In the Matter of Preserving the Open Internet & Broadband Industry Practices:  Comments of The Alliance for Digital Equality to The FCC

The Alliance for Digital Equality (ADE) is a non-profit organization that serves to facilitate and ensure equal access to technology in unserved and underserved communities – communities that have yet to realize the full benefits of digital empowerment that flow from broadband Internet access.  We aim to create conditions that will speed the delivery of affordable broadband to every American and encourage widespread adoption, especially among lower-income citizens and communities of color.   With this goal in mind, ADE educates consumers about the benefits of broadband and e-related services and also encourages policymakers to consider the potential impact of their actions on the unserved and underserved. 

The benefits of broadband Internet access and its ability to open the doors of economic, political, and social opportunity to every citizen, particularly those who are suffering from the effects of past discrimination, have been well documented, and we need not repeat them here.  Suffice it to say that, given these benefits, achieving President Obama’s goal of broadband for all must be America’s top Internet policy priority and must remain in the forefront of the Commission’s agenda as it proceeds with this rulemaking.   The Commission has an obligation to ensure that any net neutrality rules or other regulations it adopts do not compromise this vital goal.

Our response to the Commission’s NPRM focuses specifically on your questions about the digital divide and the possible impact the proposed rules could have on efforts to spread broadband to minorities and other disadvantaged groups.  That is a question of the first order – particularly for the many members of the communities on whose behalf we advocate.  Therefore, we address some specific concerns we have regarding the potential for the Commission’s proposed rules to negatively impact the unserved and underserved among us.   In light of these concerns, we urge the Commission to undertake comprehensive factfinding before it adopts any net neutrality rules and to develop a “broadband impact” analysis to ensure that the Commission acts with a full understanding of the impact of net neutrality rules on lower-income citizens and communities of color. 

ADE is primarily concerned that net neutrality rules could slow the deployment of broadband offerings necessary to bridge the digital divide and may adversely impact roadband adoption, particularly in communities of color.  Specifically, we are concerned along with community leaders that comprise ADE’s nine Digital Empowerment Councils across the nation that the Commission’s proposed non-discrimination rule could potentially drive up the monthly cost of broadband for the average consumer and price broadband service beyond the means of many lower-income consumers.  Low household income and high broadband prices are obvious barriers to broadband adoption, especially during a period when unemployment is hovering well above 15% amongst African-American and Latino consumers.   For example, the Pew Internet & American Life Project reports that home broadband is a standard feature of American life for the most affluent, but remains a luxury item at the lower end of the income scale.  While 88 percent of Americans who earn $100,000 or more each year enjoy broadband at home, only 35 percent of those with $20,000 in annual income benefit from home broadband.   Pew’s surveys also show that price is cited by about one of every five Americans when asked why they do not subscribe to broadband.   The impact of pricing and income is also illustrated by Pew’s finding that some 17 percent of consumers with incomes of $20,000 or less either cut back or eliminated Internet service in response to the recent recession.

Net neutrality rules must, therefore, be carefully calibrated for their potential impact on the affordability of broadband.  The Commission also must consider whether net neutrality rules will help or hurt efforts to get broadband to those areas that today lack the service.

The Commission’s broadband taskforce has indicated that delivering broadband to every American will require hundreds of billions of dollars in additional investment by the network companies responsible for building and maintaining our country’s broadband infrastructure.   Where will those investment dollars come from?   One potential source is customized or enhanced services provided by network operators to the many Internet businesses that deliver content and other services to Internet users.   However, an overly restrictive non-discrimination rule would cut off this source of revenue and shift the full burden of building broadband networks onto consumers in the form of higher broadband prices.  Such an outcome would likely force some current broadband subscribers to give up their broadband service and would deter many non-subscribers from signing up. 

A recent study by Economists Robert J. Shapiro and Kevin A. Hassett illustrates the impact of different pricing approaches.  The study concludes that reducing the share of investment costs paid by the average consumer would enable the U.S. to achieve universal broadband by 2016.  Conversely, only 80 percent of Americans will enjoy home broadband if restrictive regulations limit the ability to shift costs and, instead, require consumers to provide the revenues for new investment.    A separate and earlier analysis by J. Gregory Sidak, estimates that allowing network operators to offer customized services to Internet businesses could reduce consumer costs by as much as $10 a month and enable millions of additional Americans to sign up for broadband.

Continuing to allow broadband providers and the commercial entities that would benefit from enhanced services to enter into voluntary business arrangements can help close the digital divide.  These arrangements effectively reduce the cost burden consumers would otherwise have to bear and would enable broadband adoption by the most price-sensitive non-subscribers, a group disproportionately composed of lower-income citizens and minorities.   In sum, policies that allow network providers to offer customized services will help broadband adoption among those who now lag behind.  By contrast, certain aspects of net neutrality rules that limit network operators’ flexibility and service offerings will hurt more widespread broadband adoption. 

ADE understands the Commission’s desire for an open Internet and its need to ensure continued innovation on the Internet.  Since the start of the present recession in early 2008, underprivileged and disadvantaged consumers that are situated in the communities that we serve, have been denied full access to the benefits of the Internet due to sustained rates of high of unemployment.   Under the circumstances, it would be unacceptable for the Commission to take any action that would limit the continued deployment of broadband or make broadband more expensive for consumers, particularly those Americans who have been adversely impacted by the worst economic down-turn since the Great Depression.

ADE shares the Commission’s commitment to equal rights for Internet users, but equally as important, we are also concerned that the proposed net neutrality rules may have a discriminatory effect on those Americans who are already trailing behind in a broadband world.  Instead of prohibitions that might raise the cost of broadband and delay broadband adoption by lower income Americans, communities of color, and others on the wrong side of the digital divide, we urge the Commission to seek policies that drive Internet empowerment.   As President Obama has made clear, we must make broadband more accessible and more affordable so that every American can fully participant in Internet society.   We fear that the proposed rules may do the opposite.

Sincerely,

Julius H. Hollis

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