Why Comcast’s $10 A Month Internet Isn’t All It’s Cracked Up To Be
By Cecilia Kang
May 9, 2014
PHILADELPHIA — As Comcast tries to win over regulators reviewing its controversial merger with Time Warner Cable, its well-honed lobbying campaign often highlights a company program offering Internet to low-income families.
In the Washington area, ads promoting the program, known as Internet Essentials, plaster the Metro and flood radio waves during the morning commute. In a recent video on Comcast’s Web site, NBC News reporter Andrea Mitchell touted the benefits of the program, which offers Internet for $10 a month to families whose children qualify for free or reduced-price lunches at school.
“Whether you’re researching George Washington for a history paper or searching for a job, Internet access is essential,” Mitchell said.
But many low-income consumers say accessing Comcast’s program isn’t so easy.
Comcast says it has enrolled 300,000 families across the country in three years, a figure critics say is low considering that 2.6 million households are eligible. Many consumers say they have been denied access to the service because it’s only available to new Comcast customers. Others were rejected because of old unpaid bills — as little as $53 from a decade ago. And those who do get the program say it’s often too slow. The speed is 5 megabits per second, enough for basic Internet use but often frustrating for those who try to stream videos or download big files.
Shaping how regulators view Internet Essentials is critical for Comcast. As it tries to win over regulators at the Federal Communications Commission and the Justice Department, the cable company is trying to defuse what analysts view as the biggest threat against the deal: a determination by the FCC that a merger would be against “the public interest,” an ill-defined standard that leaves a lot to the judgment of the agency’s commissioners.
Internet Essentials is a way for Comcast to show a more civic-minded side, countering the company’s mixed reputation among consumers.
The proposed merger with Time Warner Cable has alarmed consumer advocates because it would combine the country’s top two cable and Internet service providers, putting Comcast in control of 40 percent of the high-speed Internet market and 30 percent of cable TV. Comcast and Time Warner Cable consistently rank at the bottom of customer satisfaction surveys.
Critics say Comcast is using the Internet Essentials program to brighten its public image and paper over deeper problems posed to consumers by the deal. In Philadelphia, where the company is based and where it arguably has the most control over the program’s outcome, participation rates are especially low.
“While Comcast should be applauded for trying to bridge the digital divide, they are clearly benefiting from the promotion of this program,” said Hannah Sassaman, a policy director at a Philadelphia community organizing group, Media Mobilizing Project.
Comcast proudly defends the Internet Essentials program, and executives bristle when opponents say the program is being used to counter negative perceptions of Comcast or Time Warner Cable.
“This makes me sigh,” Comcast Executive Vice President David Cohen said in an interview. “You can criticize us for data consumption caps. You can criticize us because cable bills are too high. You can criticize us because the acquisition of Time Warner Cable will make us too big. I can understand that. But every once in a while, even a big company does a good thing for the right reasons.”
If any place should be a success story for Comcast’s Internet Essentials program, it’s Philadelphia. It has the highest poverty rate of any big city in the nation. Comcast’s corporate headquarters are housed in the city’s tallest skyscraper; the company plans to construct an even taller 59-story office tower in 2017.
Comcast executives have deep ties to the city’s political leaders and community organizations. Cohen served as chief of staff to former mayor Ed Rendell. The firm has been a major contributor to community groups and has in return enjoyed tax breaks and grants for its skyscrapers.
In 2012, Comcast head Brian Roberts went to Constitution High School to promote Internet Essentials, bringing with him a camera crew, the mayor of the city and other top company executives. Located just one mile from Comcast’s corporate headquarters downtown, Constitution High School draws promising students from some of the city’s poorest neighborhoods. More than half receive free or reduced-price lunches, making them eligible for Comcast’s program, which also provides $150 used laptops.
But two years later, few students at the school can remember the program. In an informal survey, a teacher recently asked 139 students if their families had enrolled and only two raised their hands.
One student said her family participates in Internet Essentials but complains the connection is slow. She often looks up definitions of words on her smartphone rather than wait for pages to download on her home computer. Many students rely on the school computer lab to do their homework because they still have no Internet access at home.
“I really expected more,” said Ray Yuan, a student who helps run the tech lab and who remembers the Comcast event at his school. “Comcast has so much money and what they are offering to families and even giving to the school is substandard.”
Yuan stacked 10 used notebook computers on a desk, all donated by Comcast after the event. Within months, he said, half the computers stopped working; the others are frustratingly slow to use.
The experience at Constitution High School is mirrored across the city. In Philadelphia, the adoption of Internet Essentials is about 9 percent of eligible families, compared with the national average of 12 percent.
At the city’s consumer affairs office, officials say residents often call to complain about the Comcast program, saying they have been rejected because of small past bills. Current customers are also often frustrated they can’t switch to the lower-cost program.
Two years ago, Dawn Hawkins tried to participate so her then-12-year-old son, Kavi, could do his homework online. She was rejected because of a long-forgotten $53 balance on her cable bill
from 10 years ago. Hawkins said she had not been a Comcast customer in years and asked to get on a payment program to settle the charges but was denied.
“You say you want to help the community, but how can you punish me for a bill I don’t even remember I had?” said Hawkins, who has become a community organizer with Action United, a group that has staged protests in front of Comcast's headquarters to complain about the requirements that kept her and others from signing up.
Comcast’s Cohen said that a small but vocal group of people is behind the protests and that the company’s program has been largely praised. He added that the program clearly states it won’t include applicants with past bills or who are current customers.
Ads for Internet Essentials are hard to come by in Philadelphia. But in the nation’s capital, Comcast has been widely promoting the program since announcing in February that it wanted to purchase Time Warner Cable for a blockbuster price of $45 billion.
Two months after the merger was announced, Comcast said it would extend the life of the program indefinitely, beyond the initial three-year trial.
In a congressional hearing this week, Cohen told lawmakers that the merger would allow Comcast to offer the Internet Essentials program to Time Warner Cable’s millions of subscribers.
Federal officials have also touted the program, noting that Comcast is the only corporation to offer a discounted service that could help expand the adoption of broadband across the nation.
Internet Essentials was conceived expressly to win goodwill in Washington. It began three years ago as part of an offering to the FCC as the agency considered another big and controversial merger by Comcast — this one to NBC Universal for $31 billion.
While the Justice Department is bound to a fairly strict interpretation of the law in its antitrust reviewal process, the FCC can look at deals with a more subjective eye. The FCC says it weighs “the potential public interest harms of the merger against any potential public interest benefits.” The standard is a carryover of the FCC’s original mandate of doling out licenses for airwaves, which the government says is a public trust.
Comcast argues that the deal should be approved because the company and Time Warner Cable do not compete in the same markets. It also cited Internet Essentials in its FCC application, saying the program would result in the expansion of Internet access to more low-income households.
The company won’t say how much Internet Essentials costs to market and operate.
“Comcast should be applauded for creating this program on the one hand, but you wonder if these kinds of programs should be offered as bargaining chips related to a review of this merger,” said Gene Kimmelman, president of the consumer advocacy group Public Knowledge.
Executives acknowledge that they are promoting Internet Essentials in the hope that it will help them win approval for their merger. But they also insist they have good intentions.
“Sure, it helps in the transaction as a public-interest benefit, but we are doing it because we think it’s the right thing to do,” Cohen said.
Read more at The Washington Post