A Corporate Obsession: Why the FCC is Failing to Bridge the Digital Divide

On average, Americans spend ten hours staring at a screen every day. The incorporation of internet use into everyday life has become so ubiquitous that the inability to get online can have massive repercussions. Nicol Turner Lee of Brookings summarizes that those without internet connectivity “are at risk of being marginalized in an information-rich economy where digital transactions and commercial sharing services are becoming more relevant.” Unfortunately, the inability to connect to the internet is a real problem in much of rural America. Only 68.6 percent of rural Americans have access to a reliable internet connection, compared with almost 98 percent of urban Americans. The Federal Communications Commission (FCC) is attempting to bridge this gap, dubbed the digital divide, with new regulations, grants, and auctions, but the progress made has been insufficient. The agency recently announced that the digital divide is “narrowing substantially,” but this pronouncement was largely politically motivated and misleading. The FCC’s approach to bridging the digital divide relies too heavily on attracting investment from large telecommunications companies; instead, the FCC should focus on empowering local governments and regional cooperatives to provide connectivity to underserved parts of the country.

In January 2017, the FCC announced the creation of the Broadband Deployment Advisory Committee (BDAC) to recommend policies to bridge the digital divide. The committee purports to provide “stakeholders with interests in this area” the opportunity to “exchange ideas.” In reality, the BDAC is a tool for large telecommunications companies to pressure the FCC to help them increase profits. Over three-quarters of the committee members represent telecommunications companies or have interests that align with them. In his letter resigning from the BDAC, San Jose mayor Sam Liccardo lamented that “the industry-heavy makeup of BDAC will simply relegate the body to being a vehicle for advancing the interests of the telecommunications industry over those of the public.” He cites a working group of over 30 members tasked with the reduction of municipal regulatory control that didn’t contain a single representative from municipal government.

The overrepresentation of corporate interests in the BDAC directly leads to polices that favor the telecommunications industry. In the summer of 2018, the FCC auctioned off almost $2 billion in support over ten years of the expansion of internet access to underserved areas. The FCC rules governing this auction favored large corporations with “some track record” of infrastructure development.

"The FCC’s plan to address the digital divide fails to include local actors and favors large corporations that have no incentive to provide long-term support to the communities they are supposed to serve."

Though existing corporations have the capacity to expand internet access, they have no profit incentive to provide long-term support for rural communities. Because auctions like the FCC’s afford the recipients of their support virtual monopolies in their expansion zones, profit-driven companies can charge high prices for subpar service. Still, recent technological improvements have resulted in steadily rising baseline internet speeds, and DSL connections that were once sufficient are now functionally unusable. The necessity of constant service upgrades, on the other hand, makes large telecommunications companies poor allies in the effort to mitigate the digital divide. For example, Verizon announced that they wouldn’t expand their speed upgrades even after the FCC reduced regulation and fees, such as local taxes. If the FCC continues to favor large telecommunications providers, the existing access divide will simply be replaced by “a divide in which certain dense and high-income communities will have multiple choices for affordable gigabit services, while less dense, lower-income communities may still be stuck with a DSL offering that is 100 times slower but similarly priced.”

To promote investment in internet expansion by large telecommunications firms, the FCC sidelined local governments by reducing their regulatory authority. Joanne Hovis, CEO of CTC Technology and Energy, a public sector communication consulting firm, characterized the FCC’s efforts to stimulate internet expansion as “removing local processes, waiving environmental protections, and forcing local communities to subsidize carrier access to public property.” She notes that “It is in areas where localities have been free to use their creativity, public assets, and legal authority to incent opportunity where we have seen some of the most robust broadband deployment.” Thus, she concludes that “preempting local efforts and authority is not a winning strategy.” By disempowering local governments, the FCC has diminished the actors that have the greatest incentive to fix the digital divide.

The FCC clearly needs to reassess its love of large telecommunications companies; fortunately, there are other entities who are more deserving of the FCC’s support. Rural electric cooperatives (RECs), the same organizations that facilitated the expansion of rural access to electricity in the early 20th century, are poised to take the lead again in internet access expansion. RECs won 30 percent of the bids in the FCC’s 2018 auction. Moreover, the National Rural Electric Cooperative Association’s website pledges that RECs are “taking a lead in … projects to install broadband to benefit their member-consumers,” indicating a desire to mitigate the digital divide. Alyson Moore, manager of North American marketing for Corning Optical Communications, explains that “many RECs see bringing broadband to their territory as a natural extension of their duty to serve the community.”

RECs provide a better long-term solution to the digital divide because their end goal is to benefit members of their community. Unlike for-profit telecommunications companies, non-profit RECs will continue to improve service even if there’s no clear profit incentive to do so. Governed only by their own members, RECs have an organizational structure that encourages investment for local good and hinders the involvement of for-profit corporate interests. Moreover, RECs have a long-term approach to investing better suited to rural internet expansion than telecommunications companies that seek short-term and substantial returns on investment. RECs have been successful at expanding rural internet access throughout the country. In Oregon, the Douglas Electric Cooperative transformed a region with slow, unreliable service into “a leader in fiber-optic voice and data services,” now offering speeds of up to a gigabit per second. In southern Nevada, the Valley Electric Association was equally successful at expanding service and is currently engaged in a massive service upgrade operation. RECs have the experience necessary for large-scale infrastructure investments and an organizational structure conducive to providing long-term support.

The FCC’s plan to address the digital divide fails to include local actors and favors large corporations that have no incentive to provide long-term support to the communities they are supposed to serve. A far better plan would restore local autonomy and encourage the expansion of rural electric cooperatives, as local governments and RECs are closely connected with the communities they serve. The FCC is correct that bridging the digital divide must be a priority with the educational, economic, and social implications of the inability to access the internet only getting more severe. Unfortunately, the current FCC strategy is doing more harm than good.

Photo: “Internet Cafe

About the Author

Jackson Segal '22 is a Staff Writer for the US Section of the Brown Political Review. Jackson can be reached at jackson_segal@brown.edu

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