A Discussion About Net Neutrality and the Digital Divide

By Brad

Last week, James Rucker of the group Color of Change penned an op-ed for the Huffington Post taking aim at the position of some civil rights groups when it comes to net neutrality:

Net Neutrality is the principle that prevents Internet Service Providers from controlling what kind of content or applications you can access online. It sounds wonky, but for Black and other communities, an open Internet offers a transformative opportunity to truly control our own voice and image, while reaching the largest number of people possible. This dynamic is one major reason why Barack Obama was elected president and why organizations like ColorOfChange.org exist.

So I was troubled to learn that several Congressional Black Caucus members were among 72 Democrats to write the FCC last fall questioning the need for Net Neutrality rules. I was further troubled that a number of our nation’s leading civil rights groups had also taken positions questioning or against Net Neutrality, using arguments that were in step with those of the big phone and cable companies like AT&T and Comcast, which are determined to water down any new FCC rules.

Most unsettling about their position is the argument that maintaining Net Neutrality could widen the digital divide.

Today, Maximum Leverage Solutions President Navarrow Wright offered a rebuttal to Rucker’s op-ed, also on the Huffington Post:

We all know the fight today is between Google and the ISPs. And just because the arguments you make sound just like those made by Google and Public Knowledge, it doesn’t make you a bad guy. What I don’t understand though is why you are criticizing people who are looking for answers. You seem surprised that the CBC and civil right leaders are concerned that when the big companies fight each other the under served may lose?

Don’t you think the FCC should answer the questions raised by the civil rights leaders and CBC? Why is it wrong to ask the FCC to make sure the rules they are proposing will not widen the digital divide? Why is it wrong to ask the FCC to make sure the rules they develop will not lead to regressive pricing which would shackle poor people? Why is it wrong to ask that the costs be borne by the people that cause them and not by the underserved? Why are you so afraid of the answers to these questions?

Broadband as a Civil Right

By Brad

Broadband Breakfast has a good rundown of a Minority Media & Telecom Council event held yesterday at Howard University:

Blair Levin, an FCC alumni who has been tapped to oversee the current plans to get broadband throughout the nation, said he wants to ensure that the policies for the plan will not contribute to a second-class citizenship and digital literacy will not be denied to anyone.

Levin told attendees at the Broadband and Social Justice Summit that broadband to certain communities will not automatically remove the digital divide, but will remove the barrier to creating more equal opportunity.  He noted that connecting those previously excluded from the internet can bring real results in education, employment, the nation’s physical health, political participation and civic engagement.

The full article is worth checking out.

Net Neutrality and Unintended Consequences

By David

While the FCC sifts through comments from a reported 200,000 + people in response to its proposed net neutrality regulations, minority groups continue to voice concerns about the effect those regulations will have on the digital divide. Yesterday, groups of minority legislators circulated letters around Capitol Hill warning of unintended consequences from new regulations. Reports Multichannel News:

The Jan. 22 letters came from the National Black Caucus of State Legislators, National Foundation for Women Legislators, National Organization of Black Elected Legislative Women, National Conference of Black Mayors and the National Association of Black County Officials.

The groups called closing the digital divide “one of the most pressing social and civil rights issue of our day.”

They asked President Obama to intercede to keep the FCC focused on a broadband plan that closes that divide and does not include any new rules they say could threaten that end.

A Report on the Digital Divide

By David

The Hispanic Institute has released a new report on broadband adoption and minority communities. Multichannel News looks at some of the report’s findings:

[W]hile English-dominant Latinos subscribe to broadband services at a higher rate than non-Hispanic whites (68% of those surveyed having broadband services at home), Spanish-dominant Latinos lag well behind, with only 32% using the Internet in any form in 2006, compared to 78% of English-dominant Latinos and 76% of bilingual speakers.

The full Hispanic Institute report, Toward Access, Adoption & Inclusion: A Call for Digital Equality and Broadband Opportunity, is available online.

The Price of Net Neutrality

By Bruce Mehlman

At the Huffington Post, Navarrow Wright, President of Maximum Leverage Solutions, has a must-read post breaking down the negative effects net neutrality could very well have on minorities and the urban poor:

The FCC is playing a dangerous game here, and the people who have the most to lose are already the socially and economically disenfranchised members of our national community - low-income, rural, urban, non-English speaking, tribal, minority, underserved and underserved populations. Neither the Commission nor the American people can rightly afford to preoccupy themselves with corporate interests over the greater priority interests of people. As responsible citizens, we have an obligation to speak out for and protect the interests of those who are not already digitally connected. I applaud the minority elected officials, the civil rights leaders and the consumer groups who are making their voices heard. I encourage the FCC to listen to the people.

