New Orleans FCC Chairmen Tom Wheeler claimed the decision to expand Lifeline programs from telephones to the internet was a major breakthrough in closing the digital divide. This was a 3-2 decision on party lines. The majority at the FCC claim that this broadening application of the subsidy will “help millions of low-income households connect to the internet.”
The New York Times noted that “only about 40% of families making less than $25,000 a year can afford broadband while 95% making over $150,000 have high-speed internet at home.” The program will provide a monthly subsidy of $9.25 to access broadband. The eligibility for the program will begin with those eligible for either food stamps through the SNAP program or veterans benefits.
This must be a good thing, right? Why are we not applauding or at best have only one hand clapping this new FCC initiative?
Let’s look at just some of the reasons.
First, this program will NOT close the digital divide, and the subsidy is basically a subsidy for internet providers like Comcast, Times-Warner, Charter, Cox, and others, more than it is a subsidy for lower income families.
Why do I say this?
Well, let’s please remember that analysts argued several years ago when the FCC required Comcast to establish a $10 per month program for lower income families as a condition of approving their acquisition of Universal, that Comcast would still make money on internet even at $10. This program will be almost a ten dollar subsidy for a family to access broadband, which in plain English means of course that the internet provider will be charging more, and potentially way more, for the service while the $9.25 knocks a bit off the bill. In the run-up to the FCC’s action some argued that average basic internet bills were running $30 to $40 per month. Knock a ten-spot off of that bill, and we’re still talking about families pushed up against the wall having to come up with another twenty or thirty bucks. And, I’m not even talking about the cost of installation or whether or not the family has a computer. This is just not going to happen.
And, will this be “high-speed” just like those 95 percenters have who are making $150,000? I doubt it. In Canada for several years after we got Rogers to agree to a $10 per month plan in public housing in Toronto, we were constantly arguing with them about issues of speed. One or two megabytes per second is not enough to stream or download or do most web-based homework. The FCC action was silent on this issue.
One-hand clapping might say this is better than nothing. Maybe. But, the fact that internet providers are not complaining should be a clue, friends and neighbors. They are glad to get their hands on some of the billions that had been solely subsidizing phone service for some lower income families. The Comcasts don’t sell phones and phone service, so this is all good news for them.
For lower income families this new program will mainly be another myth where they are playing Tantalus and trying to reach the grapes, always out of reach.