Look Back, But Move Forward – Digital Redlining in the 21st Century

by Karen Bryson on March 9, 2015

BBSJ Summit Net Equality Digital Redlining Panel - by Jason Miccolo JohnsonJust as if a time machine has transported us all back to the civil rights era, the American people are under attack.  The nation is fraught with a history of racial redlining, and in today’s technology-driven world, we are facing a new crisis: digital redlining.

MMTC President Emeritus David Honig moderated a panel at MMTC’s 2015 Broadband and Social Justice Summit titled, “Net Equality: Working to Achieve Universal Broadband Access and Adoption and End Digital Redlining.”  Honig defined digital redlining as the refusal to build out broadband infrastructure to some neighborhoods on the same terms as other neighborhoods, thus reducing the competition and opportunity available to people because of the neighborhood they live in.

The term “redlining” was coined in the 1960s, describing the practice of denying or charging more for service to persons in certain communities, usually Black, inner-city neighborhoods, no matter how qualified the individual.  The banking industry, among others, would physically draw red lines on a map to outline the areas they were not willing to serve.  As a consequence of redlining, neighborhoods that local banks deemed unfit for investment were left underdeveloped and in despair.  With an absence of employment opportunities in these neighborhoods because prospective employers were now unwilling to locate there, it was common for crime to follow, causing a rapid decline of these neighborhoods. Thus, future investment became less likely and created a cycle that created a justification for the initial redlining.

“Today, African American and Hispanic communities are way behind other communities in America,” said panelist National League of Cities Executive Director Clarence Anthony.  Anthony stated that there is a gap in access for people of color, and if not addressed, those communities and cities would not be competitive.

Data Justice Director Nathan Newman pointed out that many businesses perceive that it isn’t as economically viable to expand into lower income areas.  However, former U.S. Small Business Administration Deputy Administrator Marie Johns noted that increasing access to these communities and furthering adoption is a good business decision.  It is not simply social policy, she said, but it makes sense to deploy these technologies broadly.  Deployment in the DC area, for example, has shown that usage of Internet services was actually higher in low-income areas one might think would have lower usage.

Problems arise, says Newman, when companies like Google Fiber roll out deployment based on an advertising model.  This new disruptive model for deploying broadband does not require Google Fiber to serve everybody, which pleases advertisers because they are not interested in serving everybody.  They make decisions based on their perception about whom they can make the most money on.  We must not allow an advertising economy driven by redlining.

What Are the Facts?

Dr. Anna-Maria Kovacs, Visiting Senior Policy Scholar of the McDonough School of Business at the Georgetown University Center for Business and Public Policy, provided good contextual data to show the digital gaps:

  • About 75 percent of households, when including broadband and smartphone usage, have access at home.
  • 90 percent of American adults, across all races and ethnicities, have cell phones.
  • Latino and African American populations rely heavily on wireless as their primary means to access the Internet. About 60 percent of Latino and 40 percent of African American populations’ primary access to the Internet is through their cell phones, compared to just 25 percent for whites.

Dr. Kovacs pointed out that Internet access requires deployment, adoption, and openness, and wireless has increased access substantially.  Providing access is step number one in closing the digital divide.

Money Buys Access

Hal Singer, Principal of Economists, Inc., and Senior Fellow of the Progressive Policy Institute, provided perspective as to where the money should and should not come from to pay for access and adoption.  “When you have an industry with negative spillovers, where the market is producing too much of it, the economist wants to tax it.  When you have positive spillovers, the market produces too little, and we want to subsidize it to get output to expand.”

Singer pointed out that broadband is an industry with positive spillover, and we therefore want to subsidize. Pew Research Center studies have shown that price is the main reason non-adopters choose not to subscribe to broadband.  As a result, if we want to expand broadband adoption by 10 percent, then we must reduce prices by about 15 percent, said Singer.  This 10 percent increase would connect about 10 million more homes.  However, this kind of increase will cost about $810 million per year.   So the question is, where is this money going to come from?

Singer addressed this question in his remarks.  FCC Commissioner Jessica Rosenworcel often points to programs like Lifeline, he said, which is used to stimulate demand for the telephone industry, as a way to pay for increased broadband adoption.  However, this would mean taxing broadband services.  First, no one wants higher taxes, and second, it doesn’t make sense to raise broadband taxes so we can subsidize those who can’t afford it, Singer added. Raising broadband taxes will cause people who are already users to drop out, which is the opposite of the desired result.  The subsidy needs to come from somewhere other than the backs of broadband users.  We want to tax things with negative spillovers, not positive, Singer stated.

Clarence Anthony discussed the opportunities for partnership between the public and private sectors to address access for all citizens.  If the private sector doesn’t provide accessible and low-cost broadband access, it is the responsibility of the local cities to get involved in that business. State and local governments should prioritize this in their budgets, he said.  He disagreed with Singer that taxes could not or should not be used because it is, as he described it, “an investment that we will make in our children,” and that investment will pay off in the long run.

Dr. Kovacs, too, suggested that municipalities should work with private sector companies for efficiency and economic reasons. However, she warned of the importance of providing broadband efficiently. Municipalities shouldn’t be the first choice, she said, because they provide less scale and historically have lots of their projects abandoned or dismantled.

Newman pointed out that we are spending on average about $10,000 per child per year for education, and students are increasingly required to go online to complete their homework.  We should be willing to spend $50 a month for kids to have Internet at home, he said.  He also suggested that if we are going to use taxes, we should not tax broadband service but instead add to property taxes.

Laying Our New Foundation

The entire panel discussion was jam packed with eye-opening statistics, differing perspectives, and thoughtful resolutions.  Although there was not a consensus on one specific solution to end all redlining, get all Americans to adopt broadband, and alleviate the financial costs of it all, this panel took necessary strides in the right direction.  To end digital redlining and close the digital divide, we must be aware of the redlining practices taking place, and we must move to increase access and adoption.  Additionally, the means by which we increase adoption and access must not be to the detriment or harsh taxation of those already connected to broadband.

Rome wasn’t built in a day, but it was laid brick by brick.

The Multicultural Media, Telecom & Internet Council (MMTC, formerly Minority Media and Telecommunications Council) is a national nonprofit organization dedicated to promoting and preserving equal opportunity and civil rights in the mass media, telecommunications and broadband industries, and closing the digital divide. MMTC is generally recognized as the nation’s leading advocate for minority advancement in communications.

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