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New Study Shows Progress and Challenges of Low-Income Broadband Adoption Programs

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WASHINGTON (September 19) In a study presented Thursday at a Capitol Hill policy conference, economists Scott Wallsten and Gregory Rosston take a new look at how to increase the number of low-income households that sign up for broadband internet service.

Wallsten is president and senior fellow of the Technology Policy Institute, and Rosston is senior fellow at the Stanford Institute for Economic Policy Research, where he directs the Public Policy Program.  Their paper, “Increasing Low-Income Broadband Adoption through Private Incentives,” is a focus of discussion at the annual Telecommunications Policy Research Conference being held in Washington this week.

The study evaluates Comcast’s low-income broadband program branded “Internet Essentials” (IE). The authors use data from the U.S. Census Current Population Survey (CPS) and the Federal Communications Commission and a differences-in-differences approach to evaluate the program’s effects on subscription rates for eligible households.

Among the findings:

  • Between 2011, when the Comcast program began, and 2015, broadband adoption by eligible households increased more among households that lived in areas where Comcast provided broadband internet service than among households in areas served by other cable providers.
  • About 66 percent of IE subscribers represent true increases in low-income adoption as a result of the program, with the remaining subscribers being households that switched from a competitor and households that would have subscribed as part of a general upward trend in adoption.
  • Even among low-income households, broadband demand is relatively inelastic.
  • Survey respondents in IE eligible households increased their likelihood of taking online courses or job training in Comcast territory relative to similar households in territories of other cable providers
  • There was no difference in propensity to apply for jobs online
  • The results provide some evidence that aspects of internet literacy training may have made a difference.
  • The study found no difference in the change in low-income computer ownership across cable territories from the company’s computer subsidy.

While the current study focuses on Comcast’s private incentive program, Wallsten and Rosston are watching other providers’ similar programs.

“We expect large benefits to eligible households in other geographic areas, both from increased adoption and more from lower prices,” they write. “When competing firms in the same geographic areas offer similar programs, it is less clear how much benefit will accrue to customers as opposed to the second firm minimizing the business stealing effect.  Empirical research may be able to shed light on the answer to this question.”

 

Contact: David Fish, 571-389-4446, dfish@techpolicyinstitute.org

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/.