FCC Consumer Survey Supports PULP'S Findings That Affordability Is Key Factor in Broadband Deployment

On February 23, 2010, the FCC its National Broadband Plan Consumer Survey entitled "Broadband Adoption and Use in America," which found that affordability and lack of digital skills are the main reasons why 93 million Americans - one-third of the country - are not connected to high-speed Internet at home. This result supports PULP's proposals to increase broadband deployment by making it more affordable to low-income households.

The FCC conducted the survey of 5,005 Americans between October and November 2009 in an effort to understand the state of broadband adoption and use, as well as barriers facing those who do not have broadband at home. It did make several interesting discoveries:-- 78% of adults are Internet users, including broadband, dial-up, access from home or access from someplace other than home.

• 74% of adults have access at home.
• 67% of U.S. households contain a broadband user who accesses the service at home.
• 65% of adults are broadband adopters (some survey respondents are non-broadband users but live with someone who is.)
• 6% of Americans use dial-up Internet connections as their main form of home access.
• 6% are Internet users but do not use it from home, but access the Internet from places such as work, the library, or community centers.

Most importantly, 52% of Americans in households with annual incomes of $50,000 or below have broadband at home, compared with 87% of those in households with incomes above that level. Further, among low income Americans, those whose annual household incomes fall below $20,000, broadband adoption stands at 40%. Compare this with the 91 percent adoption rate among those living in homes with annual incomes above $75,000. Low income broadband users are more likely than well-off broadband users to look for or apply for a job online - by a 77% to 60% margin.

According to the survey, 36% of non-adopters cite cost as the main reason they do not have high-speed Internet at home. This breaks out as follows:

• 15% say the price of the monthly bill is too much for them.
• 10% say the cost of a computer is too much.
• 9% say they do not want a long-term service contract or cannot afford the installation fee.
• 2% cite a combination of these reasons.
• 22% of non-adopters cite factors pointing to lack of digital literacy as the main reason they are not online.

Non-adopters who cited the monthly cost of broadband as a reason they did not have service received a follow-up question asking them to estimate how much they would pay for service. Among this group, 52% were able to provide an estimate; it averaged $25 per month.

As noted above, PULP submitted an application to secure funding from the federal Stimulus Program which included creative means to increase broadband adoption among low income households. Our proposal included three distinct phases:

(1) Educate low income families about existing, but under-utilized, state and federal utility programs designed for low income families and inform them that the savings could be used toward high-speed Internet access in their home. These programs include the Lifeline discount telephone service, electric and natural gas utility low income rates, and the Home Energy Assistance Program. Unfortunately, the vast majority of those who are eligible to participate in these programs either do not know about them or choose not to participate. PULP believes that the average eligible NY household can save around $30 a month, which could be used to pay for broadband. A digital literacy component would be included, to make sure these households understand the benefits of broadband for education, government access, and entertainment purposes.

(2) PULP would design a model "Lifeline-like" assistance program for low income households to afford broadband access. The Lifeline discount telephone program is supported on both the federal and state levels by either the carriers themselves or through pass-through charges to customers. This money is pooled together and is used to reimburse the carriers for the discounted rates they offer their Lifeline local telephone customers. In a similar vein, all broadband customers would either directly or indirectly assist low income households in affording broadband access in order to achieve universal availability.

(3) PULP would also design a model consumer protections document for all broadband customers, based on the existing Telephone Fair Practices Act and Home Energy Fair Practices Act. These consumer protections would address the application, billing, suspension, and termination processes.

While PULP's application was not accepted in the first round of broadband funding, we are considering whether to re-submit it for round two, which would be due mid-March. Should PULP's proposals become adopted nationwide, it will greatly minimize the concerns the FCC found regarding low income broadband customers being able to access the service.

Lou Manuta