Consumers Union blames Bush for broadband "digital divide"

[Declan McCullagh <declan () well com>]

-------- Original Message --------
Subject:        Consumers Union/CFA: New Broadband Divide study
Date:   Wed, 27 Oct 2004 09:31:56 -0400
From:   DEGRKE () consumer org
To:     declan () well com



For Politech, if you wish...

*High-Speed Internet Policy Failure:*

*U.S. Slips to 13th in Broadband Service Worldwide
and Digital Divide Grows Under Bush Administration*

Contact: Mark Cooper, CFA, (301) 807-1623
Susanna Montezemolo, CU, (202) 462-6262

(Washington, D.C.) - The Bush Administration's Internet policy has
resulted in high prices that are retarding the spread of high-speed
Internet service and widening the digital divide, a report released
today by the Consumer Federation of America and Consumers Union concluded.

"Allowing cable and telephone companies to squeeze out competition is a
double-barreled failure," said Mark Cooper, director of research for the
Consumer Federation of America. "Americans pay ten to twenty times as
much as consumers in Korea and Japan for broadband, and the U.S. has
fallen from third to thirteenth in the world in the percentage of
citizens with broadband service. Meanwhile, the percentage of households
that have the Internet at home has stagnated at about 60 percent."

"The digital divide is growing because consumers pay inflated prices for
the basic services needed to connect to the high-speed Internet," said
Gene Kimmelman, senior director of public policy for Consumers Union.
"About half of all households with incomes above $75,000 have broadband,
but half of all households with incomes below $30,000 do not even have a
slow Internet connection at home."

"Just last week the Federal Communications Commission under Chairman
Powell gave the local telephone companies more leeway to close their
networks to competition," Cooper said, "but building high cost networks
that serve a handful of upscale neighborhoods will not solve the problem
of the digital divide or help America catch up in broadband adoption."

The report, Expanding the Digital Divide and Falling Behind in
Broadband, documents the advantages that Internet households,
particularly those with high-speed access, have in conducting economic,
social and political activities, and concludes that it is critical to
aggressively close the digital divide by promoting universal service at
affordable prices for all.

The report notes that in 2001, Chairman Michael Powell and the National
Telecommunications Information Administration declared the digital
divide a non-problem and proceeded to ignore it, adopting policies to
eliminate all public interest obligations for the advanced
telecommunications networks used to provide high-speed and voice over
Internet service.

"Failure to make high-speed and voice over Internet services responsible
for maintaining affordable access to basic phone services will result in
higher phone bills for low and moderate income households," Kimmelman
said. "As more and more upper income households migrate to advanced
telecommunications networks, many local telephone companies are
attempting to raise basic rates by $4 per month," Kimmelman added.

The hope that competition between cable and telephone companies will
drive prices down anytime soon is misplaced, especially where cable is
the industry leader," Cooper said. "The FCC's approach is to force
consumers to buy bigger and bigger packages and bundles of services,
that most households cannot afford."

"All consumers have to do is look at their monthly cable bills, which
have more than doubled since the passage of the Telecommunications Act
of 1996, to know you have to pay more just to get the option to choose
new advanced services," Kimmelman concluded.

_http://www.consumersunion.org/pub/ddnewbook.pdf_  to download a copy of
the report.

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Kenneth DeGraff

Policy Advocate

Consumers Union

Publisher of Consumer Reports

o/ 202.462.6262

f/ 202.265.9548

w/ http://www.consumersunion.org

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