DSL providers save faster internet for wealthier communities

Introduction

When noncable internet providers — outlets like AT&T or Verizon — choose which communities to offer the fastest connections, they don’t juice up their networks so everyone in their service areas has the option of buying quicker speeds. Instead, they tend to favor the wealthy over the poor, according to an investigation by the Center for Public Integrity.

The Center’s data analysis found that the largest noncable internet providers collectively offer faster speeds to about 40 percent of the population they serve nationwide in wealthy areas compared with just 22 percent of the population in poor areas. That leaves tens of millions of Americans with the choice of either purchasing an expensive connection from the only provider in their area, typically a cable company, or just doing the best they can with slower speeds. Middle-income areas don’t fare much better, with a bit more than 27 percent of the population having access to a DSL provider’s fastest speeds. The Center reached its conclusions by merging the latest Federal Communications Commission data with income information from the U.S. Census Bureau.

The FCC, which regulates the industry, defines broadband as a download speed of at least 25 megabits per second. Those speeds are mostly only available through wired connections to the home. It’s the speed that the agency believes is needed to support multiple devices on a single connection, stream uninterrupted movies and educational videos, upload photos, and allow for future applications such as in-home health services and networked homes.

The noncable internet providers — the four largest are AT&T Inc., Verizon Communications Inc., CenturyLink Inc. and Frontier Communications Corp. — hook up customers over telephone wires that are Digital Subscriber Lines (DSL), or use hybrid networks that include some fiber connections near, or sometimes directly to, homes. The Center included all types of connection in its analysis. These companies account for nearly 40 percent of the 92 million internet connections nationwide.

Cable companies, such as Comcast Corp. and Charter Communications Inc., operate under a different set of conditions. These providers offer the same fast speeds to almost every community they serve, in part because of franchise agreements with local governments. But a previous Center investigation and other reports have shown that cable firms sometimes avoid lower-income or hard-to-reach areas based on how franchise agreements are written. Poor areas not served by the cable companies are not included in the Center’s analysis, which results in what seems like an equitable distribution of speeds across income levels.

In addition, internet speeds sent over coaxial cable used by the cable firms don’t degrade over long distances as they do over copper telephone lines. That means that in order to keep speeds from slowing, DSL carriers must make costly investments in equipment, including fiber cable in some places.

It would seem DSL providers’ coverage decisions are simply smart business. After all, the companies and economists say, providers must invest millions of dollars in equipment to boost speeds over relatively short distances in their service areas. The best way to get a substantive return on investment is to provide the service in wealthier areas. Besides, fewer lower income households purchase a home internet connection than do their higher income neighbors.

But broadband advocates, economists — those in the United States, Europe and the White House — as well as the FCC argue that a fast internet connection is now so crucial to managing daily life and seizing opportunities for advancement that it’s an economic necessity for households and communities. And they further argue that having a choice between two providers is essential to keeping prices down.

“Society said it did not matter if you could pay for electricity — we wanted everyone to have it. Society said we would not limit dial tone to those who could pay the most, we gave it to all,” said telecommunications lawyer Gerard Lederer of Best Best & Krieger LLC in Washington, D.C., in an email. “Broadband is quickly becoming that utility, and if applications only work at high speeds, then the universal availability of that speed must be the goal, otherwise you are providing everyone with water, just some of the water is not drinkable.”

Where the high speeds are

High-speed connections will only become more important for Americans. As families simultaneously use more than one connected device at home, and tools like health-care apps become more prevalent, and cars and household appliances become networked, broadband demand is forecast to more than double in just the next four years. The increased internet traffic will require ever faster speeds to allow applications to work.

That’s why the FCC voted last year to increase the definition of broadband from a download speed of 4 Mbps and 1 Mbps upload to 25 Mbps down and 3 Mbps up. The Center’s analysis looked at the availability of just download speeds, using the FCC’s 25 Mbps definition for broadband.

But the opportunity to purchase the higher speeds or choose between two high-speed providers is unequal, determined in large part by a family’s earnings, the Center’s analysis shows. Without exception, the nation’s four-largest noncable internet providers offer their highest speeds to more wealthy communities than lower-income ones.

An earlier Center investigation found that people living in the poorest areas nationwide — where median household incomes are less than $34,800 — are five times more likely not to have access to broadband than households in the wealthiest areas — where the median income is more than $80,700. Many times, the Center found, high-speed internet service stops at the edge of low-income communities.

In this analysis, the Center drilled down into the data to learn how providers manage speeds within their service areas and which carriers offer service equally across income. The findings: DSL providers in particular favor the wealthy over lower-income communities in providing their fastest speeds.

