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Increasing Low-Income Broadband Adoption through Private Incentives

Jan 2020
Working Paper
20-001
By  Gregory L. Rosston, Scott J. Wallsten

We evaluate a program by a private Internet Service Provider (ISP) intended to encourage low-income households to subscribe to broadband internet service. As part of its approval of the Comcast-NBCU merger in 2011, the Federal Communications Commission (FCC) mandated a “voluntary commitment” by Comcast to introduce a low-income broadband program that Comcast has branded “Internet Essentials (IE).” We use data from the U.S. Census Current Population Survey (CPS) and the National Broadband Map and a differences-in-differences approach to evaluate the program’s effects on subscription rates for eligible households.

We find that between 2011, when the program began, and 2015, broadband adoption by eligible households — those with school-age children who were eligible for free or reduced-price school lunches — had increased by more among households that lived in areas in which Comcast provided broadband internet service than among households that lived in areas served by other cable providers.

In our difference-in-differences approach, we estimate that about 66 percent of IE subscribers represent true increases in low-income adoption as a result of the program, with the remaining subscribers being households that switched from a competitor and households that would have subscribed as part of a general upward trend in adoption.

We find that CPS survey respondents in IE eligible households had small and insignificant increases their likelihood of taking online courses or job training in Comcast territory relative to similar households residing in the territories of other cable providers and they showed no difference in the propensity to apply for jobs online. These results provide no evidence to support internet literacy training.

We also did not find robust effects of some of the program’s other components. In particular, IE makes computers available for $150, but we found no difference in the change in low-income computer ownership across cable territories. As a result, it would be hard to conclude that subsidized computers made a difference in broadband subscription despite the visceral appeal of such programs.