Wrestling With Redlining in Cleveland, Lessons For All

Bill Callahan: Little parts of the city were they deployed it they were parts of the county including most of the suburbs where they deployed it. And there were parts of the city notably those which are a lower income where they simply didn't.

Lisa Gonzalez: You are listening to episode 290 of the Community Broadband Bits podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. In March 2017 the National Digital Inclusion alliance and connect community released a report that analyzed connectivity and digital inclusion in Cleveland Ohio. The report titled AT&T digital redlining described how the company had failed to invest in specific areas of the city with some of the highest concentrations of low income households. In this interview Christopher talks with Angela Siefer from the National Digital Inclusion alliance and Bill Callahan from connect your community. Angela and Bill explain how they came to take on the Cleveland project what they've learned about digital redlining and describe what it is. And they also share some ideas to eliminate it. Angela and Bill also give us an update on what is happening in Cleveland since they released the report. Now here's Christopher with Angela Siefer and Bill Callahan.

Christopher Mitchell: Welcome to another edition of the Community Broadband Bits podcast. I'm Chris Mitchell up in the frozen tundra of Minneapolis where I a lonely Eagles fan waits to see what happens this weekend though as you're listening to you will already know what happened to the Eagles and the Vikings game although we are all united in opposing the Patriots coming out of my shell this year and I'm going to be very honest about this. But to get back on track I'm with the Institute for Local Self-Reliance and today we're going to talk about digital redlining. We're welcoming back to our show a fan favorite Angela Siefer the executive director for the National Digital Inclusion alliance. Welcome back. Thanks

Angela Siefer: Chris. I'm excited to be here.

Christopher Mitchell: And we also have with us Bill Callahan the president and director of Connect Your Community in Cleveland. Welcome to the show.

Bill Callahan: Thank you. From another part of the frozen tundra.

Christopher Mitchell: Yes. Perhaps even more frozen depending on current weather patterns. So for people who are interested in digital inclusion I hope you caught our episode 284 just a month ago where we talked more generally about digital inclusion Digital Equity and what all that means you'll just want to do a very brief refresher for people as to what Digital Equity is and digital inclusion.

Angela Siefer: We define Digital Equity as the outcome of individuals having access to the tools that they need to participate in society today. Digital Inclusion are the activities that get us to Digital Equity so digital inclusion is affordable home broadband the digital skills that are necessary today. The appropriate device the tech support it's all the things that you would think of as solutions to the barriers that which keeps us from participation.

Christopher Mitchell: And so before we launch into too much more about how this applies to Cleveland I wonder Bill if you can just tell us a brief background of Cleveland bringing people up to speed. We know the Browns had a hard season we know the Indians have been doing well, but what's happening in Cleveland otherwise?

Bill Callahan: Other than the fact that they're having a hard time on defense in the basketball arena.

Christopher Mitchell: Right. I guess there is that matter of LeBron James you're right. This is apparently going to be more of a sports podcast which you know I hope some of our fans will enjoy. We haven't touched on it too much in the past.

Bill Callahan: It gets us a lot bigger audience here. Well so Cleveland is like Minneapolis and many other central cities a place which was served for a long time primarily by a Bell Company and by some cable company. So the Internet market in the city is really shaped by what those companies have done. And depending on which city you choose to compare it with the third or the six worst connected big city in the country the third worst if you compare it to cities above 100000 in the number of households. And what that means is that something like a third of all households in the city don't have any kind of internet connection at all at home including mobile. That's a reflection of poverty. It's a reflection of you know many folks who have not finished high school. It's a reflection of other factors that are commonly associated with digital exclusion.

Christopher Mitchell: Bill as you're describing Cleveland I think I want to correct something and what I suspect most people's minds are and they might think well you have a kind of fits like I think of Cleveland kind of like I think of Detroit or another city that's really fallen on hard times. But the Cleveland's really had a bit of a renaissance. I mean there's a lot of poverty and people struggling but the city as a whole is doing better than I think many people realize.

