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Lifeline Broadband Program will likely do little to Close Digital Divide

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Wallsten Analyzes FCC Lifeline Pilot Programs

Contact: Amy Smorodin
(202) 828-4405

March 23, 2016 – Evidence from the Federal Communication Commission’s broadband Lifeline pilot studies demonstrate the difficulty of encouraging non-subscribers to join the network, explains Scott Wallsten in “Learning from the FCC’s Lifeline Broadband Pilot Projects,” released today by the Technology Policy Institute. Without careful attention to this issue, subsidies for broadband provided by the Lifeline program will likely go to those who already subscribe to broadband service, suggesting the program will do little to close the digital divide.

Wallsten, Technology Policy Institute Vice President for Research and Senior Fellow, analyzed 14 experimental broadband Lifeline projects proposed by wireline and wireless broadband providers in 2013. His research shows:

  • The programs, restricted to those who had not subscribed for at least 60 days, had low participation rates. Overall, providers signed up less than 10 percent of the number of participants they had expected (except in Puerto Rico). “These results demonstrate the difficulty of encouraging low-income people without connections to sign up even with large discounts, suggesting that subsidies are likely to go to people who already subscribe rather than working to close the digital divide,” Wallsten explained.
  • Subscribers regularly choose plans offering speeds of less than 10 Mbps, which is the FCC’s current required minimum for rural broadband subsidies. “Because faster broadband typically costs more, higher minimum speeds are likely to blunt the (already likely low) beneficial effects of subsidies by increasing the price of eligible plans.”
  • Subscribers generally expressed a preference to avoid digital literacy training classes, although those that did take the classes were somewhat more likely to continue to subscribe to broadband once the pilot programs ended. “The results also suggest that digital literacy training should be studied further to evaluate which aspects of it are most effective,” Wallsten advised.

“The FCC is to be commended for encouraging and funding pilot projects. Such experimentation should be required before spending billions of dollars on new programs. In this case, the experiments revealed fundamental challenges facing Lifeline reforms,” Wallsten concludes. “If the FCC truly wants to help close the digital divide it will take the pilot programs seriously, consider their implications, and confront the difficult challenges they imply before committing an additional $2.5 billion per year.”

Learning from the FCC’s Lifeline Broadband Pilot Projects” is available on the TPI website.

 

The Technology Policy Institute

The Technology Policy Institute is a non-profit research and educational organization that focuses on the economics of innovation, technological change, and related regulation in the United States and around the world. More information is available at http://www.techpolicyinstitute.org/.