Redefining Rustbelt: Making Broadband Available to Residents and Small Businesses in Detroit, Charlotte, Cleveland, and Philadelphia

In the digital era, broadband is essential for running a business, finding a job, and getting and receiving most types of mainstream data and information. Yet disparity in broadband use remains a concern across communities, affecting both businesses and households. The Federal Reserve Bank of Chicago-Detroit Branch recently organized its fifth videoconference discussion with the Federal Reserve Banks of Cleveland, Philadelphia and Richmond on the topic “Broadband: Infrastructure of the Future,” bringing together experts and stakeholders in each city to share strategies related to digital inclusion, broadband financing models and their impact on businesses and community development.

"Broadband" technically means a wide bandwidth data transmission that enables rapid movement of multiple electronic signal and traffic types simultaneously. The extent of broadband access depends largely on infrastructure availability and affordability. Broadband is provided by a range of media (e.g., cable, telephone wire, fiber, satellite, and wireless) that give users the ability to send and receive data at speeds greater than traditional “dial-up” Internet access over telephone lines.¹ In January 2015, the Federal Communications Commission (FCC) raised the minimum download speeds from four megabits per second (Mbps) to 25Mbps, and the minimum upload speed from 1Mbps to 3Mbps. Download speed is a measure of how fast a connection delivers content to your computer or local area network. Upload is the measure of how fast content is delivered from your computer or local area network to others on the Internet. Mbps indicates the transfer of one million bits of data each second.

A 2013 Census survey found Detroit to be the least-connected city in the U.S. (of cities with over 100,000 people) in terms of household broadband subscriptions. About 46 percent of Detroit households subscribed to broadband services in 2013, meaning more than half of Detroit households lacked a fixed broadband Internet account (see table 1). About 53 percent had no paid internet connection at all. Digital exclusion was more pronounced for lower-income residents. Almost two-thirds of households with incomes below $35,000 in Detroit reported no internet connection, compared to a third of households with incomes above $35,000 in Detroit. These gaps are likely to grow under the new broadband standards. DSL service, which is delivered over telephone lines, does not generally accommodate the new download/upload threshold speeds.

Table 1 can be seen by clicking: Digital Divide Blog Table

According to a 2015 report from the FCC, eight percent of Americans living in urban areas throughout the U.S. lacked physical access to broadband under the latest Mpbs definitions. Data from Michigan shows 12 percent of households (about 450,000 households) were unserved by fixed broadband platforms with download speeds above 25Mbps in 2014. Although more than 20 broadband providers operated in Wayne County as of October 2014, a third of them offered service below the new definition of minimum download speed. Within Detroit, pockets of the city remain without high-speed internet (see figure 1). Thus residential users and home-based businesses located in certain areas are more challenged than those in other parts of Detroit in terms of their access to broadband technology.

1. Detroit access to high-speed internet

Strategies for Increasing Broadband Access and Digital Inclusion

Subsidizing the Cost of Subscribing:

At least part of the solution lies in helping lower-income people pay for internet service. Federal policy may be particularly important in this regard; the FCC put forward a proposal in May 2015 to provide needy households with a subsidy for either phone service, Internet service or a mix of both through its Lifeline program. Proponents of this plan suggest that if the subsidy encourages more lower-income households to sign up for broadband access, this may encourage the private sector to create new offerings for lower income consumers.² Among current corporate initiatives, Comcast began offering a $9.95 monthly service to certain low-income households in 2011 through its Essentials program. The City of Charlotte, which participated in the videoconference, was selected for Google gigabit service that provides internet speeds of 1000 megabits per second, for which the company has promised options for low-income customers.

Building Infrastructure Affordable to Lower-Income Households

In each of the cities that participated in the videoconference, reducing costs for the end-user has been the main idea behind the various efforts to expand broadband access through community-based networks. Cleveland has been part of the Mobile Citizen project wherein educational, social welfare and nonprofit organizations lease excess radio spectrum to cell phone companies (in this case Sprint), and in exchange get access to low cost service which they can pass on to their own customers. In Detroit, the Community Telecommunications Network, a nonprofit technology organization associated with Wayne State University, Detroit Public Schools and Detroit Public Television, attempted a broadband expansion project in 2009 with an award from the Knight Foundation. Also in Detroit, Allied Media Projects partnered with the Open Technology Institute of the New America Foundation in 2012 to create the Digital Stewards Program, which deploys mesh wireless networks in neighborhoods and community centers beamed from the rooftops of low income housing units.

Using Training from Nonprofits to Make the Internet More Accessible:

Participants at the videoconference highlighted the role of community computing centers as a low-cost way to provide internet access and digital training to residents of lower-income neighborhoods. In Philadelphia, a citywide coalition of community-based groups developed the KEYSPOT Network to provide free Internet access and computer training to thousands of people, funded initially through federal stimulus dollars from the Broadband Technology Opportunity Program. In Ohio cities as well as in Detroit, the nonprofit OneCommunity also used funding from the Broadband Technology Opportunity Program to create the Connect Your Community program, a two-year program to provide broadband training and low-cost equipment for low-income households. In Detroit, the Community Telecommunications Network teamed up with neighborhood nonprofits includingMatrix Human Services and Focus: HOPE to recruit more than 5,000 people to receive training and Internet access, funded by the Knight Foundation. An important feature of these programs has been to provide refurbished computer equipment to people who complete the training modules.

Using Internet Training as a Launchpad for Technology Training

Some nonprofits that teach digital literacy also have the potential to deliver workforce development training. The idea is that entry-level technology training can serve as the first step to move people into jobs. Within Detroit, Matrix Human Services, a social service agency, operates a Tech Lab that teaches computer skills to help people advance in their careers. Focus: Hope, a community development organization, offers programs ranging from basic computer training, to IT training for specific industry certifications, to programs like the Information Management System Engineering program through which students pursue a technical or college degree. Harmony Point, which offers digital literacy training, supports a model whereby community computing centers become Internet outposts in “digital deserts,” as well as places were neighborhood residents receive training to manage those centers. Indeed, a major reason that Allied Media developed the Digital Stewards program was to train residents to design the network, build skills, and thereby empower community leadership. The importance of tech training for job placement was the motivation behind the White House’s 2015 initiative Detroit Tech Hire, a project that is calling upon some of Detroit’s largest employers (GM Onstar, Quicken Loans, etc.) to train and hire local, low-skilled workers for jobs in software development, network administration and cybersecurity.

Broadband access depends on the physical deployment of infrastructure, as well as on affordability and demand among end users, some of whom may not fully grasp the potential and benefits of high-speed internet access. Detroit nonprofits and educational institutions have made considerable investments in connecting lower-income neighborhoods with broadband infrastructure and reducing the cost of service. They have built community partnerships, adapted training curricula, donated equipment, and tapped into government and corporate resources. These efforts are not limited to the cities that participated in the videoconference, as the National Digital Inclusion Alliance includes nonprofits from around the country working to reduce disparities. As the standards for broadband speed evolve with new applications, and as new high-speed service providers like Rocket Fiber enter the Detroit market, it remains to be seen whether a growing number of households and small businesses, particularly those in lower-income areas of the city, will benefit from the economic, social and educational opportunities that come with access to broadband.

Footnotes

¹ See Lennard G. Kruger, "Broadband Internet Access and the Digital Divide: Federal Assistance Programs," available online.

² Wired, Why Helping the Poor Pay for Broadbank is Good for Us All, available online.

The views expressed in this post are our own and do not reflect those of the Federal Reserve Bank of Chicago or the Federal Reserve System.