Broadband Adoption in Low-Income Communities

Post updated 1/22

I thought this would be a Copy Culture week for me but it looks like it will also be a broadband regulation week.  So for those of you coming from this New York Times story about Comcast’s ‘Essentials’ program, which unexpectedly cast me as the main critic, here’s some background and  a few comments

I was part of a group asked by the FCC in 2009 to conduct a qualitative study of barriers to access to broadband in low-income communities.  This was intended to complement the FCC’s phone-survey-based study on access (phone surveys run into difficulties in reporting on low-income and minority populations, and the FCC was rightly concerned about this).  Both studies found that low-income communities were being consistently under served by broadband providers.  Our study also documented a wide array of ISP practices that made maintaining access particularly difficult in those communities, especially bait and switch tactics around pricing and hidden fees. 

The FCC’s National Broadband Plan was released in 2010.  It broadly endorsed  the conclusions of the two studies, identifying the lack of affordable access in low-income communities as a top priority.  It notably avoided the conclusion that this problem had anything to do with the lack of competition in broadband markets, where many communities are served by only one provider (if they are served at all).  Due to pressure from companies like Comcast, the competition question proved too controversial to take on.  So the FCC punted.  It proposed grants for infrastructure build-out, subsidies for providers, and a range of ‘voluntary’ measures to expand access, backed by hints of stronger regulation if the main players didn’t deliver.

In Comcast’s case, the regulatory threat was more concrete: serve more low-income people or we’ll block your merger with NBC.  The Internet Essentials program was the result.  It, in turn, provided the template for Connect2Compete–an FCC-incubated non-profit that enlists ISPs and other technology providers in furnishing cheap computers and broadband access to low-income students in public schools.

As I made clear to the NYT, these programs do good things.  According to the NYT (which appears to be citing Comcast) Comcast’s program has now provided $9.95/month access to over 100,000 families.  But these programs also have serious drawbacks as a national strategy for addressing low-income access.  Connect2Compete is a ‘voluntary’ initiative dependent on corporate cooperation and grants from sources such as the Knight Foundation and Carlos Slim.  Like Internet Essentials, it is limited to families of poor students enrolled in school lunch programs.  Participation by those families is capped at 2 years, after which all bets are off on keeping them online.  Participation is further limited to families with no current access, which doesn’t help those who have already identified broadband as a priority and made sacrifices to subscribe. Families that owe money on phone or cable bills cannot apply.

Some of this made it into the body of the NYT piece.  My speaking role ended up as:

“A company like Comcast doesn’t do it out of the goodness of their heart,”

and

“Broadband service is “a natural monopoly” controlled by a handful of private companies, said Mr. Karaganis, of the American Assembly, adding that Internet Essentials gave Comcast access to people in community settings where it could use the lure of low prices to tap into a new consumer base

I stand by the quotes, but the interview was a while ago and I’m fairly sure I didn’t talk about Comcast ‘luring’ consumers in this way, since I don’t think this is the problem or Comcast’s motivation.  The problem is that poor communities aren’t valuable markets for the ISPs, which is why they’ve done a very poor job of serving them.  The motivation is to avoid regulatory action.  I also didn’t speak to whether Comcast was overreaching in its marketing in schools–though that was implied in the quote placement.  I have no knowledge of that.  Most of the critics of the program appear to think that lack of outreach is the bigger problem.

As for whether broadband access is a natural monopoly, I think it meets the usual criteria, but views differ.  I was referring to wire-to-home, which has huge installation costs.  New 4G services complicate the picture but it’s not clear that spectrum and wireless infrastructure are any less subject to concentration in the hands of a couple companies.  And in fact they are concentrated in the hands of a couple companies, which keep trying to merge.

What to do about this?  If you think that broadband access is now a basic element of social and economic inclusion, then there’s a strong case for addressing these market failures through regulation–not temporary, charitable half-measures compelled by the threat of regulation.  There are lots of ways to do this.  The FCC could do more to protect and promote experiments in municipal broadband provision, which treat broadband like a public utility.  It could introduce line sharing provisions that encourage price competition on bandwidth provision.  It could expand Connect2Compete and make it compulsory for the major ISPs–maybe as part of a larger rethinking of the public interest obligations of companies that control large parts of the public sphere. Comcast can probably afford it. It made $62 billion last year.

So, yes, Connect2Compete is ok.  It’s a drop in the bucket, but it’s not nothing.  Let’s hope it’s around in 2 years.

 

More…. Here’s Wade Rathke, who is paying closer attention to Connect2Compete than I am, and who is not happy.

is this the same Comcast where the FCC in June 2012 agreed with the scores of complaints filed by our members that they were unable to access the cheaper program and while slapping the company with an $800,000 fine for not following through on the contingent commitment for the service also found that they in fact were bait-and-switching the poor to buy the bundled service?  The FCC found Comcast’s handling of this so bad that they added another year (2015) for them to have to do the program.

Still more… I’ve read the FCC statement on the consent decree.  It states pretty clearly that Comcast was violating its promise to market standalone Internet service as a condition of approval of the NBC merger.  But I don’t see anything related to Internet Essentials.

The core question seems to be whether Comcast (and Connect2Compete) have designed programs with such narrow eligibility that few families would qualify and those would be the hardest to enlist–leading to the numerous and hard to address complaints about outreach, even if they are trying.  Comcast puts eligibility at 2.3 million families.  It says 100,000 have signed up.  The total population without broadband access at home is around 100 million, of whom around 19 million have no service providers.  The FCC consent decree requires that the program run through 2015, after which.. what?  Clearly we’re in ‘drop in bucket’ territory.   It would be good to see some independent evaluation of all this.

 

 

 

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