Bill Callahan: You know as a resident I have the civic duty to confirm that, but I also have to say that like most places which can claim that the effect on the actual residents of the city is pretty limited. It's true that we have our convention center and our new convention hotel downtown. We have you know one successful sports team. And you know there's a number of other things that are not that uncommon with cities of this size. We're not a particularly big city anymore about 400000 people but all of that is very widely understood in the city to be -- to have its impact only in a few neighborhoods. And to be having very little impact on the general level -- the level of inequality in the city which is among the highest in the country according to Brookings. In terms of our work in in terms of the subject we're talking about today all of that renaissance stuff has very little impact on the level of people's ability to use modern tools to participate.

Christopher Mitchell: Well let's let's get back to that in a second and talk very specifically about the pattern of investment that we've seen. But before then I just want to ask Angela for just a quick primer on you know is there anything that sets digital redlining apart from just an ordinary pattern of neglect of low income neighborhoods.

Angela Siefer: The question is how were decisions being made as to where an Internet service provider is placing their resources to upgrade. So we don't know what goes on in the backroom. So what we what we know is the data that says which neighborhoods have it in which neighborhoods don't. So this is something that is important. So have out there and be talking about because we, we as a country, have to decide what's okay right. If we have only a few which is the reality in most communities only through Internet service providers in each community what are our expectations of those and service providers should they be serving everybody?

Christopher Mitchell: Yeah I think it is worth noting and I think that the work that both of you did does a great job of discussing this because a lot of the services we're talking about they have a radius and so depending on where you put a hut or an office will depend on those around you who are served with a close radius being the higher quality service. And as you get further and further away you get lower quality service so. So with that I think we can ask Bill to tell us a little bit about what the pattern of investment has been in terms of neighborhoods having access in Cleveland over the past, well since the turn of the century really.

Bill Callahan: There's two providers who dominate the market. The bigger of the two. It was time Warner it's now Charter they sell cable service. They pretty much sell it every place in the city because the networking board was built when there was still municipal franchising. And as a as a standard the company which then owned the network was required to build it out citywide. And so it's there citywide. So great, right? But the other provider is AT&T and AT&T managed to -- did have a DSL network which reached throughout the city. DSL is characterized by you have a basic switch in the central office central offices are like two miles apart and three miles apart and close to the central office you get a decent speed. And as you get further away from the central office you get slower and slower and slower and if you're you know sort of as far as you can get from a central office the speed of DSL gets to the point where you wouldn't want to pay for it.

Bill Callahan: So that's the standard historical DSL pattern which is throughout the city. In 2008 in anticipation of building out its cable competing system which is called U-Verse which is a system of building fiber out into the neighborhood and then creating switches that are closer to people's homes. These so-called de-reg cabinets AT&T got the legislature to eliminate municipal franchising so that it wouldn't have to deal with pesky cities in terms of where it was going to put that fiber, those de-reg cabinets, and therefore the ability to provide that service to the nearby neighbors.

Christopher Mitchell: And that was a part of a process we saw nationwide where about half of the states over the period of several years in the mid 2000s got rid of these requirements. It also changes things like local people had no one to really complain to anymore because cities and remember authority. AT&T made ludicrous claims and some states like Tennessee they promised all this investment that never really happened and there was no reporting requirement so we can't really prove whether it happened or not but it's pretty clear that the rollout doesn't look like they promised it would be. And I don't want to jump ahead of you too much. One of the things that I found interesting reading through your report was that was that one of the impacts of that of course is people are supposed to have a better service for Internet but also they were supposed to have cable competition and many of the low income folks never got that either.

Bill Callahan: Many of the low income folks in places which were supposedly targeted for like Cleveland didn't get it. And of course parenthetically, about two thirds of the territory of the state never even got the whiff of it because the companies in question; the big phone companies never intended to provide it.. So essentially yeah basically, Ohio is the poster child for that kind of so-called cable reform. What it essentially did was eliminate regulation at any level. When that happened plenty of people warned people in the legislature including urban representatives like ours, "look you're inviting redlining and cherry picking." You're inviting these companies to basically pick their markets and ignore people who don't look as profitable. That is precisely what has, what has happened here.

Bill Callahan: After 2008 when AT&T began upgrading its old DSL system in order to this new hybrid system which was combination of fiber and kind of local neighborhood switches there were parts of the city where they deployed it. There were parts of the county including most of the suburbs where they deployed and there were parts of the city, notably those which are a lower income where they simply didn't. There were four central offices in the city which serve primarily lower income neighborhoods. And they didn't deploy fiber for purposes of upgrades out of any of those central offices. So the pattern then and this all happened between 2008 and 2013-14. So it's a rollout process that was finished a couple years ago. And the bottom line of it was that you had something like two thirds of households in the city who didn't have access to either fast internet or cable competition.

