“Broadband adoption rates and gaps in U.S. metropolitan areas” (Adie Tomer and Joseph Kane, December 2015)

Closing the digital divide will take closer urban-tech collaboration

The map above, released in December by Brookings, shows the share of households with broadband Internet in America’s 100 largest metro areas. What’s immediately clear is that not all cities are equally connected.

San Jose, at one end of the spectrum, has 88 percent adoption; Laredo, Texas, at the other, lags 30-plus points behind. But even across all cities there’s a tipping point to the digital divide by household income, according to the analysis by Adie Tomer and Joseph Kane. Those making more than $50,000 a year have very high adoption (89 percent), while those making less have far lower rates, falling below half for households under $20,000.

So as the overall U.S. broadband gap inches closed, with three-quarters of all Americans now subscribing to Internet service, this progress remains highly unequal. In March, the White House Council of Economic Advisors issued a brief on addressing the remaining digital divide, saying it “will require a focus on affordability.” But affordability means competition, and when it comes to broadband, the country hasn’t had much.

“Community-based Broadband Solutions” (White House, January 2015)

Two parties bear the blame. Traditional communication technology companies have clearly failed the people. Recent White House figures show that even at the low broadband speed of 4 Mbps, only 15 percent of American homes have more than two provider options. As speeds increase, some options turn into the option — or worse. At 50 Mbps, over 61 percent of homes have just one service provider, and a fifth have none at all.

Then there’s the states. While some cities are willing to jump into the fray themselves, often with federal help, numerous states have restricted municipal broadband efforts at the private sector’s encouragement. Wilson, North Carolina, for instance, built a fiber network in 2008 that forced Time Warner to improve its service “because of the competitive environment.” In response, the state passed a law effectively preventing Wilson from expanding its network. When the FCC opposed this regulation in 2015, the state sued.

So the blueprint for change rests largely with urban-tech partnerships. Google Fiber is leading the way here. Its presence in midsize metros like Kansas City and Austin has spurred other providers to improve services and prices. Its work in Huntsville, Alabama, offers a new model for the municipal broadband movement (smaller companies like Ting Internet have made similar efforts). And its joint efforts with the Department of Housing and Urban Development offers a path for bringing service to lower-income city residents.

Blair Levin of Brookings puts these bold moves in larger perspective (our emphasis):

What’s great about these private efforts, which will enjoy increased momentum when the FCC reforms Lifeline, is they demonstrate how market forces are taking hold and spurring behavior common to more competitive markets: experimentation and adjustments to find more effective ways to bring customers value. Market forces alone will not solve the adoption issue, but market forces, particularly if supported by smarter government, can accelerate the closing of the digital divide.

Sidewalk, through our portfolio company Intersection, took a similar approach with LinkNYC, working closely with New York City to transform existing pay phone infrastructure into a gigabit Wi-Fi network. What’s fresh about this effort is that it bridges the digital divide right on public streets — reflecting the fact that people are relying less on home-based broadband to stay connected than on their smartphones. A Pew Research Center report from December found a slight decline in home broadband adoption from 2013 to 2015 (3 percent) and a slight rise in “smartphone-only” Americans (5 percent).

Every new entrant to the broadband game should help bridge the broadband gap. And the closer that bridge gets to completion, the better the economy is for it.

“The Digital Divide and Economic Benefits of Broadband Access” (Council of Economic Advisors, March 2016)

In its March brief, for instance, the CEA argues that addressing the digital divide holds huge potential benefits for the labor force — in particular, by decreasing the duration of unemployment. After one month of unemployment, 19 percent of people in a connected household had a job, compared with 15 percent of those in unconnected homes. But after a year, that gap grew to 46 and 34 percent, respectively. It’s not hard to see why: the ability to search for a job online creates more opportunities to find new work.

The list of social benefits goes on. Local economic growth rises with broadband expansion. Wages do, too, according to some research. Broadband access facilitates medical care, keeps school children up to speed, and creates an informed citizenry with heightened civic participation. But it starts with the competition that leads to the affordability that leads to higher adoption. And spurring this competition requires tech companies and cities to collaborate in increasingly creative ways.