Broadband for the Poor

http://www.futureofcapitalism.com/2011/11/broadband-for-the-poor

From Mike Allen's Politico Playbook:

FCC today to announce $9.95/month broadband Internet to the homes of all school-lunch-eligible families...FCC & 'CONNECT TO COMPETE' TACKLE BARRIERS TO BROADBAND ADOPTION: NEW LOW-COST BROADBAND AND COMPUTER OFFERINGS FOR ELIGIBLE SCHOOL LUNCH CHILDREN & THEIR FAMILIES -- $4 BILLION, UNPRECEDENTED IN-KIND OFFER FOR UP TO 25 MILLION AMERICANS -- BUILDS ON FCC'S DIGITAL LITERACY ANNOUNCEMENT -- BIGGEST EFFORT EVER TO HELP CLOSE THE DIGITAL DIVIDE: In May 2011, Chairman Genachowski challenged the broadband ecosystem to help close the adoption gap. Today, at a public school in Washington, D.C., Chairman Genachowski applauded executives and nonprofit leaders from leading Internet service providers, technology companies and nonprofits for their unprecedented multi-billion dollar in-kind commitments to empower millions of families with broadband Internet, PCs, and digital literacy training, with zero cost to taxpayers."

Forgive me, but I'm not sure I follow the "zero cost to taxpayers" claim here. If the internet service providers are providing $9.95 a month broadband at a loss, then the cost is to the companies and their shareholders. The loss reduces corporate profits (which are taxed) and also the dividends and capital gains of shareholders (which are also taxed.) The money spent on doing this might more profitably be invested elsewhere by the companies or the shareholders. And if the internet service providers are still making money on the broadband services at a $9.95 price point, then why are they getting preferred treatment by being able to partner with the federal government in offering services to the poor at special promotional but still profitable discounts. I'm sure there are plenty of other companies — from fast food restaurants to payday loan providers to cable television companies and cigarette companies — who would like to sell their products to school-lunch eligible families at government-endorsed discounts. The FCC reportedly says the discount broadband service is going to be used for job applications, but there are plenty of other uses of the Internet, too, not all of which are especially productive. Maybe some families would be better off spending the $120 a year on something else, or saving it.

by Editor  |  Nov 9, 2011 at 11:19 am receive the latest by email: subscribe to the free futureofcapitalism.com mailing list