AT&T Takes Heat For Avoiding Broadband Upgrades For Poor Areas

from the one-for-you,-three-for-me dept

So we’ve noted for years now how giant broadband ISPs have made a 20-year career out of taking taxpayer money, subsidies and other perks in exchange for broadband networks they only partially deliver. When it comes time to hold these large ISPs feet to the fire, well-lobbied lawmakers and revolving door regulators pretty consistently do their best to ensure accountability never happens. Obviously this is just one of numerous problems leading to a lack of broadband competition in the United States, where two-thirds of homes lack access to more than one ISP at speeds of 25 Mbps.

And while it makes perfect sense for ISPs to want the best return on their investment, problems have arisen as broadband is increasingly seen as a necessary utility, but government refuses to stand up to some of the most politically powerful companies in America. ISPs don’t want anybody dictating where they can and can’t deploy service, but at the same time their lobbyists are passing protectionist state laws preventing towns and cities from improving their broadband fortunes…even in areas incumbent ISPs refuse to serve.

AT&T has come under fire in recent months after allegations emerged that the company was avoiding deploying upgrades to low-income neighborhoods. The National Digital Inclusion Alliance (NDIA) and a Cleveland-based group called Connect Your Community released a report last month claiming AT&T was engaged in “digital redlining” — or intentionally only upgrading higher-income customers. The report notes that while AT&T provides scattered speeds of between 18Mbps and 1Gbps to the Cleveland suburbs, poorer neighborhoods in central Cleveland remain stuck on speeds between 768kbps to 6 Mbps.

A map from the report highlights what this not-so-subtle practice looks like:

The groups have threatened to sue AT&T, stating that FCC data and “city construction permits and other information” support its case that AT&T intentionally ignored low-income communities. AT&T, as you might expect, insists that it has done nothing wrong:

“Access to the internet is essential, which is why we’ve continuously invested in expanding service and enhancing speeds,” the AT&T response starts. “The report does not accurately reflect the investment we’ve made in bringing faster internet to urban and rural areas across the U.S. While we are investing in broadband, we’re also investing in technologies that will mitigate some of the infrastructure limitations.”

But a more recent study also accuses AT&T of doing the same thing across California. The study, drafted by the UC Berkeley Haas Institute for a Fair and Inclusive Society, again offers up some pretty compelling data:

“By contrast, the median household income is $53,186 in California neighborhoods where AT&T provides only DSL, with download speeds typically ranging from 768kbps to 6Mbps. At the low end, that’s less than 1 percent of the gigabit speeds offered by AT&T’s fiber service. The median income in areas with U-verse VDSL, which ranges from 12Mbps to 75Mbps, is $67,021. The income difference is even more stark in some parts of California. “For example, in Los Angeles County, the median income of households with fiber-to-the-home access is $110,474, compared with $60,534 for those with U-verse availability, and $47,894 for those with only DSL availability,” the report said.

All told, rich or poor, around 4.1 million California households, or about 42.8% of AT&T’s California service area, can’t get access to the FCC’s base definition of 25 Mbps down, 3 Mbps up. AT&T often promises regulators they’ll shore up these broadband coverage gaps in exchange for regulator favors (merger approval, etc). But these improvements often never arrive, and AT&T uses misleading marketing to make its “next gen” offerings appear more uniformly available than they actually are. In the real world AT&T’s focus is elsewhere: namely wireless, and buying media companies like Time Warner.

A major reason for broadband’s inconsistent deployment was the state “franchise reform” laws AT&T and Verizon passed in dozens of states a decade ago.

Originally, local franchise authorities required even network deployment in exchange for doing business in towns and communities. But around 2006 or so, both companies went state by state promising lawmakers that if they eliminated the local franchise reform laws and replaced them with state-level rules, consumers would be awash in broadband and TV competition. That never happened, but company lobbyists were successful in demonizing the old franchise system as archaic, and towns and cities as viciously uncooperative (which was sometimes true, but often not).

