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Kids Suffer as Telecoms Profits Soar

The School Broadband Scam

by DAVID ROSEN

In the early-1990s, Al Gore began to popularize the term “information superhighway” and now, a quarter-century later, the U.S. is still waiting for it to become a reality.  In his 2000 State of the Union Address, President Clinton argued, “We must close the digital divide between those who’ve got the tools and those who don’t.”

Pres. Obama, in his recent 2014 State of the Union Address, drew attention to the issue of broadband in schools, calling for the delivery of high-speed broadband to 99 percent of all U.S. schools in five years.  He then went on to announce, “Tonight, I can announce that with the support of the FCC and companies like Apple, Microsoft, Sprint, and Verizon, we’ve got a down payment to start connecting more than 15,000 schools and 20 million students over the next two years, without adding a dime to the deficit.”  The announcement drew widespread media praise, a bold initiative for a president hobbled by a deeply divided, dysfunctional Congress.

The media failed to mention a 2004 speech by former Pres. Bush-II calling for universal broadband service.  “This country needs a national goal for broadband technology, for the spread of broadband technology.  We ought to have a universal, affordable access for broadband technology by the year 2007 ….”

Now decades later, the goal envisioned by Gore, Clinton and Bush has yet to be met.  According to Education Superhighway, a group founded by Facebook’s Mark Zuckerberg and the Gates Foundation, there are about 132,000 public and private elementary and secondary schools in the U.S.  However, “72% of public schools in America lack the Internet speeds needed to prepare our students to compete in today’s economy.”

Sadly, meeting Pres. Obama’s modest goal of adding 15,000 schools will raise the number of broadband-connected schools to only about 40 percent.  The U.S. continues to rank as a 2nd rate broadband nation and our schools continue to fail America’s students.  How many more presidential addresses will Americans have to suffer through yet another false broadband promise?  And, of course, how long will the big winners be the giant telecom companies and not the nation’s children?

* * *

To realize his modest proposal, the president launched a two-front campaign.  One involved the private sector; the other involved a reshuffling of federal spending.  Shortly after the speech, the White House unveiled commitments valued at $750 million by the “usual suspects” — AT&T, Verizon, Apple, Microsoft, etc. — for broadband connections in schools.  It was a perfect photo op.  One can well expect them donating discarded, returned and throwaway products at a steep tax write-off. 

The president also committed the Federal Communications Commission (FCC) to double what is known as the “E-Rate fund.”  This is part of the Universal Service Fund (USF) dedicated to bringing broadband Internet connections to schools, libraries and rural communities.  In June ‘13, the Obama administration introduced the ConnectED program reallocated USF funding to schools.

The USF, often dubbed the Universal Slush Fund, adds around 15 percent to a phone bill for all interstate services, whether long distance, wireless or part of the local bill.  Designed initially to make sure that everyone in America had phone service and later to pay for schools and libraries to get services, the USF has long been seen as riddled with fraud.  A 2004 Congressional report, “Problems with the E-Rate Program:  Waste, Fraud and Abuse Concerns in the Wiring of Our Nation’s Schools to the Internet,” sheds light on its inherent problems.  Little has changed over the last decade.

The USF is basically a subsidy to the large telecom companies.  The largest portion of the fund is called the “high-cost” fund and goes directly to telecoms offering service in rural areas.  Remarkable, it is imposed without provisions for an audit to determine the total amount of money collected by the carrier over the subsidized wire or whether the company needs the monies to be profitable.

The FCC’s new plan will increase to $2 billion from $1 billion the portion of the E-Rate program for school and library grants to build-out the broadband network.  The FCC insists that this new money will not come from an increase in rates charged to wireless and phone customers.  Consumers’ monthly bills include a line-item charge for the USF amounting to about $2.4 billion for E-Rate program.  However, for the past several years, an average of $500 million to $1 billion a year has gone unused.

* * *

About two thirds of Americans (62%) have “broadband” connectivity.

But nearly one third of Americans — 120 million people — don’t have broadband.  In terms of broadband adoption, the U.S. lags behind South Korea, the U.K., Germany and other countries.  Nevertheless, there’s been a significant increase in broadband adoption over the last few years as telecoms have shifted their businesses from wireline to wireless service providers, offering less robust 3G and 4G hookup in place of higher capacity wired connectivity.

Making matters worse, U.S. subscribers to either wireline and wireless broadband get poor services at higher fees.  According to Akami, in 2013, the U.S. the average wireline download speed was 8.6 Mbps, ranking the U.S. 9th in the world.  With regard to wireless, OpenSignal estimates the 4G LTE (for Long Term Evolution) speed at 9.6 Mbps, but this varies greatly with carrier, location and time of day.

In The Cost of Connectivity 2013, the New America Foundation pointed out that Verizon FiOS offers a 150 Mbps home broadband connection in limited parts of New York City at $130/month.  It noted “the international cities we surveyed offer comparable speeds for $77 or less per month, with most coming in at about $50/month.”

Equally reveal, T-Mobile charges $30/month for 2 Gb mobile broadband data twice as much as what users in London pay for the same T-Mobile service.  As the report notes, “it costs more to purchase 2GB of data in a US city than it does in any of the cities surveyed in Europe.”

And the big winners?  The telecom and cable operators are laughing all the way to the bank.   For 2012, AT&T had $7.3 billion in profits, Verizon had $2.4 billion and Comcast had $2.5 billion in profits.  Profit is another name for overcharge.  Not bad for, essentially, supplying subsidized infrastructure.

Today teens are 21st century beings, wired for a postmodern selfhood and social life.  Education, school life, lags behind social existence.  A recent Pew study makes this terribly clear.  More than nine out of ten (93%) teens have access to a computer, whether at home, a friend’s, school or a commercial outlet.  About three-fourths (74%) of 12-17 year old teens have Internet access, of which more than one-third (37%) have a smartphone and about a quarter (23%) have a tablet.  An estimated 20 percent of young people are engaged in sexting, postmodern teen erotic display and flirting.

American teens are 21st century being, armed with postmodern technologies and sensibilities.  Yet, their schools remain 20th century fortresses.  Unless this dichotomy is satisfactorily addressed, America’s future is doomed.

David Rosen regularly contributes to AlterNet, Brooklyn Rail, Filmmaker and IndieWire; check out www.DavidRosenWrites.com.  He can be reached at drosennyc@verizon.net.