Frontier Communications, the nation’s fourth-largest DSL internet provider, favors its wealthy communities more than most. The Norwalk, Connecticut-based firm offers high-speed broadband to 38 percent of the population in the wealthiest communities, those with the median household incomes of more than $80,700, according to the Center’s analysis. But Frontier only offers its fastest speeds to 11 percent of the people living in areas where the median household income is less than $34,800.

AT&T, the nation’s largest DSL provider, offers speeds at 25 Mbps and higher to about the same proportion of wealthy, middle- and low-income areas. But those speeds are available to just a little more than 5 percent of the population its national service area, which covers about 6.6 million people out of a total of 123 million people AT&T’s service area covers, according to the Center’s analysis. The vast majority of the population in the communities AT&T serves — 72 percent — have access to sub-broadband speeds, between 10 and 24 Mbps. Who has access to those speeds varies greatly by income. More than 82 percent of the people living in the wealthiest areas can buy those speeds, while 66 percent of the people in the poorest communities can, the Center’s investigation found.

Low-income regions are not the only ones that have less chance to buy fast download speeds. Some DSL providers ignore middle-income areas at nearly the same rates. Verizon provides broadband speeds to 64 percent of the population in wealthy communities where it has service, but only to 49 percent of the population in the middle-income areas, those with a household median income between $46,900 and $60,200.

AT&T, Verizon and Frontier did not reply to requests for comment.

CenturyLink’s track record is similar. The Monroe, Louisiana-based company, which has almost 6 million subscribers nationwide, offers broadband to 72 percent of people living in wealthy areas in which it operates compared with 57 percent of the population in the middle-income communities — just 3.5 percentage points more than in the company’s poorest areas.

CenturyLink denies the unequal access is purposeful.

“CenturyLink does not engage in discriminatory practices in broadband deployment,” a CenturyLink spokeswoman said in an email. “We focus our network investments in a fiscally responsible manner by investing in areas that allow us to take advantage of current assets, such as existing conduit and fiber routes, while reaching the largest number of potential customers.”

But that is exactly the problem, said Hannah Sassaman, policy director at the Media Mobilizing Project, a community organizer and support group for low-income families in Philadelphia.

“It’s fine for an incumbent to say they want to leverage their existing assets, but we have to remember that many of these incumbents have been cherry picking what communities they serve for decades,” Sassaman said. “Of course companies that want to build where they already have conduit and fiber will be doing so in neighborhoods that already have high-speed access and competition.”

And that means in more wealthy neighborhoods, Sassaman said.

The FCC believes its Lifeline program, which provides low-cost internet access to qualifying households, will lead to faster internet speeds for lower-income families. But FCC Commissioner Mignon Clyburn acknowledges that more needs to be done.

“There are certainly challenges in bringing communications services to those who can least afford it,” Clyburn said in an email. “Regardless, those who are less affluent should not be relegated to receiving second-class broadband.”

‘We live in an oligarchy’

The Hinebaughs, who live in Washington, Pennsylvania, about 25 miles southwest of Pittsburgh, are one of the many middle-to-lower-income families that don’t have access to a fast DSL connection. James, 27, his wife, Jennifer, and their 2- and 4-year-old children live in a 90-year-old, two-story house sitting atop a hill. They’re a couple of blocks above Jefferson Avenue, a commercial strip that’s home to local businesses like Beck’s Tobacco & Beer shop and the Alpine bowling alley.

Here, where the rumble of tractor trailers on Interstate 70 a few hundred feet away resonates through the neighborhood, the median annual income is less than $20,000 and the poverty rate exceeds 16 percent, making it one of the poorest areas in Washington County. James Hinebaugh said his income varies year to year, from the lowest to the middle-income quintiles in the Center’s analysis, depending on how much overtime he can get at his job as a machinist at Dynamet Inc., a maker of titanium alloys for aerospace and medical companies.

The only choice the Hinebaughs have for a wired broadband connection is Comcast, and they consider it a ‘must have’, Hinebaugh said. The children log on to play games, watch educational programs and stream movies. Jennifer Hinebaugh, 31, uses the internet to communicate with family and friends on Facebook, manage the bank account, search for coupons and research health websites for their son, who has special needs. James Hinebaugh goes online to read political news, watch tutorials on painting and research his passion, astronomy. “I’d love to become an astrophysicist one day,” he said.

The Hinebaughs pay Comcast $255 a month for a bundled package that provides an actual internet speed of 25 Mbps, cable TV and a networked security system that had previously been installed in the house. The bill is one of the highest they pay and it’s a struggle every month, Hinebaugh said. He would like another option, but the only one is Verizon, which offers service in his neighborhood, but at a maximum speed of 3 Mbps, according to a search of Verizon’s website. That’s on the low end for basic web surfing and email, and can’t support video streaming or managing other large files such as uploading photos.