Bill Callahan: And because of that pattern of declining speed as you get away from the central offices, something like 10 percent probably a little higher of census blocks in the city have speeds below 3 Mbps from AT&T. Now they all have the option of getting cable service. Cable service from spectrum as you know is a matter of you know more than 60 dollars a month. AT&T would be the option that was a little bit cheaper and had more variety in its pricing. But that's not available to people.

Christopher Mitchell: Now Angela I'm curious. We have an incredible level of detail as to how this has happened in Cleveland. Do you have the sense from your work nationally that this is an anomaly?

Angela Siefer: It is not an anomaly. We, we've also done maps for Toledo, Dayton, and Detroit. We have some affiliates and partners who are working on maps of their regions. Bill is happy to explain to anyone how we did it so if you want to create a map. This is all publicly available data. We think an important point that sometimes gets misrepresented and media articles is that we did the research on this as in gathering the data. We did not gather data -- we use publicly available data and overlaid the different data sets in order to see what's there was anyone can do. And we highly recommend anyone to do this.

Christopher Mitchell: Well one of the things I read that I don't know if it's wrong or apocryphal or not but you know I'm sure you know, Bill, and I just found it amazing that some of this came to light after AT&T had a discount program for low income folks and you found that they were systematically denying it to some people in Cleveland because AT&T had originally said you had to have a three megabit service package to get this which generally meant they weren't going to discount their 18 megabit or their 25 megabit package. But it turned out a lot of people in Cleveland that qualified because they were low income only had one point five megabit service and therefore AT&T was denying it to them which is just amazing to me.

Bill Callahan: Or less or none. Yes that is exactly the way that we that we stumbled across this. The organization that I work for, Connect Your Community, was in the process of working with a coalition of groups to basically to reach out to low income folks across the city who had supplementary nutrition assistance, federal food assistance which qualifies you for this AT&T, access from AT&T program. Luckily we did a little due diligence for a couple of months and realized that we were getting phone calls from people saying I applied and they told me I can't get it because I don't have fast enough service. That's what led us to look at the public data that Angela was describing, so-called FCC Form 477 data. And then what we discovered was that we know we had these circles of areas with very very poor service and that led us down the path of figuring out what had happened. So we didn't go looking for trouble here. We ran into trouble because when we started trying to make this service available to people we discovered that it wasn't.

Christopher Mitchell: It's worth noting that that probably means that these areas were some of AT&T's most profitable in the sense that they had not invested in them for 10 or 12 or 15 years. They've been collecting money from a lot of people for telephone and Internet service and not investing anything in improving it. So it's not a matter of they were losing money in these neighborhoods in fact they were probably some of their higher margin neighborhoods because they were just letting them rot effectively.

Bill Callahan: Well I think that's an accurate characterization. But the other thing to remember is that the fact that something is, an area is high poverty doesn't mean the majority of people are poor it simply means that it has a high level of poverty. The areas that we looked at were areas that had a third or more of a households in poverty but plenty of customers plenty of working class and middle class customers in those neighborhoods. They tend to be African-American neighborhoods although they're not limited to that. And so yes those are those are neighborhoods which have lots of AT&T customers. The other thing that it's interesting to note is that AT&T charges you the same amount of money a month for 5 Mbps service or 24 Mbps service.

Bill Callahan: Right. They have a price tier depending on what is the fastest speed they can give you. Right. You know if you got low speed in the neighborhood you charge the same price and basically your cost per megabit may be four or five times as high because you have crappy service.

Christopher Mitchell: So, Angela, this is kind of a pattern that you see as a national organization of pulling this information out of on the ground organizations?

