Why the FCC’s Internet Subsidies Won’t Narrow Inequality

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Photograph by Paul Bradbury — Getty Images/OJO Images RF

The motivation behind the Federal Communications Commission’s recent proposal to subsidize low-income Americans with $9.25 a month to help pay for either their home or cellular Internet is admirable. Now that we live in an information-based economy in which millions of people generate an income based on their ability to process information, it makes sense to make access universal.

And while the interpretation by the FCC’s chairman, Tom Wheeler, and one of its commissioners, Mignon Clyburn, of how to modernize its Lifeline program—which started in 1985 to help pay for basic phone service—is a welcome and timely one, it’s not ambitious enough.

As the name suggests, Lifeline was originally a program that would provide phone lines in areas where people couldn’t afford them. Having access to a phone can save a life—that much we know. The repositioning of this program to subsidize poor people’s access to the World Wide Web takes on a more lofty approach. Where a phone line allows you to call for help, Internet access helps in a much less direct way. It seeks to address the widening gap between rich and poor by permeating all layers of society with information. But the country has tried this before, and it failed then, too.

In their early days, television and radio were meant to educate the masses. Professors would broadcast lectures to millions of homes, where eager students would be able to get access to a curriculum that would otherwise be out of reach—universities especially took it upon themselves to do this. Unfortunately, access alone wasn’t enough.

According to author Douglas B. Craig, the effort ultimately failed because “broadcasting costs increased, audiences diminished, and professors demonstrated that lecture-hall brilliance did not always translate into good radio technique.”

And now, the persistent myth that the Internet is somehow more democratic than traditional media is likely to get in the way of the FCC’s proposal. Succinctly, the digitally distributed nature of the way in which the Internet is organized implies a freedom of information. Certainly there is a host of free services and applications available to anyone. But if we consider, by the standards of the Department of Justice, the degree to which access to the Internet is controlled by for-profit companies, a clear picture emerges. Consider, for instance, the availability of cable providers in your local area. In most local markets, there’s one—maybe two—providers that dominate. Or, once online, the market share of a company like Alphabet (GOOG) when it comes to search is an increasingly powerful force that directly affects what we find, or not, when looking for specific topics. Of course, Alphabet knows of no evil. But when it comes to access to information, education, and, ultimately democracy, having any single entity hold control over more than half of the market is cause for concern.

For poor families, this may simply mean that they will be “taxed” in the form of advertising.


Many services today offer a free-to-play component that provides either partial or whole access in exchange for recurrent ads being shown. Music services like Spotify, Apple (AAPL) Music, and Pandora all have a two-tiered offering.

But it’s a tempting proposition: For only a few billion dollars, we can bring broadband connectivity to poor families, providing them with no less than an improved chance in life. The ultimate answer, of course, is more complicated. And it is a mistake to think that mere access to the Internet is going to close the gap between rich and poor.

Economic disparity is not solvable with technology alone.

Of course, the FCC’s proposal is likely to attract criticism if it fails to show results. For years, critics have pointed out how sensitive the system has been to fraud. It testifies to a lack of faith to call such an initiative a “recipe for disaster,” as FCC Commissioner Michael O’Rielly would have it. But the poor are everyone’s responsibility. And subsidizing people who live in or close to poverty to get access to the Internet doesn’t absolve our obligation to provide education, literacy programs, and other infrastructure to better society as a whole.

In terms of who can affect the most change, it would certainly not be out of place if the firms that stand to gain the most from more people coming online contributed to the availability of the infrastructure. In an economy dependent on the car industry, one needs ample and serviceable roads. In a knowledge economy, there needs to be a different infrastructure. The estimated $2.25 billion cost of the program that falls well within the budget of the major players at the top of the Internet ecosystem could subsidize unfiltered, unobstructed online access. In the same way that oil companies are increasingly desperate to showcase how eco-friendly they are, always eager to list their altruistic activities, so, too, will information-based companies find that long-term investing will pay itself back.

Joost Van Dreunen is the founder and CEO of SuperData. He is also an adjunct professor in NYU Stern’s Entertainment, Media & Technology program, and does extensive research on video games.

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