At that speed, “you might as well not even have it,” Hinebaugh said. “It’s so slow that you say, ‘I might as well go chop wood.’”

Hinebaugh’s situation is similar to nearly half of Americans, who have only one wired broadband provider to choose from, according to the FCC. Another 30 percent have no wired broadband service at all. The lack of competition keeps broadband prices higher, and it hits poorer families harder, according to the FCC.

The Hinebaughs are far from an exception. Verizon provides its fastest speeds to only 1.3 percent of people in the poorest areas where it offers service in Washington County, according to the Center’s analysis. Most the people in the poor areas, 87 percent, can hook into 10 to 25 Mbps. Verizon gives its fast broadband speeds to almost all of the population in the wealthiest areas in the county — 92 percent.

But drive about 10 miles east from the Hinebaughs — past the Lindenwood Golf Club, the BMW and Cadillac dealerships on Washington Road and the Youth Ballet School & Company on Valley Brook Road — and it’s a world apart. Here, landscaping crews tend the grounds behind large stone gates of multimillion-dollar estates. The median income is $164,000, eight times the income where the Hinebaughs live and the highest in the county.

And there’s something else here too. Along these winding tree-lined streets and rolling green pastures, Verizon offers wealthy residents some of its fastest service, up to 150 Mbps over fiber-optic cable, which first came to this part of the county in 2007. Its DSL service in the surrounding areas reaches 15 Mbps, five times the top Verizon speed that’s available in the Hinebaughs’ neighborhood.

Hinebaugh looks at the speeds Verizon offers just a few miles away and scoffs. He knows that if Verizon offered higher speeds in his neighborhood like it does in the wealthy ones east of him, the competition might push down the price of internet service and save his family some much-needed cash. But he’s not holding his breath.

“We live in an oligarchy. That’s pretty much how it goes,” Hinebaugh said. “It’s hard to change something that rich people have spent a lot of money putting in place.”

‘A big social problem’

Neighborhoods such as the Hinebaughs’, where DSL providers such as Verizon and AT&T have chosen not to upgrade download speeds over 3 Mbps, represent an understandable economic decision by providers, said Nicholas Economides, an economist at New York University’s Leonard N. Stern School of Business. DSL providers tend to upgrade speeds to more than 3 Mbps in areas where they believe they can sell internet TV, which means they avoid poorer areas they think can’t afford the higher speeds, he said.

“That isn’t surprising,” Economides said.

Economides is more concerned about the cost of internet connections, and the lack of competition that leads to higher prices for people like the Hinebaughs, who have just Comcast for high-speed internet because Verizon provides only that meager download speed in their neighborhood. The No. 1 reason cited for not purchasing a home internet connection is by far the high cost, according to the Pew Research Center.

“That’s a very serious issue, and a big social problem,” Economides said. “You need high-speed internet for national reasons, to get information, to get educated. That’s just not happening. We still have very high prices.”

Verizon got permission to begin building its fiber-optic cable connections in Washington County in late 2007. But the company abandoned expanding its Fios network in 2010. Cities such as New York and Philadelphia have criticized Verizon for not living up to promises to wire the entire cities. Some reports speculate that Verizon may consider expanding its fiber network in several cities, as it recently announced in Boston.

But Verizon gives no indication as to whether it will wire poorer neighborhoods. Company officials announced that it will use a free online registration process “to assess demand and help Verizon prioritize its fiber-optic network construction schedule.”

Verizon didn’t reply to questions about its plans.

AT&T is obligated to bring cheaper internet connections to low-income areas under conditions imposed by the FCC when the company purchased internet-satellite-provider DirecTV last year. The speeds are required to reach 10 Mbps, still below what the FCC defines as broadband. “Many of these communities will see a tremendous leap in terms of speed in the move from dial-up connections to Fixed Wireless Internet,” AT&T said on its website.

FCC conditions also require AT&T to deploy fiber to homes in 12.5 million locations nationwide, giving them access to high speeds. But none of the wording in the conditions require the company to connect low-income neighborhoods.

AT&T had been expanding a souped-up version of its AT&T Fiber network, which can deliver speeds up to 100 Mbps, and its gigabit service. AT&T announced last month an experimental network that it says will bring ultra-fast speeds to underserved and rural areas, presumably including low-income areas. The network won’t begin testing until next year and wouldn’t be available for years, however.

AT&T didn’t respond to requests for comment on the new network.

For Hinebaugh, he said these efforts are too little, too late, leaving him with no hope that his neighborhood will ever get a choice of another high-speed provider.

“Why are the rich entitled to a choice of fast speeds and other people aren’t?” Hinebaugh asks. “It’s like why even bother trying to change it? Why try to get ahead, because the system is built against you?”