ConnectNYC: Mayor Bloomberg's Attempt at Solving the Digital Divide

-- By ConradJohnson - 8 April 2013 - Final Revisions

Introduction: ConnectNYC

On October 19, 2012, New York City Mayor Michael R. Bloomberg launched ConnectNYC, a competition to install free fiber cable wiring in growing businesses across the City's five boroughs. The purpose of this competition is to encourage small and medium-sized businesses in unwired or under-wired buildings to apply for free fast-track wiring that would provide or improve access to high-speed broadband internet. Companies would apply through a competitive process that will make awards based on a demonstration of how additional connectivity would help them grow their business. Ultimately, by the end of the second year of the program, the City expects Time Warner Cable and Cablevision (partners in the initiative) to commence free fiber build-out for 240 competition-winning businesses.

ConnectNYC is part of a larger set of new initiatives planned by Mayor Bloomberg “designed to address specific challenge areas the City faces to ensure NYC is a global leader in connectivity and technology in the 21st century." When taken as a whole, the Mayor insists that these initiatives, are truly geared toward decreasing the “digital divide” – the inequality between groups, broadly construed, in terms of access to information and communication technologies – in the City. The Mayor believes ConnectNYC can help alleviate the problem because “it will make sure more businesses and more New Yorkers can get connected.” However, despite the Mayor’s assertions and any nominal benefit gained, ConnectNYC fails to truly serve the “underprivileged” in the pursuit of increased digital connectivity. Rather, ConnectNYC may function more as smokescreen, masking the depth and severity of the digital divide that Americans face.

Benefits

It would be unfair to state that nothing positive could stem from an initiative like ConnectNYC. The mere fact that this initiative was created demonstrates a crucial awareness by Mayor Bloomberg of the importance of accessible internet for the City’s population. In the digital economy, it is of great importance that our politicians recognize that removing impediments to internet access will allow the skilled minds in poorer neighborhoods to participate in higher-value activities without relocating, thus directly producing better lives in their community. ConnectNYC could achieve this goal by removing the cost of fiber build-out for smaller businesses. The cost of a wiring build-out is often identified as one of the biggest hurdles to getting businesses connected to broadband internet, with the average cost being approximately $50,000 per business. Thus, ConnectNYC could harness market dynamics and alleviate this financial and technological burden for numerous businesses in underprivileged neighborhoods.

Failures to Address the Digital Divide

Although eliminating this cost could be very beneficial for a few small businesses, one of the requirements for achieving the true benefits of a digital economy by reducing the “digital divide” is to provide unimpeded access to the network, regardless of ability to pay. Yet, for ConnectNYC, free isn’t free, and the ability to pay may still be a factor. Once selections have been made, businesses chosen to participate will be required to sign a one-year service contract with a participating Internet Service Provider (Time Warner Cable and Cablevision) at negotiated market rates prior to being eligible to receive the fiber build-out. This service contract would thus maintain impediments towards access to information and communication technologies that would continue to be felt by those in low-income communities.

A purported justification for this service fee is that the two year program will equal $12 million, with presumably most of the costs for the build-outs falling on the ISPs. Yet, this argument fails to recognize that ConnectNYC provides that the ISPs have final say on whom the awards are given to. Although the City will create a list of finalists by considering several factors, the ISP’s final determination will be based on the feasibility of wiring the finalist’s location. As a result, this will continue to prevent broadband internet accessibility in certain communities.

Similarly, the City has only assured that a minimum of 25% of the overall award value will be granted to businesses located in Industrial Business Zones. This could potentially mean that only a small number of the award winners come from the most underserved areas. Further, the small number of businesses impacted pales in comparison to the millions of civilians without access. Thus, ConnectNYC serves mostly as busy work, lulling New Yorkers into believing that true access is being provided.

Systemic Issues

The inefficiencies of ConnectNYC reflect more systemic issues facing the U.S. as a whole. As in NYC, most high-speed wired internet access to homes and businesses is provided by a small number of for-profit cable companies that have very little local competition and almost no checks on their pricing. Though there are several large cable companies nationwide, each dominates its own fragmented kingdom of local markets (e.g. Comcast in Philadelphia, Time Warner in Cleveland). This lack of competition from other cable companies or alternate delivery technologies allows each of the major cable distributors to raise prices in its region for high-speed Internet services while failing to improve their systems. Further, it provides little incentives to expand into rural or underprivileged areas where potential customers are relatively few and far between.

Compounding the problem is the deregulation of high-speed internet access that has both failed to increase competition and has removed hope of government oversight to protect the public. Thus, Americans face higher prices for less access to slower broadband internet than citizens in many countries around world. By contrast, governments that have intervened in high-speed Internet markets have seen higher numbers of people adopting technology and at lower subscription charges. For example, consumers in Seoul, Paris, and Amsterdam pay only $35-$45 for speeds that are much faster than those for which Americans pay $100-$150 per month. 2012 data from the Organization for Economic Cooperation and Development shows that people in the U.S. pay at least $1.10 per Mbps, where people in South Korea pay $.21 per Mbps.

Conclusion

Ultimately, although ConnectNYC provides wiring and reduces the number of “digital deserts” in the City, it still presents impediments to real access to networks. As such, it also fails to realize its maximum economic potential. In so doing, it hides the fact that these “generous” ISP’s are the ones holding them back.

---

You are entitled to restrict access to your paper if you want to. But we all derive immense benefit from reading one another's work, and I hope you won't feel the need unless the subject matter is personal and its disclosure would be harmful or undesirable. To restrict access to your paper simply delete the "#" character on the next two lines:

• #Set ALLOWTOPICVIEW = TWikiAdminGroup, ConradJohnson
• #Set DENYTOPICVIEW = TWikiGuest

Note: TWiki has strict formatting rules for preference declarations. Make sure you preserve the three spaces, asterisk, and extra space at the beginning of these lines. If you wish to give access to any other users simply add them to the comma separated ALLOWTOPICVIEW list.