reservations, internet access can benefit tribal communities by supplementing the education offered there. High school students have access online to accelerated classes, Advanced Placement classes and dual enrollment classes that would otherwise be unavailable to them. If and when future pandemics necessitate school closures, internet access will allow reservation schools to remain open. Further, internet access allows high school graduates to go to college online without needing to leave the reservation.
Additionally, the internet provides new means of accessing healthcare, such as telehealth. Individuals who struggle with health problems are less economically productive and have fewer opportunities to engage in entrepreneurship. The geographic isolation of many reservations can make it difficult or costly for residents to travel to a healthcare facility. With expanded internet access, tribal members can use telehealth at home or from a community center. In future pandemics, access to telehealth will likely expand medical care options, making tribal communities healthier and more productive.
Barriers to Internet Access
Despite the seemingly self-evident benefits of the internet on reservations, providing access is often difficult and costly. The governance institutions on reservations—including the complex web of laws and regulations at the national, state, county and tribal levels—raise the costs of providing reliable, high-speed internet. Public policy reforms are necessary to make it easier to bring the internet to underserved Native American communities.
Most of the U.S. population lives in areas where individuals can simply call an internet service provider, which will connect a residence to existing internet infrastructure. If the infrastructure does not exist or if it is outdated, telecommunications firms or utility services have to install new infrastructure. Due to legal and regulatory frameworks on reservations, however, telecom companies may not find it profitable to invest in new or upgraded infrastructure. Because of the economic challenges that telecom firms face, there may be a case for subsidizing internet access, at least to some degree. Even better, policymakers could rethink the governmental barriers that make it less profitable for telecom companies to invest in infrastructure on reservations.
If a telecom firm decides to build new infrastructure on a reservation, it must work with a variety of officials and comply with a variety of policies simultaneously. Tribal officials, who implement tribal policies, and officials in the Bureau of Indian Affairs (BIA), who implement federal policies, oversee the installation of internet infrastructure. The need for cooperation and joint decision-making can complicate the infrastructure-building process.
The BIA manages the rights of way, easement grants, leases, leasing fees and all necessary permitting to build traditional internet infrastructure on reservations. The BIA’s lease fees require fair market value assessments to ensure that the fees are appropriate for the requested use. Lease fees and permitting processes can be significant barriers to building infrastructure on reservations.
State and county regulations may also apply to tribal lands in cases where the state or county has been given a right of way. A telecom company or a utility service may have to work with federal, state, county and tribal agents simultaneously in various permitting and compliance processes.
The amount of red tape that must be overcome to install infrastructure is simply much more significant on reservations than in other places in the U.S. Consequently, the most daunting roadblocks to expanded broadband access include a lack of trust in the government and complicated legal and regulatory processes, as well as financial burdens on tribes, limited resources and challenging geography.
Even if red tape and other bureaucratic costs could be reduced, laying traditional fiber cables in remote places may still be prohibitively costly. That is why technological innovation is so critical. New means of bringing internet access to underserved places such as reservations may be the best way to avoid both red tape and the economic barriers associated with traditional fiber cables.
One such technological innovation is SpaceX’s Starlink, which has enabled high-speed internet service via a satellite network, eliminating the need for extensive physical infrastructure. Starlink has already proved useful for Native American tribes in remote locations. In 2020, at the beginning of the COVID-19 pandemic, Starlink connected the Hoh Tribe of Washington state to reliable broadband for the first time. Tribal members were able to access education when schools were closed and telemedicine when it was difficult to visit a doctor’s office.
Melvinjohn Ashue, vice chairman of the Hoh Tribe’s governing committee, said, “It seemed like out of nowhere, SpaceX came up and just catapulted us into the 21st century. Our youth can do education online, and participate in videos. Telehealth is no longer going to be an issue.”
Another innovation is the use of electrical cooperatives to provide broadband internet. Electrical cooperatives are customer-owned, nonprofit organizations that provide electricity to many rural parts of the U.S., including reservations, that would otherwise be underserved by traditional electric companies. These co-ops either return profits as dividends to members or invest the profits in infrastructure.
Since electrical cooperatives build infrastructure for electricity, they can also bring broadband to rural areas by bundling electrical infrastructure and fiber-optic infrastructure. Many co-ops are engaged in smart-grid modernization projects in which they retrofit or upgrade utility poles with fiber. Co-ops also have personnel, skills and equipment that can fairly easily be shifted to serve broadband customers in addition to their electrical customers. In the past few years, some states have passed new legislation or enacted new policies that have expanded co-ops’ ability to do this.
In the 2010s, tribal leaders on Washington state’s Colville Reservation devised an innovative system for providing internet access to the reservation’s residents. They worked with telecom companies to design and install solar- and wind-powered communications towers on the mountaintops that also beam wireless internet down on the reservation. The expansion of internet access across the Colville Reservation increased opportunities for local entrepreneurs, improved tribal enterprises, facilitated educational opportunities and allowed tribal members to use telehealth.
Internet access is a way forward for economic development on Native American reservations. Although economic and legal barriers to the expansion of internet access still exist, technological innovation has the potential to fundamentally change how reliable, high-speed internet can be delivered to isolated areas. The combination of new technology and institutional reform will give both individual and tribal entrepreneurs the freedom to discover and exploit opportunities for economic development.
This piece is based on an ongoing academic research project by Jordan K. Lofthouse and James Ronyak of the Mercatus Center at George Mason University.