Learning from the FCC's Lifeline Broadband Pilot Projects

Abstract

In 2013, the Federal Communications Commission facilitated 14 experimental broadband Lifeline projects proposed by wireline and wireless broadband providers around the country. The projects tested consumer responses to a range of issues, including preferences for speed, the effects of different levels and types of discounts, and the effectiveness of different methods of outreach. In order to focus on the unconnected, participants could not have subscribed to broadband service within the past 60 days. In practice, the vast majority of them had never had broadband.The most consistent result was unexpected: an extremely low participation rate. Wireline providers and mobile providers (except those in Puerto Rico) managed to sign up less than 10 percent of the number of participants they had expected despite extensive outreach efforts. Puerto Rico mobile providers met their participation goals probably because of mass-market television advertising. These results demonstrate the difficulty of encouraging low-income people without connections to sign up even with large discounts, suggesting that subsidies are likely to go to people who already subscribe rather than working to close the digital divide.The trials also revealed subscribers’ willingness to trade off speed for lower prices, with subscribers regularly choosing plans that offered less than 10 Mbps, which is the FCC’s current required minimum for rural broadband subsidies. Because faster broadband typically costs more, higher minimum speeds are likely to blunt the (already likely low) beneficial effects of subsidies by increasing the price of eligible plans.Finally, subscribers generally expressed a preference to avoid digital literacy training classes. In one project, many participants were willing to forego an additional $10 per month savings or a free computer in order to avoid taking those classes. However, those results do not necessarily mean digital literacy training is not, or could not be, beneficial. The data from the pilot programs (weakly) show that those who took such classes were somewhat more likely to continue to subscribe once the subsidies expired. While that may reflect a self-selection effect, it nevertheless suggests that digital literacy training can plan a role. Still, the results also suggest that digital literacy training should be studied further to evaluate which aspects of it are most effective.