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Ask the Expert

Billions of dollars have been set aside to try to narrow the digital divide by expanding access to broadband internet connectivity. How is that money being spent?

As appeared in the Cleveland Fed Digest’s Ask the Expert

Unprecedented investments are being made to expand broadband access and enable more people to connect to the internet and have the technical knowledge to use it.

Investments are aimed at overcoming multiple obstacles to connectivity: Some people don’t have access to the service, others can’t afford it or don’t have the digital skills to connect. It’s a significant issue for low- to moderate-income communities, people of color, and rural areas. The problem can look different in different places whether it’s due to lack of a physical connection or being unable to afford it. While a lot of people do have internet through their smartphones, they can be more difficult to use for many work- or school-related activities, which may be optimized for laptop or desktop computers.

The Infrastructure Investment and Jobs Act (IIJA) earmarked $65 billion for broadband projects, with almost $43 billion for the Broadband Equity Access and Deployment Program, or BEAD, to expand broadband infrastructure. In the region served by the Cleveland Fed, Pennsylvania is receiving $1.2 billion, West Virginia is getting $1.2 billion, Kentucky just over $1 billion, and Ohio nearly $800 million. The allocation formula sends more funding for unserved and underserved locations because they have greater need. It’s also more expensive to connect many of these locations because many are rural areas and have fewer households per square mile.

Other federal internet connectivity initiatives include the Digital Equity Act, or DEA, which supports states in the development of five-year digital equity plans, and the Affordable Connectivity Program, which subsidizes broadband services for low-income households across the country.

The Federal Reserve pays careful attention to this issue because one of the Fed’s two mandates is to ensure maximum employment, and it’s become increasingly important to be connected to the online economy for many activities including education and training and finding and holding a job.

The Cleveland Fed’s recent report, “Broadband and Beyond: Getting Connected in the Fourth District,” found that lower-income people may need to make tradeoffs in their household budgets to afford broadband. The Affordable Connectivity Program under IIJA is a policy solution that aims at subsidizing broadband and devices for low-income families to reduce those tradeoffs. All of this is a multi-pronged funding approach, which can also include investments from the American Rescue Plan Act (ARPA), the private sector, foundations, and non-profits.

The report also highlighted ways public-private partnerships are working to increase internet access, affordability, and adoption across the region served by the Cleveland Fed. For example, the Greater Cleveland Digital Equity Coalition convenes entities from public, private, and non-profit sectors and champions a variety of organizations providing high-speed internet access, digital skills trainers, and low-cost technology and supports. There can’t be enough said about what local leaders, non-profits, libraries, and partnerships are doing across the region to help people figure out how to do what they want to do online, whether it’s look for a job or call their granddaughter in a different state.