How Internet Service Providers Fuel Inequality

It’s time for Democrats to push for universal access to broadband.

When the House Antitrust Subcommittee brought the CEOs of Amazon, Apple, Facebook and Google to Capitol Hill recently, astute questioning from Democratic members raised the hope that antitrust enforcement could make a comeback during a Biden administration.

The Democrats grilled the heads of the world’s richest companies on a host of anti-competitive transgressions, from using third-party data without their permission to copying products of others, simply to drive competitors out of business.

As Congress continues to dig into the digital economy, however, it’s important to remember that companies like these are only the top layer of a complex ecosystem. It’s what lies beneath that also demands urgent attention: Many millions of people don’t have the Internet service to even connect to Facebook or Amazon.

Worse yet, the COVID-19 pandemic has exacerbated the problem. Far more problematic than the inability to shop online or keep up with friends, millions of Americans can’t reliably connect to schools or work from home. Not surprisingly, the challenge is most acute in rural areas.

That’s why the next item on the Congressional agenda, and on a prospective Biden administration’s agenda, should be a thorough review of a system in which Internet service providers have no obligation to provide service to the areas most in need. Providing an essential service like high-speed Internet should be a requirement enshrined in law.

While Trump’s Federal Communications Commission (FCC) estimates 21 million Americans don’t have access to high-speed Internet service (aka broadband), a Microsoft studyput the number as high as 162 million. Moreover, an estimated nine million students lack the Internet access necessary for remote learning.

Ryan Orton, 45, lives in tiny Stuart, Virginia, a town near the Blue Ridge Mountains in Patrick County, population 18,000. He has a day job at the New College Institute and takes classes to become an elementary school teacher. On weekends, he had to drive 15 miles to the nearest library to use the Internet to download materials for his classes. Then the pandemic eliminated his best Internet source. “Since COVID started, the library closed, and forced me to get [satellite Internet service] HughesNet,” Orton said.  That service is $150 per month and is spotty and limited, Orton added, noting, “I wake up at 5 a.m. and download material for work and school, and use it sparingly during the day.”  Orton said because of the expense, he’s now the only one in his home who can use it. What will his eight-year-old son, Dane, do for remote learning when school starts?  Orton said he will have to increase his allotment of satellite minutes to accommodate Dane’s school work.

Facing similar challenges in Rutherfordton, North Carolina, author and teacher Beth Revis has had to jam herself into the trunk of her SUV from the parking lot of a closed school so she could use the building’s free WiFi service to teach a writing class to local students. As she recently told The New York Times, accessing reliable Internet in her community 70 miles west of Charlotte “has turned from a mild inconvenience to a near impossibility” since the pandemic shut things down.

The good news is, there’s a simple way to help. If Biden wins in November, one of the Democrats’ first policy initiatives should be to get rid of the current system and to require universal Internet service throughout the United States. An essential service like high-speed Internet should be a right, not a privilege.

It’s critical to understand why these problems exist. Revis’ home state of North Carolina is a case study. “I remember when I was house-hunting here in Asheville,” Doug Dawson, president of CCG Consulting, which engineers and operates broadband networks, recently wroteon his blog. “I live a mile from [downtown Asheville] and I can look out my window and see homes with no broadband.” In a later conversation, he told me: “There are a number of counties in North Carolina where every rural home has almost no broadband options.”

Chris Mitchell, with the Institute for Local Self-Reliance, a group that works to bring high-speed Internet to rural areas, cites an example: Time Warner Cable served one side of a major street in Fayetteville, N.C., but not the other side because the cable company didn’t think it was worth it crossing the street to offer service.

Put simply, the big telecom companies don’t see sufficient financial incentive to invest heavily in rural broadband, and no one can make them do it.

