The Utility of Internet Access

The coronavirus pandemic has proven to be the great amplifier of existing inequities in internet access across communities in the United States, driven by the need for both access and affordability.

According to the Boston Consulting Group and Common Sense Media, since the pandemic began, the number of public school students without high-speed internet access has increased dramatically to 16 million, or three in every ten students. The largest paucities reported were in southern states, rural areas, and minority households. The report also estimates that up to 400,000 teachers lack adequate internet access or a suitable computing device for at-home instructions.

In addition, with the pandemic, more workers than ever before are working remotely. Dallas Federal Reserve estimates from the Real-Time Population Survey found in May, 35.2% of the U.S. labor force was working full-time away from the office, a 27-percentage point increase from February. By late summer, the number of individuals working full-time remotely had dropped to 24%, with another 18% working some of the time away from the office. In comparison, in February, 74% reported regularly commuting to their workplace, a difference of 32 percentage points.

As a result of this disruption, more and more people are asking whether the lack of affordable and accessible broadband internet accentuates the divisions already present in education and the workforce. Nearly every facet of life now requires a broadband connection, from education to work to visiting with family and even interacting with the government. During the stay-at-home order, your author found himself helping his neighbor with an unemployment claim because he had neither a computer nor internet access with which to file his claim after he lost his job.

How did we get here? Since the mid-1990s, the United States government has taken a back seat on building out the internet’s network and infrastructure. Even though the federal government was the original driver of much of the architecture the internet still relies on to function, the plan was to allow the private market to expand the connection infrastructure, hoping competition would increase access and drive down prices. However, that has not happened.

The number of adults in the United States who use the internet daily has almost doubled since 2000. Nevertheless, today’s costs are among the highest, and speeds are among the slowest in the developed world. For example, in 2019, in the United States, the average cost for broadband internet was between $50 and $60 per month (depending on location) compared to roughly $40 in Sweden and $16 in Hungary, both of which also have faster internet speed. In fact, according to a 2019 study by Cable.co.uk, the United States ranks 104 in affordability and 20 in speed out of 206 countries .

The Federal Communications Commission (FCC), the government agency that oversees broadband companies, stated that price and speed discrepancies occur because the United States is vast and diverse. Ensuring connectivity in Chicago is very different from ensuring connectivity in Fairbanks, Alaska. FCC leadership under presidents of both political parties have agreed that the answer is to increase competition. However, as of December 2017, roughly one-third of Americans — about 100 million people — lived in a neighborhood where there is only one internet service provider, and some 21 to 42 million Americans do not have any broadband internet access at all.

Steve Andriole with Forbes,  David Lazarus with the Los Angeles Times, and others have called on lawmakers to regulate the internet as a utility to solve the twin problems of affordability and unequal access to high-speed internet. Regulation has been done before. In the 1920s, access to electricity was available only to those lucky enough to live in the city and if they could afford it. During the Great Depression, the federal government spearheaded efforts to bring electricity to the country, especially in hard-to-reach rural areas. It also set up regulations and local government bodies, called public utility commissions, to ensure continued access and affordability. Other necessities of domestic life are regulated as utilities such as water, gas, and sewage. Without government intervention, the private sector would not invest in many communities, such as rural and low-income neighborhoods, because they have a high operation cost. Sounds familiar.

How would regulating the internet like a utility work? Whether it is the federal, state, or local government, a body with oversight powers would set up a public commission to ensure a basic price. Such a price would have to meet both the service provider’s needs to maintain its connection (access) and citizens’ financial needs. The commission would then grant monopoly-like powers to a private entity but have oversight of its pricing and distribution model. As of today, no local or state government treats the internet as a public utility.

Critics of more government intervention in internet access argue that the private sector already does a good job. Over the past ten years, the percentage of Americans with access to broadband internet has climbed to 93.5% from 74.5% because of the industry’s efforts to expand their networks. According to internet service providers, prices are higher than many other parts of the world because they continue to invest billions into building out their fiber optic grids to offer service in ever harder-to-reach places. Some, such as former Federal Trade Commission official Jeffrey Eisenach, argue that the internet is not a natural monopoly like water or gas because competition and innovation are crucial to providing service.

As part of the second stimulus package passed before Christmas last year, Congress set aside $3.2 billion for low-income households already on the FCC’s lifeline program. It would provide a benefit of $50 per month towards their internet bill. Another $1.3 billion was included to improve broadband connectivity on tribal lands and communities around historically Black colleges and universities.

Neither the private sector nor the federal government are doing enough because large gaps in service persist. That is why 331 municipalities have picked up the ball by expanding their own broadband network to compete directly with the private sector. One example is Chattanooga, Tennessee, whose service is consistently ranked as one of the top-rated internet service providers in the U.S. by Consumer Reports. The city offers competitive rates for consumers (starting around $50) and speeds miles ahead of what the private industry currently provides, even with their premium service.

Other municipalities are following Chattanooga’s lead in the wake of the pandemic. In November, voters in Chicago and Denver passed initiatives authorizing municipal authorities the power to build their own high-speed broadband networks. However, hurdles remain; as of May, 22 states had laws on the books limiting or outright banning municipalities from creating their own broadband networks. This figure was down from 25 in 2019 after states like Arkansas and Connecticut repealed their ban on municipal broadband networks due to local authorities’ pressure. Research by the consumer advocacy group Broadband Now has shown that in states without municipal broadband restrictions, consumers have access to cheaper broadband services ($60 monthly plans or less).

As the pandemic advances and its impact on students, workers, and families continues to compound, individuals are beginning to rethink their relationship with the internet. Recognizing that whole swaths of their constituencies are being left behind because they are laid off or forced to stay inside, elected officials are responding by seeking out solutions to close the internet divide before the next crisis.