Angela Siefer: Yes so Chris we started NDIA almost three years ago. We're coming up on our third anniversary and we represent we will include programs that are on the ground doing this work right there working with disadvantaged communities. And so it's an important point that the way we figured out this was happening was that the affiliates in Cleveland were struggling with the fact that they couldn't sign folks up for the AT&T low cost offer which side note. We were all excited about because it's great to have a lot of coastal Hopper from a provider. So we are all like rah rah let's sell this let's all this low cost offer. And so when the affiliates started trying to make that happen they're the ones that realized there's a problem. And it took digging into a variety of data sets and Bill even checking neighbors addresses and the AT&T data set to see what kind of speeds they could get for us to figure out what was actually going on. So I think the connection of understanding what's happening at the local level. That's how we get to some recognition of issues.

Christopher Mitchell: So what is happening today in Cleveland? I know that there's a hush hush process going forward but but if we simplify that what's what's happened since you found this and went public with it.

Angela Siefer: There is a an attorney who completely outside of NDIA had interactions. He knew some folks in Cleveland. And one of those folks kept telling him there was a problem with her AT&T service and he told her to, you know, find some tech support. And then he saw our report and realized maybe she actually had a legitimate claim and so started researching it and found that she did have a legitimate claim. So attorney Daryl Parks had submitted a complaint to the FCC regarding the poor quality of service in these neighborhoods. And what is the current update of that is that AT&T and Attorney Parks are in discussions that are not public. So we know they're still in discussions but we don't know what is happening with that. Bill, is anything you want to add to that or can I go on to start grilling you?

Bill Callahan: I would only say that while we're you know we're really grateful that Attorney Parks and the folks he represents in Cleveland and Detroit now are doing what they're doing and we hope there's some good outcome. We're not actually that wildly optimistic about the FCC. There is a potential state regulatory process because this is actually income discrimination which is forbidden by the law. And so it's possible that this could turn into a state political issue with this is an election year. But beyond that I think that our assumption all along has been that probably this represents evidence of other strategies to get reliable bandwidth to people in low income neighborhoods rather than trying to cure AT&T behavior.

Christopher Mitchell: The reason I said that I was going to grill you because I want to ask a question that I think is is hard. And I know from personal experience with you that you can handle it but it seems to me that we have on the one hand obviously rules that say you can't screw poor people or low income folks or more accurately low income neighborhoods. You know, but on the other hand we have a telecommunications environment in which we have decided to say AT&T you can invest wherever you want. AT&T has a fiduciary responsibility to maximize its profit for its shareholders. And so in some ways, I mean as someone who loves markets I like bright line rules that are easy to follow that can create real good incentives and things like that. We don't have that. Like how do we reconcile what a company like AT&T is supposed to do in this muddy environment?

Bill Callahan: Well let me first of all let me say AT&T is not the company I would have expected sort of on the face of their relationships within the community which are actually pretty deep. They're a major employer in this town for a long time as a as a Bell. I would actually expect that if any company was likely to try to go out of their way to avoid the appearance of something which among other things really hurts the black community it probably would have been AT&T. The fact that they really have reacted to this whole thing with denial even though they never denied any of the data and the kind of universal there's no way we can build any more fiber says to me that really we have something that's completely out of control and that we're not going to be saved by the regulators because the regulators aren't really regulating anymore.

Bill Callahan: So what's left. It's exactly what what you, Chris and folks you work with, are constantly saying what's left is that local municipalities and communities start taking matters into our own hands. And I do think in the long run creating more competition and more competitive alternatives is really the only solution to this.

Christopher Mitchell: You're preaching to my choir. Yeah. So I was sort of follow up on that with a note that I pulled out from AT&T state external affairs executive carries her. She's a vice president of AT&T your name is Joan Marsh and she said "We do not redline." And then she said our commitment to diversity and inclusion is unparalleled. And then she said our investment decisions are based on the cost of deployment and demand for our services and are of course fully compliant. But it's a remarkable statement to say like no one goes further than us to, like, to try and help low income communities and to be diverse. Oh and by the way the only thing that we make our investment decision is based on the cost of deployment and demand. I mean those those things are mutually inconsistent.

Bill Callahan: Yes. And you'll note there's we've seen about 7 statements in various venues specifically denying redlining which never ever dispute a single item of fact in the study which gives us great comfort that we probably haven't missed anything but which essentially says you know yeah we did that and there's nothing wrong with it you know if this were a normal regulatory environment from 20 years ago you'd say Well okay let's go argue that before the regulators but there aren't any regulators really to argue about you know except the FCC and we'll see.

