After the Storm: Rebuilding Puerto Rico’s Businesses

The Role Broadband is Playing in Revitalizing the U.S. Territory  

by Jessica Denson
Director of Communications, Connected Nation

San Juan, PR (September 13, 2019)– On September 16, 2017, a tropical storm formed in the Caribbean just east of the Lesser Antilles. As it moved northward in the Atlantic toward Dominica Island it picked up power — forming Hurricane Maria, a category 5 storm. It weakened some as it crossed the small Caribbean island, but when it unleashed on Puerto Rico it was still a category 4 — with sustained winds reported as high as 155 mph*.

Hurricane Maria hit the U.S. territory with such force that most of the National Weather Service’s wind stations failed. The island’s entire power grid was effectively wiped out, whole neighborhoods were destroyed, and, according to news reports, the storm surge and flash flooding that followed caused waters to rise 6 feet in just 30 minutes, trapping thousands of people in the town of Tao Baja.

Many lives were lost as a result of the hurricane. Although there was some controversy surrounding the number immediately after the natural disaster, according to Puerto Rico officials, the final death toll

This picture is from the U.S. Department of Defense

climbed to nearly 3,000.

In addition, the destruction Hurricane Maria caused left the island’s residents cut off from worried friends and family members on the mainland in the weeks and months that followed. Overall, according to Federal Communications Commission data released six days after the hurricane hit, more than 95 percent of cell sites were knocked out of service in Puerto Rico. In addition, in nearly two-thirds of the island’s counties, cell sites were completely destroyed.

It was not only hard on families, but the blow to the local economy — business owners and employees — was devastating. The latest report from Puerto Rico’s planning board was released in December and puts the estimated economic impact at $43 billion. Other studies, including one commissioned by the economic consulting firm H. Calero, put the loss at three or more times higher — reaching as much as $139 billion to $159 billion.

Whatever the final and most accurate assessment is, Puerto Rico employees and businesses face a daunting task: restarting their economy.

“Right now, an estimated 1,100 businesses that were connected before Hurricane Maria have not yet subscribed to broadband,” said Chris McGovern, Director of Research Development, Connected Nation. “They’re left without access, and as Puerto Rico’s business community increases its online presence, we must look for ways to include all of those companies that were left reeling by this destructive storm.”

Open for Business
Connected Nation (CN) is a national nonprofit focused on expanding access to broadband and its related technologies. Through its local subsidiary, Connect Puerto Rico, it has been working in Puerto Rico since 2010. The organization is contracted by the Puerto Rico Institute of Statistics to research trends in technology among residential and business users — identifying challenges and opportunities.

“We shift our focus every other year — even years are residential; odd are business. This year, we’ve seen a significant jump in the number of Puerto Rico businesses selling products online,” McGovern said. “About half are now doing so compared to only about 28 percent in 2017. We see that companies that do business online get about one-third of their revenue from online sales. That’s up from just 19 percent two years ago.”

The use of broadband (high-speed internet) has seen a slight decrease among businesses, from 91 percent at the time of Hurricane Maria in 2017 to 87 percent today. Those that have it are increasing usage in just about every category. That includes, among other things, accepting online payments, which is up from 39 percent in 2017 to 62 percent in 2019; bidding on job contracts, up from 29 percent to 43 percent; and using social media for outreach, which is up from 49 percent to 63 percent  of businesses that are connected to the internet.

This picture is from the U.S. Department of Defense

“The ways that businesses are using the internet for different purposes is evolving,” said McGovern. “Also, the amount of revenue that Puerto Rico’s businesses are getting from online sales is increasing. Their mobile internet use is also increasing.”

Businesses that do not leverage the internet cite cost as a barrier to continuing the use of broadband.

“Part of the problem is that most of the wireline broadband network is still broken in many parts of the island,” said Eduardo Diaz, Chairman of the Puerto Rico Broadband Task Force.

As a result, many businesses that use the internet are now turning to a mobile network, with 57 percent of employees using a cell phone for work compared to 36 percent in 2017 — a 21 percentage point jump. In addition, computer desktop usage is down while tablet usage has more than doubled. More internet-connected businesses have also developed websites (up 7 percentage points), and more Puerto Rico companies are buying locally online (up 15 percentage points).

This shift in how Puerto Rican businesses operate could actually provide new opportunities for growth — including seeing improved technology.

“Business broadband demand in combination with the cost of rebuilding land-based networks will force telecom companies to adopt 5G technologies sooner rather than later,” Diaz explained. “This shift in technology will result in more businesses adopting wireless technologies for their Internet connectivity.”

“Having broadband means giving Puerto Rico’s business community access to a global marketplace so they can reach new customers while growing the local economy,” said Chris Pedersen, Vice President of Development and Planning, Connected Nation. “It also gives them access to better business applications, employee training opportunities, and other services that can set them up for success.”

There are some challenges and barriers that could stifle that growth. For instance, teleworking is on the rise, sitting at 27 percent in 2019 compared to 20 percent in 2017. However, half of businesses said they find it “difficult” or “very difficult” to find employees with the necessary technical skills. That’s compared to just 34 percent two years ago.

“What this tells us is that we must focus on more than just helping increase the access to and adoption of broadband and related technologies,” said Pedersen. “We must also look at providing digital skills training and helping potential employees understand how to leverage technology.”

Hurricane Maria left her mark on Puerto Rico. Even as some businesses begin to leverage technology to rebuild after the storm, one of the major challenges is helping those still struggling.

To see the latest business surveys, head here.

*Data used in the above article referencing Hurricane Maria’s path and the damage it caused can be found in the National Weather Service archives

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About Connect Puerto Rico: Connect Puerto Rico is a local subsidiary of the national nonprofit Connected Nation. Our mission is to improve lives by providing innovative solutions that expand access to and increase the adoption and use of broadband (high-speed internet) and its related technologies for all people. Everyone belongs in a Connected Nation.

Connected Nation works with consumers, local community leaders, states, technology providers, and foundations to develop and implement technology expansion programs with core competencies centered on a mission to improve digital inclusion for people and places previously underserved or overlooked. For more information, please visit: connectednation.hatfield.marketing and follow Connected Nation on Facebookand Twitter.

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