Targeting School Lunch Programs to Reach America’s Most Vulnerable

By Chris McGovern, Manager, Research Development, Connected Nation

Across the board, households with lower incomes subscribe to broadband at a lower rate than higher-income households. The presence of this “Affordability Gap” can have a significant effect upon economic growth and opportunity – with the economy moving increasingly online, ensuring that every American has digital skills is crucial to economic growth, education, and workforce development.

But how much of a barrier is affordability? What is the most efficient and effective way of bridging the Affordability Gap? How many non-adopting households would be motivated to adopt broadband through low-cost incentive programs or targeted discounts? Is there any defining demographic characteristic of this community that would allow policymakers to efficiently target such initiatives?

According to a report released by Connected Nation today, titled “Broadband Adoption Among Low-Income Households: Insights from Connected Nation Research,” low-income households with children are at a particularly high risk, and this lack of broadband for such a large number of American schoolchildren affects the education and social welfare of our entire country. This report finds that 32% of households with children where the annual income is less than $25,000 do not have computers in the home, and 61% do not subscribe to home broadband service. In addition, based on our surveys, we estimate that 23% of households with children eligible (or near the eligibility threshold) for free or reduced lunches through the National School Lunch Program (NSLP) do not own a computer, and 48% do not subscribe to home broadband service. If these figures are extrapolated to the nation as a whole, that would mean that approximately 2.9-3.9 million low-income households with children don’t have a home computer, and 5.5-8.1 million don’t subscribe to home broadband service.These results, as well as a more in-depth analysis of barriers to adoption among low-income households, can be found here.

FCC: Competition is in the Eye of the Beholder

By Chris McGovern, Manager of Research Development for Connected Nation

The Federal Communications Commission (FCC) just released its 15th Annual Mobile Wireless Competition Report. A lot of people have been waiting with bated breath for this report to be made public, some looking for a stamp of approval for provider activities (like changes in price models and mergers) while others were hoping the report would portray wireless providers as robber barons that have successfully quashed all competition. This 308-page behemoth, though, paints a more complicated picture of a mobile wireless environment where both successes and reasons for concern can be found.

According to the report, about 92% of Americans (or about 262 million people) can choose from two or more mobile broadband providers, but fewer than seven out of ten (67.8%, or about 193 million people) have four or more mobile broadband choices. There is also a rural/urban divide, as only 69% of rural residents have two or more mobile broadband choices, and only 17.3% of rural residents have four or more options. In fact, a measurement of market concentration (the Herfindahl-Hirschman Index, or HHI) finds that the wireless market is “Highly Concentrated,” with four major national providers serving over 90 percent of the nation’s mobile wireless subscribers.

Yet not all is gloom and doom. As the FCC report points out, measures of concentration are not necessarily synonymous with a non-competitive market. It turns out the United States is following a global pattern, as mobile markets in many industrialized nations have just 3-4 major providers each. In the U.S. there is little variance in competition between census tracts with different median household incomes; tracts whose median household incomes are below $25,000 have an average of 3.3 mobile broadband providers, compared to 3.7 providers in tracts with median household incomes of $150,000 or more. The consumer price index (CPI) for the cellular market has decreased or remained the same every year since 1999, while the CPI for all goods and services has increased every year but one during that time period. In addition, mobile broadband providers show evidence of both price and non-price competition, a sign of healthy competition between carriers.

I suspect that in the end everyone will pick and choose some data out of this report, depending on the argument they want to make. Are there indicators that mobile competition can be improved upon? Yes, there are. Is there evidence that points to a competitive mobile market? That’s in there, too. Does this report show a market that is too complicated to resort to bumper sticker competitive analysis? Most definitely.