Panel Paper: Digital Redlining? Evidence from Los Angeles County 2014-2016

Thursday, November 7, 2019
Plaza Building: Concourse Level, Plaza Court 4 (Sheraton Denver Downtown)

*Names in bold indicate Presenter

Herman Galperin, Thai V. Le and Kurt W. Daum, University of Southern California

Broadband is the lifeblood of some of the most vibrant and innovative industries. It is also a vital tool for individuals and families that enhances economic, educational and civic engagement opportunities. However, broadband infrastructure investments in many cities and regions are not keeping pace with the growing demand for high-quality, affordable Internet connectivity from households and businesses. Further, there is evidence that investments in next-generation technologies (such as fiber and 5G) are bypassing low-income and minority communities. These market failures are compounding preexisting socioeconomic differences, thus exacerbating inequality by skewing digital opportunities in favor of wealthy residents.

Using Internet service deployment data from the California Public Utilities Commission (CPUC) and sociodemographic data from the American Community Survey (ACS), this study explores the statistical and spatial links between broadband competition and neighborhood characteristics in Los Angeles County. In particular, it seeks to determine the relationship between broadband investments and the share of low-income residents at the census block group level for the 2014-16 period.

Our preliminary results (limited to DSL, cable Internet, and fiber-based services) find that broadband competition remains weak throughout Los Angeles County. While the share of residents able to choose between two or more broadband ISPs increased in the study period, about half of the county residents still lacked choice in broadband provision at year-end 2016. In addition, increased competition mostly benefited higher-income areas, and largely bypassed block groups with higher shares of Latino residents. Our multivariate regression model shows a statistically significant negative association between broadband investments and the share of poor households in a census block. The link between investments and race is less conclusive; as such, we explore how spatial autocorrelation may be affecting these results.

While our results are preliminary and require further investigation, they suggest that incumbent ISPs are bypassing areas that need digital infrastructure investments the most. Further, they suggest that efforts by local policymakers concerned with the inequality effects of the digital divide should focus on actions that address market failures in infrastructure investments in low-income areas.

We conclude with a discussion of policy options to address digital redlining in next-generation broadband services.

Full Paper: