Focusing on Affordability

With a proposal to spend $100 billion to ensure that all Americans have affordable and reliable internet service, the Biden Administration has made closing the digital divide a huge priority. Much remains to be done to fill in the specifics of what this means, but two types of policy tools come to mind when thinking about how to address the digital divide. Top of mind is promoting competition. Fostering competition means investing in new infrastructure, thereby giving consumers more choice for very high-speed service. This competitive alternative would lower prices to consumers and put subscription service within reach of more households. Research shows that just 55% of U.S. households have two or more wireline service offering for very high-speed internet service, so encouraging development of another network alternative has obvious appeal. An alternative tool is providing a subsidy. A subsidy tackles affordability more directly by offering cost relief to households who currently lack the means to subscribe to service. Since research shows that affordability of service is the chief reason households do not subscribe to broadband, easing cost pressure through a subsidy is an attractive approach.

[John B. Horrigan is a frequent contributor to Benton's Digital Beat and a Senior Fellow at the Technology Policy Institute, with a focus on technology adoption, digital inclusion, and evaluating the outcomes and impacts of programs designed to promote communications technology adoption and use.]