Does Comcast Really Reach Out to Poor People?
By Todd Shields
Bloomberg News
http://www.bloomberg.com/news/print/2014-12-22/x.html
As he defended Comcast Corp.’s latest proposed acquisition before U.S.
senators, a top company executive showcased the cable provider’s
cut-rate broadband service for poor families.
“An amazing success,” David Cohen
<http://topics.bloomberg.com/david-cohen/>, who handles government
affairs for Comcast, said during an April hearing on his company’s $45.2
billion bid for Time Warner Cable Inc.
Comcast is dangling the promise of expanding the program -- and helping
to close the digital divide that sees one in four U.S. households
without an Internet connection -- as U.S. regulators decide whether to
allow the merger.
Yet programs by Comcast and other cable companies offering cheap
Internet aren’t benefiting enough low-income families, critics say.
Comcast’s Internet Essentials, the biggest, has reached 350,000
households -- or about 13 percent of those eligible, according to one
estimate. Cox Communications Inc., which has the capacity to provide
service to 10 million homes, reports 15,000 subscribers. Time Warner
Cable dropped its $9.95 offer after a year.
The programs have tight eligibility criteria and balky signup
procedures, where they exist at all, its detractors say.
“Everybody would like to pretend they’re doing something,” said Harold
Feld <http://topics.bloomberg.com/harold-feld/>, senior vice president
with the Washington-based policy group Public Knowledge
<http://topics.bloomberg.com/public-knowledge/>. “Cable has not done
anything real in this space.”
The cable industry bristles at such comments.
“It’s unfortunate that people look at efforts like this to connect
low-income families to an important service and find ways to criticize
it,” said Brian Dietz, a spokesman for the National Cable &
Telecommunications Association
<http://topics.bloomberg.com/national-cable-%26-telecommunications-association/>,
the largest cable trade group.
Bargaining Chips
Critics such as Feld say cable companies use the programs as bargaining
chips when they want something from government. Internet Essentials was
a three-year commitment made in 2011 as part of Comcast’s acquisition of
NBCUniversal.
Comcast extended the program indefinitely in March when Cohen, executive
vice president, met with Federal Communications Commission officials to
plead on behalf of the bid for Time Warner Cable.
“Bribing the FCC for three years with a cheap broadband program is fine,
but that doesn’t solve the problem,” said Feld. “They only did it as a
merger condition.”
Comcast was considering a program like Internet Essentials before
presenting it to the FCC, said Charlie Douglas, a spokesman for the
Philadelphia-based company. He called it “a serendipity of timing.”
While expanding Internet Essentials is “an attractive benefit,”
regulators will pay more attention to the merger’s impact on
competition, said Paul Gallant
<http://topics.bloomberg.com/paul-gallant/>, a Washington-based analyst
with Guggenheim Securities LLC.
$9.95 Monthly
Comcast’s Internet Essentials offers Internet service at $9.95 monthly
to households with schoolchildren who qualify for subsidized lunches and
other public assistance. The program helps consumers, but doesn’t
significantly close the gap between those who can afford broadband and
those who can’t, the advocacy groups Consumers Union
<http://topics.bloomberg.com/consumers-union/> and Common Cause
<http://topics.bloomberg.com/common-cause/> said in a Dec. 17 filing to
the FCC.
In areas Comcast serves in California
<http://topics.bloomberg.com/california/>, signups take too long,
service is sometimes denied contrary to program rules, and the offering
isn’t well publicized, according to the California Emerging Technology
Fund <http://www.cetfund.org/>. Comcast should expand the program to
include all low-income families, according to the nonprofit, which works
to narrow the digital divide.
“We need to do a better job if we are to be globally competitive,” said
Sunne Wright McPeak, the fund’s president.
Offering Help
In California’s San Joaquin Valley, where 244,000 Hispanic families lack
Internet service, some have needed help signing up for Comcast’s
Internet Essentials.
“There were all these different steps,” said Santa Maldonado, 31, a
homemaker in Fresno. Like more than 900 other families, she got help
from Fresno State, a branch of California State University
<http://topics.bloomberg.com/california-state-university/> that has
taken out newspaper advertisements to let residents know about Internet
Essentials.
“We do that because Internet Essentials doesn’t advertise the program,”
said Eduardo Gonzalez
<http://www.fresnostate.edu/academics/oced/connecting/staff.html>, a
project manager in the school’s community development office. “It’s rare
that people know about it.”
