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Ben Sperry: Broadband Internet Not a Social-Justice Issue

The economist Thomas Sowell once observed that capitalism knows only one color: that color is green. His point was that, under capitalism, businesses that discriminate on the basis of race or other irrelevant features will pay a cost.

Not content that market incentives would be sufficient to ensure that Internet service providers (ISPs) don't leave money on the table by choosing not to invest in minority communities, and despite lacking any data or economic models that would suggest otherwise, the Federal Communications Commission is pushing new rules to guarantee equal access to broadband internet by preventing digital discrimination of access based on income level, race, ethnicity, color, religion, or national origin.

This is, quite frankly, social-justice reasoning run amok at what is supposed to be a technocratic agency tasked with deploying scarce taxpayer dollars to expand broadband access nationwide.

The FCC's own data reveal the backwardness of this entire enterprise. As of year-end 2019, the last year for which there is data, 94.6 percent of census blocks in the quartile with the highest household poverty rates had access to what the FCC defines as high-speed broadband (download speeds of at least 25 Mbps and upload speeds of at least 3 Mbps).

In contrast, census blocks in the quartile with the lowest poverty rates were only a few points more connected, at 97.4 percent. When it comes to the very fast 250/25 Mbps service, 85.6 percent of the census blocks with the highest household poverty rates had access, compared with 91.1 percent of the census blocks with the lowest household poverty rates.

Where the FCC data show much wider gaps in broadband access is in rural areas with very low population density. Only 83.2 percent of the quartile with the lowest population density had access to broadband Internet at all, and just 58.2 percent had access to the highest speed tiers. There's a huge jump between that quarter and the second-lowest by population density, where 98.2 percent had access to high-speed broadband and 91.3 percent had access to the highest speed tiers. In the quarter with the highest population density, the numbers are 99.3 percent and 98.4 percent, respectively.

Of course, it isn't that ISPs have special animus toward people in rural areas, either. The truth is, these disparities are driven by investment decisions aimed at profit, and not discrimination at all. It's expensive to build a network to serve only a very few potential subscribers.

Topography also plays a role, as it is harder to wire a network over a mountain than over a plain. Though satellite options may be available, they tend to be lower speeds than cable or fiber.

To the extent that there are disparities in access in urban and suburban areas, it's similarly economics, and not racial animus, that motivates the business decisions of ISPs. It is less likely that ISPs will invest in building the highest-speed networks in areas where the consumer base is unlikely to have the disposable income available to buy the most expensive speed tiers. This is basic economics and common sense.

This also helps to clarify what are the best policies to achieve universal broadband access. First, more money and focus should be on extending broadband access to those areas that lack even one high-speed option, rather than on bringing a second or third option to areas that already have broadband.

Second, when focusing on those areas where poverty makes it less likely that ISPs will be able to recoup their investment, stimulating demand by helping these consumers pay for broadband according to their own chosen needs is a much more effective approach.

The FCC should drop this false "social justice" narrative of discrimination and refocus itself on serving the public good by effectively spending taxpayer dollars to achieve universal broadband access.

Ben Sperry is associate director of legal research with the International Center for Law & Economics.

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Posted: June 3, 2022 Friday 06:30 AM