Bill Callahan: Good luck to Attorney Parks. And again this is no surprise to you and your and your listeners probably really the only leverage people have in this situation is to take stock of the situation, realize what we're dealing with, and figure out how to take our own steps to fill in the gaps. And beyond that honestly we are continuing to use AT&T's discount service where it makes sense and and we'll continue to take advantage of every opportunity we have to get low-income folks affordable service because that is the point.

Christopher Mitchell: Right, I'd like to reiterate that because Angela you made that point a little earlier that even though we're very frustrated with companies like AT&T and the investment patterns many of us are frustrated with some of the decisions Comcast makes, some regular price increases and things like that. It still makes sense for people to go out and perhaps volunteer their time to try to spread the word that people that are facing hard times, households that are struggling may be qualifying for ten dollar a month service or less from these firms, right?

Angela Siefer: Yes absolutely. Multiple Internet service providers have low-cost offers. I really think it's one of those deals out there that the majority of the population who's eligible has no idea that this is even a thing. So we really need to do more promotion of those offers and they are solid deals. The one from Charter is $15 a month and I think it's 30 Mbps. Yeah. So it is. That's a really solid offer.

Christopher Mitchell: That's almost as good as ten dollars a month for 50 Mbps symmetrical and Wilson with a municipal network that's leading the pack.

Angela Siefer: Yes.

Bill Callahan: Yes, the difference is that will be gone in two years.

Christopher Mitchell: The Charter one?

Angela Siefer: That's the question is Internet Essentials is still around. We don't want to have the view that we are coming down on all the Internet service providers. We're certainly not. We have positive relationships with most of them. We want them to understand that we do appreciate these low cost offers and we want those offers to continue beyond the time that they are required to provide them with based upon their agreements with. Yes I think so. So it is in no way a negative. We don't want this to be viewed.

Bill Callahan: We used the term redlining to describe this and we we do that for a very specific reason that does have to do with the history of that term namely a way of describing what banks have done in similar neighborhoods in the past and what it specifically refers to is the fact that you have a strategic decision by an institution not to offer certain services that are important to a community because of that community's economic or racial characteristics.

That's redlining. It's not something bigger than that is it's it's obvious explicit policy decision not to invest and offer services in specific places. Well there was a big national fight about bank redlining in the 60s and 70s. And the consequence was something called the Community Reinvestment Act and the Community Reinvestment Act has led to a lot of bank initiatives. We've figure out how to offer useful products to people in those neighborhoods in order to avoid regulatory sanctions like those regular sanctions have led to a large deep industry of community reinvestment driven relationships between banks and community banks. There's nothing that would prevent AT&T from following that model. How would AT&T understanding that has gotten in trouble because of its investment strategy with a bunch of communities go out and say good let's work with the community let's look at the city government let's figure out how we can work together to fill in the gaps that we've helped create.

That's what the banking industry largely has done with some awful exceptions recently. But but that's the history and it means that you basically have to say yeah OK we get it. We have a problem here. Let's bury what we do and build a response to the market so that we can serve these people and the the discount program access. AT&T isn't exactly that. It's something that they negotiated with. You know because of the merger with with the FCC. But it does actually have a really important and constructive place in the market. If they were still Ohio and paying attention to the state of Ohio for example we might in fact be able to work that out with the fact that you know local representatives may be sympathetic but there's nothing they can do is essentially a product of the fact you have an international corporation that isn't making decisions that have anything to do with local needs.

You know we take what we can get but there certainly are paths I think for telecom providers to do better and they can just look at the banking industry to see how that raises a number of points that I'd love to make that are all really great and we're going to come back to you with what I think is a is a hard question.

Christopher Mitchell: But one point is the banking industry is increasingly using the Community Revitalization err Reinvestment Act - I always get it wrong - to invest in broadband in historically Challenge's areas or higher jobless areas I forget exactly what the qualifications are. But we've seen that in Minnesota with our a fiber project in Bozeman Montana and there's more projects coming online where banks have been involved because of the history of redlining. Second point is I think you did a really good job of identifying how the redlining is happening. It's a term I've sometimes seen tossed around carelessly by some and I think we need to avoid doing that here in Minneapolis. We have a small private company which is investing and has a vision for connecting all of Minneapolis and some people have accused them of redlining. But when I've talked to them they've said that their best customers are the working class neighborhoods.