That’s because the federal government has made it so telecom companies have unrivalled “freedom.” The FCC issued a “declaratory ruling” in 2002, upheld by the U.S. Supreme Court in 2005,  that high-speed Internet was a luxury that did not need to be regulated. Former FCC chair under George W. Bush, Michael Powell, once equated high-speed Internet with a luxury car. Asked about the “digital divide” that was emerging between those with access to new, fast broadband and those without it, Powell replied, “I think there’s a Mercedes divide. I’d like to have one, but I can’t afford one.” Powell later left the FCC to become head of the cable industry’s lobbying association, where he remains today. Under President Obama, the FCC recognized in a 2010 National Broadband Plan that access to high-speed Internet has become a necessity, not a luxury.

Still, that was not the case in 2011, when the North Carolina state legislature passed a law that largely prevented local governments from building their own Internet services. The state is one of about 20 where the telecom industry has successfully pushed legislation to limit competition.

Activists often cite the near-complete control that the major telecom companies, particularly AT&T and Time Warner Cable, had over the process. During the debates, the Speaker of the North Carolina House of Representatives was Thom Tillis, who was subsequently elected to the United States Senate. Back then, he was known to be very close to the industry, and he pushed back against new reforms. In 2013, the chairman of the state’s House Finance Committee, Representative Robert Brawley, proposed legislation to make the 2011 law more consumer-friendly and encourage competition. Tillis wouldn’t hear of it. Brawley resigned his position in protest, excoriating Tillis for his “business relationship” with the cable company. Catharine Rice, a cofounder of the advocacy group NC Broadband Matters, recounts how the cable industry’s influence was hard to ignore: In some cases, company lobbyists even answered the phones in legislators’ offices.

Since efforts to create competition have stalled, one might wonder about creating direct financial incentives. The FCC has, in fact, set up programs to try to entice telecom companies to serve rural areas. But that hasn’t worked, either. That’s primarily because of the conditions under which the money was disbursed and the lack of oversight. As Doug Dawson explained, the FCC gave over $10 billion to the big telecommunications companies to bring slow broadband service (also known as DSL) to rural areas. “That was a giant bust,” Dawson suggests, “and from what I can see, very little DSL was brought up to even that inadequate speed. That money seems to have largely gone down a black hole to the bottom line of the big telcos.”

Given all of the past failed efforts, Congress needs to step up and not rely on the FCC to solve this problem. Lawmakers should start over, beginning with the premise that reliable, high-speed Internet service is a necessity in modern America. It must be both accessible and affordable.

House Democrats have proposed spending $80 billion more to get telecom companies to do what they are supposed to do—offer universal affordable broadband—while the Biden campaign has proposed a similar route, allocating some $20 billion for rural broadband. These are necessary but insufficient reforms. Here’s what a real prescription would look like.

First, get back to first principles. More than 100 years ago, the concept of universal service was created to ensure that everyone had telephone service. Bring that back and enshrine it in law.  It is already there in theory, but not in practice, because of the way the telecom laws are written.

Second, enact new laws and regulations that enforce universal service in the digital age. Once upon a time, when state regulators set rates for telephone service, telephone companies could be “persuaded” to offer services in an area they didn’t want to serve as a concession for something else. That lever needs to be brought back as part of a comprehensive overhaul that gives federal, state, and local authorities the tools to act in the public interest.

Lastly, legislation must ensure that service is not only more widely available but that it is affordable. A number of programs subsidizing service by the telecom companies have proven successful, and they should be expanded and streamlined. Comcast, for example, boasts of its “Internet Essentials” for low-income customers.  The company doesn’t tell you, but the FCC required it as a condition of the cable company buying NBC.

None of this will be easy. Politicians would have to side with the welfare of their constituents over the pleas of big companies. That’s not a given. It’s also not a given that regulation would work because of what’s called “regulatory capture,” in which lobbyists really control the people and the process of new rules.

But as the current pandemic has shown us, the stakes have never been higher. Without a new federal law and an effective regulatory structure in place to enforce it, there is no hope that the country will be truly connected, that students like Ryan Orton and his son will be able to do their schoolwork online, and that teachers like Beth Revis won’t have to conduct class from the trunk of her car because no company cared enough about her town to offer modern Internet service.

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Art Brodsky

Art Brodsky has more than 30 years of experience in telecommunications policy and advocacy.