The Federal Communications Commission (FCC) announced that because of the reforms of its Lifeline program, the agency was able to save $214 million.
The savings was a result in the reduction in waste and fraud, which will then be used to fund 14 pilot projects in 21 states and Puerto Rico to encourage broadband adoption by lower-income residents.
The Lifeline program was launched in 1985, providing low cost phone service to qualifying low-income consumers. However, the biggest factor that negatively affects poverty-stricken areas is the lack of internet connection. Because many employers require online job applications and email addresses, low income residents without an internet subscription are at a disadvantage when it comes to getting the kind of jobs that would lift them out of poverty.
About $14 million will be used to fund the 14 pilot projects, which will provide information and analysis on how the program can “increase broadband adoption and retention among low-income consumers”, and provide broadband internet service for almost 75,000 low-income consumers in underserved neighborhoods.
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This is a small step to remedying the digital divide—according to the U.S. Census Bureau, less than 36% of families who earn less than $25,000 have a broadband subscription, compared to 92% of families with incomes of $75,000 or more.
Beginning on February 1, 2013, the pilots will run for 18 months, with the participation of Frontier Communications, Tracfone Wireless, and other independent rural ILECs (incumbent local exchange carrier).
However, there are some concerns of whether the program goes far enough in terms of allocating the necessary funding to create a strong broadband infrastructure that would truly help low income communities participate successfully in the online world. In metropolitan cities like New York, Los Angeles, and Boston, download speeds of up to 300 Mbps are not unheard of (Kansas City can now get 1000 Mbps), while plenty of rural areas have a difficult time even getting DSL speeds at 1 Mbps.
The reality is that a lack of a strong internet infrastructure hurts everyone—not just the low income residents who can’t apply for a job. It can shut out would-be business owners from participating in e-commerce, which is a multi-billion dollar industry. It can also make the community unattractive for large employers (such as General Electric or Time Warner Cable) who need a powerful high speed internet structure in order to conduct routine tasks between different regional offices.
To encourage the local economy, it may help if the FCC allocates more money and expands the programs to more areas across the country. Building these networks are expensive, which is why major cable and satellite companies are loathe to expand their networks to these underserved areas. Not to mention that they spend far more that $14 million just to upgrade their systems, which makes the budget for this program inadequate.
Still, some investment is better than no investment. Hopefully, the Lifeline program will result in real investment for a powerful broadband network—and only then will the digital divide disappear between the haves and the have nots.