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A Chance to Tackle the Urban Digital Divide

For the first time in my career, we face the possibility of some big changes for broadband in low-income neighborhoods in cities. The recent American Rescue Plan Act (ARPA) gave cities significant funding that can be used for various kinds of infrastructure, including broadband.

Cities have been handed a once-in-a-lifetime chance to fix some of the broadband deserts that have grown in poor neighborhoods. I’m already working with several cities that are taking this opportunity seriously. I think everybody in the industry understands the issues. The big ISPs have redlined poor neighborhoods for many decades. These are the places where you can still find ancient DSL technology with a maximum speed of 6 Mbps if it performs perfectly (which it never does). Cable companies have not been as blatant as the telcos, but they still largely ignore neighborhoods that they don’t think contribute to the bottom line.

The household broadband penetration rate in some urban neighborhoods is dreadful, often with less than half of the homes having broadband. Numerous studies have shown that students without home broadband and computers underperform other students. Last year, a study by the Quello Center of Michigan State showed that an eleventh-grader without home broadband has the same digital literacy skills as an eighth-grader with home broadband. This is a deficit that rarely gets closed.

The ARPA funding can let cities construct fiber to bring broadband to the poorest neighborhoods. This might mean fiber to public housing or fiber to neighborhoods that have been neglected for decades. The funding also can be used to provide computers. There is a lot of other grant funding available for digital literacy training.

If a city builds and owns fiber, it can sell broadband in these neighborhoods at marginal costs. Homes that find it impossible to pay for Comcast broadband at $90 might instead get gigabit broadband at $35.

Many critics will say that cities shouldn’t do this because the federal government has solved the problem with the EBB low-income program that gives a $50 discount for qualifying low-income households. This program is temporary and won’t last more than another year. There is the hope of a follow-on program funded by the recent Senate broadband bill that would extend the life of EBB while lowering the discount to $30 per month.

The EBB program is not a great long-term solution for poor neighborhoods. Comcast and Charter are headed for $100 basic broadband rates, so a $30 discount a few years from now is still going to mean $70 monthly fees for low-income households. It’s also likely that a controversial program like EBB could be killed by a future Senate as easily as it was created. The worst scenario imaginable is that the EBB program functions well for many years but then disappears overnight due to a change in Administration.

Very few cities are willing to be an ISP—it’s one more challenging task to lay onto staff that likely is already overworked. But there are other options. There are already a few examples around the country of non-profit ISPs bringing better broadband to public housing. I’ve always thought that a broadband cooperative could do well in a city, with the customers owning the business. I believe that if cities get creative, workable solutions can be found. It’s not an easy task, but we already know the consequences of letting neighborhoods continue without adequate broadband.

By Doug Dawson, President at CCG Consulting

Dawson has worked in the telecom industry since 1978 and has both a consulting and operational background. He and CCG specialize in helping clients launch new broadband markets, develop new products, and finance new ventures.

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