Christopher Mitchell: And not only that but the largely immigrant neighborhoods because the recent immigrants in particular they do everything online. They're talking to families back home. Their translation other entertainment. There's so much of it. So you know I think it hurts me when I hear them accused of redlining when I don't see it I see a company that's trying to figure out how to expand and they happened to start in one particular area. But we can we can always come back to that lead us. We talked with them in the past. But the question that I want to pose to you and Angela is in some ways like you know as as a person who fundamentally believes that AT&T cannot be fixed that we need to bring competition to AT&T fundamentally in order to force it over a period of many years I think to reform itself into being a company that is not a monopoly.

Christopher Mitchell: It still has a monopoly mindset it operates in many ways and mission. I look at what's happening Cleeve it and I think the best possible result is actually sort of irrelevant to AT&T because in some ways an OK result would be that AT&T invest more in those communities but then those communities are still stuck with a company that has a history of slow investment has high prices may be violating Net neutrality on a regular basis very soon probably has bandwidth caps all kinds of other problems. I think cities should be looking at Cleveland and not thinking not limiting themselves to thinking we need to fix AT&T behavior in in neighborhoods that have a high poverty rate but they need to think we need to figure out a different solution here.

Bill Callahan: That's our conclusion. You're speaking our mind. We don't think we're going to fix AT&T. That's unfortunate because we'd love to. But even if we did there's an underlying problem which is that there are two major providers and neither of them runs an open network. And so we've gone from a situation in 1999 where we had essentially 40 competitors providing ISP services to a situation where we have two there are two historical approaches. I'm an old utility organizer. Two historical approaches to a monopoly or near monopoly in the public realm. One is regulation and the other is competition which if you in most cases means build it yourself we have public power systems and we have public utility regulation right.

Christopher Mitchell: Those are the two models for people who are interested read a biography of Tom Johnson famous mayor of Cleveland where we dealt with a lot of these issues 100 years ago.

Bill Callahan: Who exactly. And it's precisely true that it was the same kind of issue. And so you know that's kind of the situation we're facing. There are people have or are developing lots of different mixtures of approaches to it across the country and we're paying attention to all of them.

Christopher Mitchell: So angel I'm curious if you have a reaction to my mini rant. I just feel like I'm being too casual with AT&T.

Angela Siefer: I think your point that whatever we solutions we come up with are going to be years in the making as the relevant points right that we can't throw AT&T away right now because we need them. So we need them to step up in whatever way they can figure out to step up. But if the community determines as Bill thinks the community is determining that there needs to be an alternative that is take some time to get there.

Christopher Mitchell: Great. Are there any final points before we wrap it up. No

Angela Siefer: I think that was great. I very much appreciate drawing attention to the issue Chris because it's something that needs to be discussed.

Christopher Mitchell: Well with that let's sign off and let me just remind people one more time that that Bill is very open to teaching people how to do this. This is something there's great value in doing. It's replicable. And you know if you, listener, aren't going to do it who will. So thank you very much, Bill, for coming on the show to share with us what you did in Cleveland.

Bill Callahan: Thanks for the chance, Chris.

Christopher Mitchell: And thank you Angela for coming back to talk more digital inclusion with us.

Angela Siefer: Any time.

Lisa Gonzalez: That was Christopher with Angela Siefer from the National Digital Inclusion alliance and Bill Callahan from Cleveland. Connect your community don't forget to check out the full report titled AT&T digital redlining. You can download a copy at NDIA website. DigitalInclusion.org. We also have a link. Many networks dot org. We have transcripts from this and other podcasts available at MuniNetworks.org/BroadbandBits. Email us at podcast@MuniNetworks.org with your ideas for the show. You can follow Chris on Twitter. His handle is @CommunityNets. You can also follow MuniNetworks.org stories on Twitter. The handle is @MuniNetworks. We hope you'll subscribe to this podcast and the other ILSR podcasts -- Building Local Power and the Local Energy Rules podcast. You can access them on Apple podcasts stitcher or wherever you get your podcasts. Never miss out on original research. Subscribe to our monthly newsletter at ILSR's artwork. Thank you. Do you speak for the song warm duck shuffle license creative commons. And thanks for listening to episode 290 of the community broadband bits podcast.