The problem: because state-level politicians are even more corrupt than their local or federal counterparts, many of the state-level franchise reform laws AT&T and Verizon managed to get passed were little more than legislative wishlists that killed many essential consumer protections, broadband deployment requirements, and in some states even citizen eminent domain rights. So yes, the franchise reform system was “streamlined” to be more efficient, but at a major cost to consumers that’s pretty rarely talked about.

It’s understandable that these companies don’t want government dictating where they can or can’t deploy broadband services. That said, it’s just as important to remember that companies like AT&T have gone out of their way to use corruption and bureaucracy to stall and hamstring would-be competitors at every conceivable opportunity. In this way they get to have their cake (lamenting demands for even broadband deployment as government “over reach”) and eat it too (use that same government to give them taxpayer dollars for services only half-delivered, and to pass regulations and laws hamstringing competitors).

With current FCC boss Ajit Pai looking to roll back oversight even further of some of the least competitive companies in America, there’s going to be a hell of a lot more of this particular flavor of market dysfunction in our foreseeable future.

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Companies: at&t

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Comments on “AT&T Takes Heat For Avoiding Broadband Upgrades For Poor Areas”

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15 Comments
Anonymous Coward says:

Do poor areas pay less?

Almost 15 years ago when I lived in Miami, I moved from South Beach to Little Haiti. My cable/internet bill was cut in half for the same service. I was told that this was because the price they were allowed to charge was less in the lower income neighborhood. If they are allowed to charge more and have larger percentage buy in, you would expect them to build out those areas first. This may be a direct result of regulations that requires them to charge less in lower income areas.

McGyver (profile) says:

Re: Do poor areas pay less?

Perhaps in some cities with strong support for lower income neighborhoods… But from my experiences, outside of examples like that…
No, it’s the same and often for worse service.

Why should they invest in any upgrades for poor people… They are just… You know… Poor people…
What are they gonna do… Complain?
Switch providers?
Stop voting for corporate installed politicians?
Not make campaign contributions?
You want to keep your top paying customers happy… The poor folks are just “filler” customers.

Yeah… Let’s see how things turn out when all the regulations are gone and they are openly writing the laws without any restrictions or shame…

I have a good feeling about this.

orbitalinsertion (profile) says:

The only thing misleading about the map is the availability of VDSL. Once you go FTTN, you can’t go back. FTTP, lol, where?

So we’ve noted for years now how giant broadband ISPs have made a 20-year career out of taking taxpayer money, subsidies and other perks in exchange for broadband networks they only partially deliver.

And the telcos long before them.

Anonymous Coward says:

‘With current FCC boss Ajit Pai looking to roll back oversight even further of some of the least competitive companies in America, there’s going to be a hell of a lot more of this particular flavor of market dysfunction in our foreseeable future’

BUT IT’S ALL FOR THE GOOD OF THE CUSTOMER! DONT YOU REALISE THAT THERE WILL BE MORE COMPETITION AND MORE INTERNET FREEDOM ONCE THIS ASS HOLE, I MEAN NEW FCC BOSS, HAS FUCKED EVERYTHING UP GOOD AND PROPER??

Regret says:

They lose either way

Yes, the broadband providers take advantage of the political system (FCC, Congress, municipal) and use obfuscation in their billing practices to their own ends, but I don’t see how a regulated for-profit business can logically behave otherwise. Expecting a business to build out infrastructure in a lower income region where we all know there will be fewer customers shows a poor understanding of economics. Expecting a business to ignore political influence as a tool to boost profits shows a poor understanding of economics and politics. You won’t get a change in behavior as long as the broadband industry is regulated. In a regulated environment, you make "gaming" the political system possible and potentially valuable. In a non-regulated environment, poor consumers can be provided vouchers to meet whatever political, social or economic goals you wish. So while you can yak about government corruption and the evil corporations all you want, if you want a regulated industry, this is what you’ll get… every time.

Ninja (profile) says:

“It’s understandable that these companies don’t want government dictating where they can or can’t deploy broadband services.”

It is? What if we are talking about drinking water? Would it be reasonable? No? There’s your answer. With internet being more and more part of our daily lives to the point you need it to do stuff related to the government and healthcare there’s no excuse not to treat it like critical infrastructure.

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