Connecting More People

By Brad

IiA Co-Chairman Bruce Mehlman has a new column in Fierce Wireless on digital literacy and closing the digital divide. Check it out and join the discussion, which is already underway.

2010 Slowdown

By Bruce Mehlman

A new report from market research firm Pike & Fischer (via Broadcasting & Cable) estimates that new high-speed Internet subscriptions may drop by as much as 10% this year. The firm also predicts that home penetration will reach 65%, leaving 35% unconnected.

Unintended Consequences

By Brad

Via Broadcasting & Cable, a coalition of minority women’s organizations — including the Asian American Justice Center, the Hispanic Technology & Telecommunications Partnership, and the National Black Caucus of State Legislators — are calling on the FCC to take the digital divide into account as it moves forward with proposed net neutrality regulations.

From the coalition’s letter to the FCC:

As organizations that serve communities that are among the most severely impacted by a lack of access to technology, we urge you to keep your number one focus on the need to get everyone connected. We are concerned that some of the proposed regulations on the Internet could, as applied, inhibit the goal of universal access and leave disenfranchised communities further behind. We are also concerned that some proposed regulations could inhibit investments being made by companies employing hundreds of thousands of workers and connecting millions to the opportunities that broadband technology affords to those in our community – from telemedicine to distance learning to applying for jobs online.

More Americans Online

By David

CNet reports on a new survey on Internet usage from the Pew Research Center (PDF), which finds that 74% of adult Americans are online. That’s the good news. The bad news is the digital divide remains very much in place, with 76% of white Americans online compared to 59% of African Americans and 55% of Hispanic Americans.

Connecting Small Businesses

By Bruce Mehlman

Broadband Breakfast reports on a recent FCC field hearing at the University of Chicago. The topic: How broadband can affect small businesses:

“When discussing the digital divide, small businesses are often overlooked,” said Norma Reyes, commissioner of the department of business affairs and consumer protection for the city of Chicago.

“Small businesses are really the engine of job creation in the U.S., and they have been for a long time,” FCC Chairman Julius Genachowski explained at the hearing.

“The statistics are really amazing. Small businesses inject about a trillion into the American economy. Small businesses have created on a net basis, over 93% of new jobs over the past 15 years.”

Narrowing the Digital Divide

By David

A new report from Pew has some encouraging news about Internet use in the Hispanic community:

From 2006 to 2008, internet use among Latino adults rose by 10 percentage points, from 54% to 64%.  In comparison, the rates for whites rose four percentage points, and the rates for blacks rose only two percentage points during that time period.

Latinos still trail whites in Internet use, but the Pew report shows that the gap is diminishing. Unfortunately, when it comes to broadband adoption at home, the Hispanic community saw very little change — from 79% of Internet users in 2007, to 81% in 2008.

The full Pew report is available here (PDF)

From the Symposium

By Brad

Jimmy Lynn of JLynn Associates has posted a brief wrap up of his participation in yesterday’s IIA Broadband Symposium:

The symposium started with a terrific opening presentation by the outstanding pollster, Cornell Belcher (he gained much fame as the pollster for the Obama presidential campaign last year).  His presentation clearly showed the need for the adoption of broadband, particularly in the under-served African-American and Hispanic communities.

IIA in the News: The Root Talks to David Sutphen

By Brad

IIA Co-Chairman David Sutphen sat down with The Root to talk about minorities, and the need to increase both broadband access and adoption:

TR: How do you see creating wider access to broadband? Do you do it through legislation or the private effort?

DS: I think it’s a kind of an all-hands-on-deck approach at this point. For the first time, you have an administration committed to a national broadband plan. The goal is to come up with policy that will facilitate universal broadband. You have a broad cross-section of industries that make up Broadband for America, the goal being to reach 100 percent access and adoption.

It’s a perfect illustration of an issue which there really is mutual benefit to both government and private industry to work collaboratively in areas where businesses can’t get any type of return. Maybe that’s where the government, with the $7 billion of stimulus money [allocated to technology] can make some of the initial investments that allows private industry to come in, after the fact, and make sure that if you’re in a rural community or a Native American reservation that you still have an opportunity to get connected.

