and Digital Divide Grows Under Bush Administration
Tuesday, Oct. 26, 2004
Contact: Mark Cooper, CFA, (301) 807-1623
Susanna Montezemolo, CU, (202) 462-6262
(Washington, D.C.) – The Bush Administration’s Internet policy has resulted in high prices that are retarding the spread of high-speed Internet service and widening the digital divide, a report released today by the Consumer Federation of America and Consumers Union concluded.
“Allowing cable and telephone companies to squeeze out competition is a double-barreled failure,” said Mark Cooper, director of research for the Consumer Federation of America. “Americans pay ten to twenty times as much as consumers in Korea and Japan for broadband, and the U.S. has fallen from third to thirteenth in the world in the percentage of citizens with broadband service. Meanwhile, the percentage of households that have the Internet at home has stagnated at about 60 percent.”
“The digital divide is growing because consumers pay inflated prices for the basic services needed to connect to the high-speed Internet,” said Gene Kimmelman, senior director of public policy for Consumers Union. “About half of all households with incomes above $75,000 have broadband, but half of all households with incomes below $30,000 do not even have a slow Internet connection at home.”
“Just last week the Federal Communications Commission under Chairman Powell gave the local telephone companies more leeway to close their networks to competition,” Cooper said, “but building high cost networks that serve a handful of upscale neighborhoods will not solve the problem of the digital divide or help America catch up in broadband adoption.”
The report, Expanding the Digital Divide and Falling Behind in Broadband, documents the advantages that Internet households, particularly those with high-speed access, have in conducting economic, social and political activities, and concludes that it is critical to aggressively close the digital divide by promoting universal service at affordable prices for all.
The report notes that in 2001, Chairman Michael Powell and the National Telecommunications Information Administration declared the digital divide a non-problem and proceeded to ignore it, adopting policies to eliminate all public interest obligations for the advanced telecommunications networks used to provide high-speed and voice over Internet service.
“Failure to make high-speed and voice over Internet services responsible for maintaining affordable access to basic phone services will result in higher phone bills for low and moderate income households,” Kimmelman said. “As more and more upper income households migrate to advanced telecommunications networks, many local telephone companies are attempting to raise basic rates by $4 per month,” Kimmelman added.
The hope that competition between cable and telephone companies will drive prices down anytime soon is misplaced, especially where cable is the industry leader,” Cooper said. “The FCC’s approach is to force consumers to buy bigger and bigger packages and bundles of services, that most households cannot afford.”
“All consumers have to do is look at their monthly cable bills, which have more than doubled since the passage of the Telecommunications Act of 1996, to know you have to pay more just to get the option to choose new advanced services,” Kimmelman concluded.
Click here to download a copy of the report.