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Broadband Internet Access and the Digital Divide: Federal Assistance Programs

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The "digital divide" is a term that has been used to characterize a gap between "information haves and have-nots," or in other words, between those Americans who use or have access to telecommunications technologies (e.g., telephones, computers, the Internet) and those who do not. One important subset of the digital divide debate concerns high-speed Internet access, also known as broadband. Broadband is provided by a series of technologies (e.g. cable, telephone wire, fiber, satellite, wireless) that give users the ability to send and receive data at volumes and speeds far greater than current "dial-up" Internet access over traditional telephone lines.

Broadband technologies are currently being deployed primarily by the private sector throughout the United States. While the numbers of new broadband subscribers continue to grow, studies conducted by the Federal Communications Commission (FCC), the Department of Commerce (DOC), and the Department of Agriculture (USDA) suggest that the rate of broadband deployment in urban and high income areas may be outpacing deployment in rural and low-income areas.

Some policymakers, believing that disparities in broadband access across American society could have adverse economic and social consequences on those left behind, assert that the federal government should play a more active role to avoid a "digital divide" in broadband access. One approach is for the federal government to provide financial assistance to support broadband deployment in underserved areas. Others, however, believe that federal assistance for broadband deployment is not appropriate. Some opponents question the reality of the "digital divide," and argue that federal intervention in the broadband marketplace would be premature and, in some cases, counterproductive.

Legislation introduced (but not enacted) in the 109th Congress sought to provide federal financial assistance for broadband deployment in the form of grants, loans, subsidies, and tax credits. Many of these legislative proposals are likely to be reintroduced into the 110th Congress. Of particular note is the possible reauthorization of the Rural Utilities Service (RUS) broadband program, which is expected to be considered as part of the 2007 farm bill. Legislation to reform universal service - which could have a significant impact on the amount of financial assistance available for broadband deployment in rural and underserved areas - has been introduced into the 110th Congress (H.R. 42, S. 101).

In assessing such legislation, several policy issues arise. For example, is the current status of broadband deployment data an adequate basis on which to base policy decisions? Is federal assistance premature, or do the risks of delaying assistance to underserved areas outweigh the benefits of avoiding federal intervention in the marketplace? And finally, if one assumes that governmental action is necessary to spur broadband deployment in underserved areas, which specific approaches, either separately or in combination, are likely to be most effective?

This report will be updated as events warrant.