FCC’s Connect to Compete Initiative Offers Low-Income Households an Opportunity to Get Connected

By Travis Lane, Research Analyst for Connected Nation

According to a new NTIA report, 32% of American households do not subscribe to home broadband service, meaning that approximately 100 million Americans are at risk of being left behind as educators and employers increasingly move online. For many families, particularly those with low annual household incomes, cost is a major barrier to broadband adoption. According to research conducted by Connected Nation earlier this year, 44% of low-income households with children (those reporting annual incomes of $25,000 or less) who do not subscribe to home broadband service say cost is a barrier to adoption.

This includes 25.4% who say the monthly cost of subscribing to broadband is too expensive, 13.2% who say that a computer is too expensive, and 4.9% who report that the activation and installation fees are too expensive.

Enter Connect to Compete, a partnership of leading Internet service providers, technology companies, and non-profits (including Connected Nation) being led by the FCC. Yesterday, FCC Chairman Julius Genachowski announced that Connect to Compete would work to address these cost barriers by making reduced-cost broadband service available to households that qualify for the National School Lunch Program, including a rental modem (for two years), free installation, and 1 Mbps access. In addition to the broadband service, Connect to Compete will provide refurbished computers at a reduced cost, which will come preloaded with educational and career content and Microsoft software. Since this program is aimed at low-income families (many of whom would still be unable to afford the reduced price tag), a microcredit program is also being developed to help families pay for the computers.

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.