Is Comcast’s $10 Internet Essentials Offering Just A Crass PR Stunt?

internetessentialsTwo years ago, Comcast began rolling out its Internet Essentials program, which offers Internet access to certain low-income families for only $9.95/month. And as the company brought Essentials to each new region, the company shook a lot of politicians’ hands and played up how it was helping to close the digital divide between those who could afford Internet access and those who could not. But some argue that the whole program is just window-dressing to make Comcast look less evil.

In a piece on Salon.com, John Randall claims that Comcast had actually been planning something like Essentials as a bottom-dollar tier offering as far back as 2009. But then the cable giant decided to buy NBC and the project was shelved, not because Comcast needed to focus on the merger, but because it knew that it could use such a program as a bargaining chip if regulators decided to get tough. If an FCC commissioner or a Congressman asked how Comcast was going to offset its obvious monopoly status post-merger, the cable company could (and did) say “Well, how about we offer really cheap Internet service to low-income families?”

That’s exactly the kind of thing that the folks in D.C. love, and on which they rarely care to follow up.

SUB-STANDARD SPEEDS
“While the program may sound like a noble effort to combat the digital divide, it is deeply flawed in practice,” writes Randall, who points to the fact that the advertised speeds for Essentials (3 Mbps downstream, 786Kbps up) are slower than 89% of cable Internet offerings in the entire country, and fall short of the FCC’s most recent definition of broadband, at 4Mbps down and 1Mbps up.

It’s worth noting that the 3Mbps downstream is actually double what Comcast had originally intended, and that the company only increased the speed after protests outside of its office.

“These connections may not even be fast enough for modern web applications,” writes Randall, “especially if multiple users in the house are sharing the same connection at the same time.”

WHY IS NO ONE SIGNING UP?
Comcast had said that 2.6 million households could be eligible for Essentials, even though the plan has some stringent requirements — the family must be in an area currently served by Comcast, must have at least one child enrolled in the National School Lunch Program, must not have an overdue Comcast bill, and must have not been a Comcast customer in the 90 days leading up to enrollment — but Randall points out that only 5.8% (150,000) of these households have signed up.

Even here in Philadelphia, where the shadow of Comcast literally looms over the heart of the city, and where you either have Comcast or a satellite dish slapped to the side of your building, only 3,250 families have signed up. That’s only 3.3% of the eligible households in the area.

Part of the problem is that people who had already signed up for the lowest tier of Comcast’s pre-Essentials offerings are in a pickle if they choose to switch, as it would require that they cancel their existing Internet service and then wait a full 90 days before signing up for Essentials. For some, the savings might be worth it, but for parents with children who need Internet access for schoolwork, it could be unimaginable to go that long without access.

“Comcast’s approach provides no relief to families on a tight budget that have already purchased a plan,” explains Randall.

PROFIT CENTER
Randall maintains that the restrictions on eligibility for Essentials aren’t an attempt to keep Comcast’s costs in check, as it effectively costs the company nothing to add these new users.

“With no additional network build needed, Internet Essentials represents almost pure profit for Comcast,” he writes. “Comcast Internet Essentials is a customer acquisition program in disguise. Because it is limited to non-subscribers in Comcast’s existing footprint, the program allows Comcast to acquire additional customers without needing to invest in expanding or upgrading its network.”

Even if Comcast isn’t making a massive profit off the $18 million a year in revenue it’s bringing in from Essentials customers, it stands to make even more money when those customers become ineligible, or when Comcast deems them to no longer be eligible, which can happen if the customer fails to submit the right paperwork, falls behind on their bill, or moves.

“Comcast reserves the right to bill Internet Essentials subscribers at the full-price rates if they are dropped from the program,” says Randall. The rate for a comparable non-Essentials Comcast Internet package is $39.95/month, four times the cost.

PUBLICITY AND PUBLIC POLICY
Comcast, which won the Worst Company In America tournament in 2010 and has made the Final Four many times, is in desperate need of positive publicity, and the Essentials roll-out was really one huge press release as it moved from town to town, sometimes with local lawmakers greeting Comcast the way they would foreign dignitaries.

Then there’s the way it continues to use Essentials as a bit of sleight of hand to distract authorities from the monopolies that keep Internet access from being competitively priced and available to all. Regulators currently rely on Comcast and other cable companies to “charitably” create programs like Essentials to bridge that digital divide, but only in the areas in which they already have existing service. There is little to no opportunity in most parts of America for a competitor to feasibly come in and offer a rival service at a better price.

“Comcast’s Internet Essentials program does more to benefit Comcast’s customer acquisition, public relations, and lobbying departments than to help people in America who need high-speed Internet access at a reasonable price,” concludes Randall. “The reality is that the program is a cleverly designed customer acquisition program that benefits Comcast’s bottom line.”

[via DSLreports]