Understanding the Broadband Digital Divide
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broadband, digital divide, Gfast

Understanding the Broadband Digital Divide

In the fight for net neutrality, there’s been a lot of discussion about the widening digital divide and the role net neutrality is having on Internet have/have nots. Yet, the situation is not as it seems. Therefore, it’s worth us taking a bit of time to better understand what is going on.

First, what is the digital divide? The basic premise is that some consumers are gaining access to very fast internet speeds, while others are lagging behind. The belief is that the Internet offers massive societal benefits and citizens who lack such access will suffer over the long term. This article takes as given these suppositions.

Most advocates of elimination of the digital divide view the digital divide as one common situation. But it isn’t. There are four distinct segments of digital divide:

  1. Urban MDU. The first segment within the digital divide is citizens who live in urban environments and live in multi-dwelling units. This group represents roughly 30% of US households. There are structural reasons why this group is generally underserved. The urban MDU citizens therefore do currently face some digital divide, but this divide will go away in the next few years.
  2. Rural. Roughly ⅓ of the US lives in what is described as rurally. This means that these citizens live in low-density environments. These citizens suffer from low broadband speeds and, regrettably, are likely to suffer from low speeds for the near term.
  3. Economic. Within both segments but more associated with urban environments are a subsegment that are part of the digital divide due to economic, not only infrastructure needs. For example, 56% of citizens earning less than $30K have a desktop of laptop computer, whereas 97% of those making over $100K do. If we look more carefully, we see that 95% of these low-income users have home broadband versus 97% of affluent users. So, the gap of broadband is more due to a lack of PC, rather than the broadband itself. These citizens do have smart phones and connect to the internet via those devices, instead.
  4. Age. While the adoption of the Internet has improved amongst citizens over 65 years old to 64% in 2016 from 46% in 2011, it still trails the next segment (50-64 year olds), 87% of whom are using the Internet. Over time, the gap will continue to narrow as more of the baby boomers using the Internet enter that last segment. However, as US lifespans increase, there will still be a segment that will never be on the Internet.

 

Root Causes

For both the urban MDU dweller and the rural citizen, infrastructure costs are at the center of the problem.

In the urban environment, it is very expensive to trench and drill in cities. There are expensive right-of-way issues, digging up sidewalks, drilling in buildings. It’s very expensive. For example, let’s say a building owner wants to provide fiber optics to all its residents, but there’s a parking lot in front of the building that is owned by another company. For the building owner to get fiber optics, they have to get permission from the parking lot owner who doesn’t want his parking lot dug up to support something he doesn’t benefit from. These kinds of problems are pervasive in the MDU environment. As a result, MDU residents often have lower broadband speeds than single-family dwelling (SFU) residents.

In the rural environment, it’s the economics that are driving the digital divide. In 2010, the FCC reported that for many US geographies, there is an economic gap where broadband cannot be funded by consumers but must be subsidized. Unfortunately, there are far more places in the US where broadband isn’t economical to deliver because the housing density is so sparse.  

The bars in blue represent the amount of investment gap between what is profitable to deliver and what is needed. This study was released in 2010, when broadband was defined as 10Mbps. Imagine what that graphic would look like if we want to deliver 100Mbps.

Remedies for the Digital Divide

For the aged and non-PC user, there’s very little that the broadband industry can do to resolve these issues. The government can use various government programs to either educate or subsidize these users.

For urban MDU users, new technologies such as Gfast and DOCSIS will provide the most economical way to deliver ultrafast broadband access to citizens. These technologies use existing wiring eliminating a lot of logistical and economic impediments to deploying fiber-like technologies inside of apartment buildings. Breakthroughs in both technologies will create competitive offerings for urban citizens which will result in more aggressive price competition and improved access. Moreover, by bringing this capability to citizens at the lowest possible price, it is possible to offer some narrowing of the digital divide among citizens that are poor but do have a personal computer of some sort.broadband, digital divide, census

For rural citizens, the digital divide is more challenging. At a rough cost of $125K/linear mile for delivering fiber, it’s pretty impractical unless there are a large number of subscribers at the other end of that fiber to share the costs.

Since the market is large (30% of the market), the desire to solve this problem is large. However, there are still many technology limitations. Many companies such as Facebook, Microsoft and many others are trying different techniques to solving the rural problem. Ultimately, there will be a solution. But it won’t come soon or cost-effectively.