The school devotes two staff members to helping families navigate
Comcast’s call centers, Gonzalez said.
“We get on a three-way call. We make that call for them. Because if we
don’t, we know they’re going to struggle,” he said.
The company’s operators have denied knowing about the $9.95 broadband
and offered regular-price service at five times the cost, said Gonzalez.
‘Simply Remarkable’
Accounts of troubled or few signups are ``opinion. That's not a fact,''
said Comcast's Douglas. The program depends on partnerships with schools
and community groups. ``Certain school districts are doing a phenomenal
job -- others are not,'' Douglas said.
In Washington <http://topics.bloomberg.com/washington/>, Comcast in a
filing told the FCC that claims the signup process is cumbersome or that
call-center workers don’t know about Internet Essentials are untrue and
that it’s inaccurate to say the program isn’t publicized. The company
has distributed some 37 million brochures and broadcast almost 4 million
announcements.
A success rate of 13 percent “is simply remarkable,” Comcast said in a
filing. It compared the number with a rate of less than 40 percent for
Internet access <http://topics.bloomberg.com/internet-access/> it has
marketed for 20 years.
Signup numbers need to be put in perspective because Internet Essentials
started just three years ago, according to Douglas.
“We think we’ve done a lot with our program,” Douglas said. “Who else
can go out and do this?”
Poor, Uneducated
U.S. households without Internet service
<http://topics.bloomberg.com/internet-service/> tend to be poorer, less
educated and older than those with access, the Census Bureau
<http://www.census.gov/content/dam/Census/library/publications/2014/acs/acs-28.pdf>
found. That population is hard to reach and persuade, said John
Horrigan, a researcher who helped write the FCC’s 2010 National
Broadband Plan. Some people lack computer skills or worry about
unsuitable content. Others aren’t interested in what’s on the Internet.
“Price is not always the thing that keeps people from having broadband
at home,” said Horrigan. “You need additional training to get over the
hurdle.”
Comcast’s purchase of Time Warner Cable would leave it with
<http://apps.fcc.gov/ecfs/document/view?id=7521344995> 29.8 million
video customers. The company told the FCC it would offer Internet
Essentials in Time Warner Cable areas and “demonstrably advance the goal
of bringing all Americans into the digital communications age.” New
areas include New York <http://topics.bloomberg.com/new-york/> City and
Los Angeles <http://topics.bloomberg.com/los-angeles/>, the largest U.S.
media markets.
“We will bring this program, voluntarily, to all those potential
customers,” said Douglas, the Comcast spokesman.
Disadvantaged Job-Seekers
Americans see having broadband at home as an advantage in finding jobs,
getting health information and using government services, a 2010 Pew
Internet survey found
<http://www.pewinternet.org/2010/08/11/attitudes-towards-broadband-and-broadband-investment/>.
That doesn’t ensure success for programs targeting needy households. The
cable trade association in 2011 said member companies would follow
Comcast’s lead and offer service to low-income families with children in
school at $9.95 per month. The group estimated students in 5.5 million
homes were eligible.
Three years later, the program doesn’t report numbers of those it has
helped, said Sheila Dugan, a spokeswoman.
Time Warner Cable dropped its low-income offer after a year but now
offers $14.95-a-month service with no eligibility criteria. Comcast’s
program ends when children leave school.
Bridging Divide
Still, U.S. officials have made it a priority to narrow the digital
divide. Congress in 2009 devoted $7.2 billion in stimulus funds to
expand broadband service.
The FCC on Dec. 11 raised by 62 percent, or $1.5 billion, an annual
limit on U.S. subsidies for fast connections to schools and libraries.
President Barack Obama <http://topics.bloomberg.com/barack-obama/> last
year said the FCC should help connect 99 percent of U.S. pupils to
broadband. In November he asked the agency to craft rules to ensure an
open Internet, weighing in on a decision that may affect investment by
broadband providers Comcast, AT&T Inc. and Verizon Communications Inc.
Congress, with a new Republican majority, is to consider a broad
communications bill next year. Lawmakers have asked whether federal
broadband adoption efforts should be changed, for instance
<http://energycommerce.house.gov/sites/republicans.energycommerce.house.gov/files/analysis/CommActUpdate/20140822White%20Paper-USF.pdf>
by cutting programs or issuing grants to states.
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