Policy Documents

Broadband Internet Access and the Digital Divide: Federal Assistance Programs

Lennard G. Kruger and Angele A. Gilroy –
August 1, 2012

The “digital divide” is a term that has been used to characterize a gap between “information haves and have-nots,” or in other words, between those Americans who use or have access to telecommunications and information technologies and those who do not. One important subset of the digital divide debate concerns high-speed Internet access and advanced telecommunications services, also known as broadband. Broadband is provided by a series of technologies (e.g., cable, telephone wire, fiber, satellite, wireless) that give users the ability to send and receive data at volumes and speeds far greater than traditional “dial-up” Internet access over telephone lines.

Broadband technologies are currently being deployed primarily by the private sector throughout the United States. While the numbers of new broadband subscribers continue to grow, studies and data suggest that the rate of broadband deployment in urban/suburban and high income areas is outpacing deployment in rural and low-income areas. Some policymakers, believing that disparities in broadband access across American society could have adverse economic and social consequences on those left behind, assert that the federal government should play a more active role to avoid a “digital divide” in broadband access.

With the conclusion of the grant and loan awards announced by broadband programs temporarily established by the American Recovery and Reinvestment Act of 2009 (P.L. 111-5), the Rural Broadband Access Loan and Loan Guarantee Program and the Community Connect Broadband Grants, both at the Rural Utilities Service of the U.S. Department of Agriculture, are currently the only ongoing federal funding programs exclusively dedicated to deploying broadband infrastructure. However, there exist other federal programs that provide financial assistance for various aspects of telecommunications development, including broadband. The major vehicle for funding telecommunications development, particularly in rural and low-income areas, is the Universal Service Fund (USF) under the authority of the Federal Communications Commission (FCC). Although the USF’s High Cost Program does not explicitly fund broadband infrastructure, subsidies are used, in many cases, to upgrade existing telephone networks so that they are capable of delivering high-speed services. Additionally, subsidies provided by USF’s Schools and Libraries Program and Rural Health Care Program are used for a variety of telecommunications services, including broadband access. Currently the USF is undergoing a major transition from a mechanism to support voice telephone service to one that supports the deployment, adoption, and utilization of both fixed and mobile broadband.

To the extent that the 112th Congress may consider various options for further encouraging broadband deployment and adoption, a key issue is how to strike a balance between providing federal assistance for unserved and underserved areas where the private sector may not be providing acceptable levels of broadband service, while at the same time minimizing any deleterious effects that government intervention in the marketplace may have on competition and private sector investment.