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In High Poverty L.A. Neighborhoods, the Poor Pay More for Internet Service That Delivers Less

A monopoly market drives inequality, a report from the California Community Foundation says.




A recent study by the California Community Foundation and Digital Equity Los Angeles laid out the stark differences in pricing and availability of internet services from two of L.A. County’s internet service providers — dominant ISP Charter Spectrum and Frontier. 

In the San Fernando Valley, Charter Spectrum offers residents of a Sylmar neighborhood with a 7% poverty rate $30 monthly service, guaranteed to stay locked in for two years. Another Sylmar community, with a 27% poverty rate, receives an offer of $70 per month with a one-year price guarantee. 

The two neighborhoods are a mile away from one another.

“The highest speeds at the lowest costs are offered to the wealthiest and whitest communities,” lead study author Shayna Englin told a community Zoom meeting with representatives from Digital Equity Los Angeles.  

Page after page of the study outlines disparities similar to the example in Sylmar. The study is confined to Los Angeles County, so its focus is on Charter Communications, or Charter Spectrum, whose internet service is available to 97% of county households.

Low income, minority neighborhoods may not only face pricing discrepancies but slower internet service, with fewer MBPS (megabits per second), according to a study of 38 cities in the U.S. by news organizations the Markup and the Associated Press. Download speeds were substantially faster in high income, white-dominant neighborhoods. (The Los Angeles area was not included in that study.) 

The California Community Foundation/Digital Equity L.A. analysis notes that in Los Angeles County, residents of high-poverty areas are routinely offered slower service at higher prices. (Disclosure: the California Community Foundation is a financial contributor to Capital & Main.)

“States have no authority over regulation, which works to the advantage of Comcast, AT&T, Verizon.”

~ Michael Picker, former president of the California Public Utilities Commission

“It’s not because people don’t know what the problem is, it’s just the urgency and the depth of the problem is still kind of hidden,” says Ana Teresa Dahan, managing director at GPSN (formerly Great Public Schools Now). “Everyone feels like they have access to the internet because we have cellphone plans.” 

GPSN has worked on a variety of education issues but students’ struggle to learn online during the pandemic has made digital equity a priority for the organization.   

Michael Picker explains the problem in terms of who runs the show. That’s the large telecom companies at the table both at the federal level and in Sacramento. Picker knows; he served as president of the California Public Utilities Commission for five years. He has sat at the table with company representatives and walked the halls in Sacramento urging legislators to give the PUC more leeway on oversight.  

When the communications companies were deregulated in the 1990s, he says, the Public Utilities Commission became “toothless in the face of federal preemption.  

“States have no authority over regulation,” Picker says, “which works to the advantage of Comcast, AT&T, Verizon. The same way we don’t have the ability to set rates, we don’t have the ability to regulate.

“If you can’t set rates, what leverage do you have?”

The 2020 Federal Infrastructure and Jobs Act includes $65 billion for broadband investment, with $42.45 billion of it allotted to the Broadband Equity, Access and Deployment (BEAD) program.

“At minimum we should have some type of pricing transparency that can then lead to solutions on what pricing equity would look like.”

~ Ana Teresa Dahan, managing director, GPSN

Providers are scrambling to pick up the largesse that builds internet access bridges to low income communities. It could be seen as building a customer base — when the federal money runs out, they will have a new set of consumers and all their data in order to sell them a new product. 

Dahan of GPSN says that grassroots groups are using the Slower and More Expensive study to figure out the way forward. “I think that as we learn what the different opportunities and solutions are, we’re going to amplify them. 

“I think what our report is trying to say is at minimum we should have some type of pricing transparency that can then lead to solutions on what pricing equity would look like,” Dahan says.

“What we’re trying to do is figure out how to get concessions from them, on these investments on the infrastructure they need for their business. What is the government asking for in return?” A minimum demand would be pricing transparency so customers could compare offered rates. 

Picker has three words of advice: Joint Powers Authority (JPA). Bring together two local government agencies and create a JPA. A JPA can purchase fiber connections and become a utility. “You can fit the definition of a utility because you’re putting up fiber and serving customers.

“Then you have real power — because you are competing; you have fiber, you can lease some of it to these internet service providers and make them serve all the customers. So, then you get to set the rates.”

It’s a long-game strategy, he admits. 

“You need a plan,” Picker says. “You need power and you need the power to follow through.”

Copyright 2022 Capital & Main

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