Check out the full interview.

Erasing the Digital Divide

By Bruce Mehlman

As the deadline for the release of a national broadband plan quickly approaches, a coalition representing minority communities has released a report outlining steps that can be taken to erase the digital divide.

The report, “Toward Access, Adoption and Inclusion: A Call For Digital Equality and Broadband Opportunity,” was issued by the National Black Caucus of State Legislators, the National Hispanic Caucus of State Legislators, the National Caucus of Native American State Legislators, and the National Pacific American Caucus of State Legislators. From Business Wire:

“Even where service is available, if the proposition of adopting broadband is too expensive, people will not use it,” the report said. It urged policymakers to address affordability through a combination of government initiatives, programmatic reforms, incentives for private sector action, and public-private partnerships.

It warned against policies that might shift costs to the poor or “over-burden low-volume broadband users with the costs of maintaining services for high-volume users.”

“Before any new policy regime is implemented, we must fully understand the potential socio-economic implications of its implementation,” the report added. The lawmakers also called for “a system of checks and balances that encourages, rather than dissuades, private investment in broadband deployment and innovation.”

Conquering the Digital Divide

By IIA

IIA Co-Chairman David Sutphen has penned a column for Fierce Telecom on reducing the “digital divide.” Using a recent FCC hearing and informal roundtable discussion as starting off points, Sutphen writes:

The disparity in broadband adoption rates between caucasians and people of color is well-documented. A panelist at the FCC hearing tagged adoption at about 60 percent for the general population, but only 43 percent for minorities. That 20 percent delta is a wide gap—too wide—aptly recognized by FCC Commissioner Michael Copps as the “digital divide.”’

None of the challenges presented in rural or urban America are unconquerable. Many will take time, money and understanding before 100 percent of all Americans enjoy the benefits of broadband.

Check out Sutphen’s entire column at Fierce Telecom.

Letters to the Commissioner

By Bruce Mehlman

With the FCC set to officially move forward with net neutrality regulations this Thursday, letters from both sides of the debate are flying into Commission Julius Genachowski’s inbox. Last week, eighteen Republican senators and 44 major companies filed letters warning against regulations. And now, Multichannel News reports, 72 Democrats in the House are urging the FCC to move slowly:

According to a copy of the letter, the Democrats urged the commission to “carefully consider the full range of potential consequences of government action,” and caution against a too heavy regulatory regime. ”[I]t is our strong belief that continued progress in expanding the reach and capabilities of broadband networks will require the commission to reiterate, not repudiate, its historic commitment to competition, private investment, and a restrained regulatory approach.”

Putting the term network neutrality in quotes in their letter, the Dems wrote: “[W]e remain suspicious of conclusions based on slogans rather than substance and policies that restrict and inhibit the very innovation and growth that we all seek to achieve.”

It’s not all opponents to net neutrality sending letters, however. As the Wall Street Journal reports, a coalition of Internet companies — including Facebook and Twitter—filed letters in support:

“We believe a process that results in common sense baseline rules is critical to ensuring that the Internet remains a key engine of economic growth, innovation and global competitiveness,” a group of 24 CEOs and Internet company founders wrote in a letter to be delivered to the FCC Monday in support of the proposed net-neutrality rules.

“An open Internet fuels a competitive and efficient marketplace, where consumers make the ultimate choices about which products succeed and which fail. This allows businesses of all sizes, from the smallest start-up to larger corporations, to compete, yielding maximum economic growth and opportunity,” they wrote.

Net Neutrality and the Digital Divide

By Bruce Mehlman

One concern over FCC Chairman Julius Genachowski’s proposed net neutrality regulations is that they could expand, rather than close, what has been called the “digital divide” in America. Yesterday, it was this concern that prompted some minority rights groups — including the Urban League and the League of United Latin American Citizens and La Raza — to send a letter to the FCC asking the commission to move carefully. From Broadcasting & Cable:

“If the history of civil rights in America teaches us anything,” they said, “it is that facially neutral laws and regulations are not always applied neutrally to the constituencies we represent,” they said. “We certainly don’t want that to happen to Internet regulation too, and we’re very concerned that, despite your very best intentions, some aspects of net neutrality might not turn out to be neutral as applied to our constituencies.”

The FCC is expected to vote on new regulations on October 22.

IIA Guest Blog: Jon Orszag

By IIA

Is There a Digital Divide?

This Friday, the FCC is hosting a workshop about the “digital divide” among American households with respect to broadband usage.

A recent research study that I conducted with two colleagues of mine, Mark Dutz and Robert Willig, reached a number of conclusions that should help to inform that workshop.

First, we found continued evidence of a significant digital divide.  For instance, while 82 percent of Asian households in 2008 were connected to home broadband, only 57 percent of African-American households were connected. While 83 percent of college graduate households were connected at home, only 38 percent of households with less than high school diplomas had adopted home broadband.  And while 84 percent of GenY households between ages 18 and 24 were connected, only 43 percent of senior households aged 65 and over had adopted it.

Second, some good news: among those who are connected to broadband at home, there is no significant valuation gap based on race, although there are valuation gaps along other lines. Among households that are connected to home broadband, blacks/African Americans, Asians and whites/Caucasians have similar valuations of broadband at home.  However, there are significant differences in how much broadband is valued according to age, level of education, and income.  For example, younger GenY and “GenX” heads of households (44 years of age and younger) value broadband much more than older householders (45 years of age and older).

Third, the more people experience broadband at home, the more they value it.  For example, households’ valuations of higher-speed broadband depend on their experience with broadband: those who are connected to broadband at home value higher speeds over 40 percent more than those who have only home dial-up connections. These data would suggest that the more Americans experience broadband, the higher will be demand for it.

Finally, we estimated that consumers receive more than $30 billion of net benefits from the use of fixed-line broadband at home, with broadband increasingly being perceived as a necessity.  For example, people appear unwilling to cut their broadband even when they lose their jobs, based on their need for connectivity as reflected in the significant jump upwards in the use of job boards and career information sites during the economic downturn.  From a technical perspective, we observe a progressive decline over time in the own-price elasticity of broadband, from -1.53 in 2005 to -0.69 in 2008.  In other words, in 2005 a 10 percent rise in the overall price of broadband would have led to a 15.3 percent decline in the quantity demanded, but by 2008, a 10 percent rise in the price of broadband would lead to only a 6.9 percent decrease in the quantity of broadband demanded. This result indicates that broadband is progressively being perceived by those who are using it as a household necessity. Such a finding is consistent with a recent survey of what Americans consider as a “necessity” or a “luxury.”  The survey found that 31 percent of Americans consider broadband Internet a “necessity”. This puts broadband Internet ahead of “dishwasher” or “cable or satellite TV” in the necessity rankings.

— Jon Orszag

More on Tiered Pricing and the Digital Divide

By Bruce Mehlman

Two weeks ago, economists Robert Shapiro and Kevin Hassett released a startling study on how flat pricing for broadband service has a hand in maintaining the “digital divide” in America. In a follow-up to the report, Network World interviewed Shapiro:

Right now there’s a small percentage of people who currently account for a large percentage of large bandwidth use, such as gamers and consumers of large amounts of video. And for these large consumers, their demand tends to be relatively inelastic. They really want it and it has greater value to them. Now, as a general property, the lower the income someone has, the more sensitive they are to price. So anything that raises the price will reduce demand for broadband access for low-income users more than it will for high-income users.

The full interview is worth checking out.

Flexible Pricing & the Digital Divide

By Brad

Ars Technica reports on an interesting theory being floated by former Clinton economic advisor Robert J. Shapiro and Federal Reserve economist Kevin A. Hassett: Can flexible pricing of broadband based on usage actually break the digital divide?

From the story:

Shapiro/Hassett’s economic projections conclude that a “flat rate” pricing model gets the country 79.4% penetration for people under $30k by 2017, and 86.4% for people over $75,000 in the same year. But in a scenario in which “80 percent of the additional cost [is] allocated to the 20 percent of very high bandwidth users,” even lower income household broadband adoption will rise to 98.5 percent in 2017.

“To the extent that lower-income and middle-income consumers are required to pay a greater share of network upgrade costs, we should expect a substantial delay in achieving universal broadband access,” the study concludes. “Our simulations suggest that spreading the costs equally among all consumers—the minority who use large amounts of bandwidth and the majority who use very little—will significantly slow the rate of adoption at the lower end of the income scale and extend the life of the digital divide.”