It's no secret that ISPs can make more money from network upgrades in wealthy neighborhoods than low-income ones, and a new analysis of Cleveland, Ohio, by broadband advocacy groups appears to show that AT&T is following that strategy. The National Digital Inclusion Alliance (NDIA) and a Cleveland-based group called Connect Your Community alleged in their report today that "AT&T has systematically discriminated against lower-income Cleveland neighborhoods in its deployment of home Internet and video technologies over the past decade."

Last year, the NDIA brought attention to AT&T's refusal to provide $5-per-month Internet service to poor people in areas where the company hasn't upgraded its network. When the Federal Communications Commission approved AT&T's purchase of DirecTV in 2015, the FCC required AT&T to provide discount broadband to poor people as condition of the merger. But the condition apparently allowed AT&T to charge full price in areas where maximum download speeds were less than 3Mbps. After the NDIA spoke out, AT&T announced it would stop exploiting the loophole and instead provide discount Internet to poor people in all parts of its network.

Today's followup report from the NDIA and Connect Your Community analyzes FCC data on AT&T Internet deployments in Cleveland, where many residents were initially declared ineligible for the discount broadband service.

"Specifically, AT&T has chosen not to extend its 'fiber-to-the-node' VDSL infrastructure—which is now the standard for most Cuyahoga County suburbs and other urban AT&T markets throughout the US—to the majority of Cleveland Census blocks, including the overwhelming majority of blocks with individual poverty rates above 35 percent," the report said.

In the Ohio suburbs, AT&T customers routinely get speeds of at least 18Mbps and sometimes up to 1Gbps, while high-poverty neighborhoods in Cleveland are stuck on speeds of 768kbps to 6mbps, the report said. The FCC defines broadband speeds as 25Mbps downstream and 3Mbps upstream.

"When lending institutions have engaged in similar policies and practices, our communities haven’t hesitated to call it 'redlining,'" the advocacy groups wrote. "We see no reason to hesitate to call it 'digital redlining' in this case."

AT&T defends network investment

We contacted AT&T about the report today. The company did not dispute any of the advocacy groups' specific findings, but it said the report doesn't "accurately reflect" its network investments.

"Access to the Internet is essential, which is why we've continuously invested in expanding service and enhancing speeds," AT&T told Ars. "The report does not accurately reflect the investment we've made in bringing faster Internet to urban and rural areas across the US. While we are investing in broadband, we're also investing in technologies that will mitigate some of the infrastructure limitations."

AT&T said it invested $135 billion in wireless and wired networks between 2012 and 2016, including capital costs and acquisition of wireless spectrum. That investment includes "nearly $1.5 billion in our Ohio wireless and wired networks during 2013-2015, with more than $325 million of that in Cleveland." AT&T has also begun trials of wireless home Internet service and recently said its fixed wireless service will reach 1.1 million locations in 18 states by the end of 2020. This will help people who have either slow service or no Internet at all, especially in rural areas, AT&T said.

The slowest speeds

AT&T DSL speeds are often extremely slow when service is delivered entirely over copper telephone wires from central offices that can be nearly three miles from individual homes. Data speeds degrade with distance over copper, so AT&T boosts speeds in many areas by bringing fiber deeper into each neighborhood with its fiber-to-the-node (FTTN) technology. AT&T's fastest speeds of all involve bringing fiber all the way to each home.

"AT&T apparently chose not to install fiber-to-the-node infrastructure anywhere in the areas served by its four Cleveland central offices with the greatest concentration of high-poverty neighborhoods," the advocacy groups wrote. "The absence of FTTN in these lower-income neighborhoods, and the overall disparity in FTTN deployment between Cleveland and the suburbs, can be traced largely to AT&T’s failure to deploy FTTN anywhere in the service areas of four 'central offices'... with large lower-income customer bases: those at 6513 Guthrie, 5400 Prospect, 2130 East 107th, and 12223 St. Clair."

By contrast, "Most of Cuyahoga County’s suburban communities are fully covered" by faster AT&T network technologies, including fiber-to-the-home, the report said.

The NDIA's investigations into AT&T began last year after people in Cleveland contacted the group about AT&T's refusal to provide discount broadband. The report today relies on the latest FCC data compiled from filings that ISPs are required to make to the commission and is current as of June 30, 2016.

The NDIA is working with officials in other cities to help them produce similar reports, NDIA Director Angela Siefer told Ars today. Besides FCC data, the report also relies on city construction permits.

FCC chair “not likely to be interested”

The NDIA shared its findings with Federal Communications Commission member Mignon Clyburn, a Democrat, but it isn't expecting any action from the FCC's Republican leadership.

"The current chair of the FCC [Ajit Pai] is not likely to be interested," Siefer told Ars. "We have shared this research with Commissioner Clyburn's office. We do not see a path in the current climate (federally and in Ohio) to force AT&T to make the upgrades. We do see this research as proof that further deregulation is not going to reduce the digital divide. Our solutions will likely include local, state, and federal policies that encourage equitable build-out. We also need competition to bring down residential broadband costs. If AT&T is not going to serve low-income areas then we need policies and initiatives that actively recruit other broadband providers."

Clyburn's office declined comment when contacted by Ars today. The FCC's main press office declined comment on the study but pointed us toward Chairman Pai's "Digital Empowerment Agenda," which proposed tax incentives and credits for ISPs in areas where average household income is below 75 percent of the national median. Pai's plan also seeks to "remove regulatory barriers to broadband deployment."

Deregulation allegedly left poor residents behind

But removal of regulations is what helped AT&T avoid making upgrades in poor areas, according to the NDIA/Connect Your Community report.

"In 2007, AT&T succeeded in lobbying the Ohio General Assembly to eliminate municipal franchising of cable television providers by dangling the promise of a new era of 'cable competition' in communities throughout its service territory," the advocacy groups' report said. "AT&T’s 'cable franchise reform' legislation explicitly permitted providers under the new state-run video service authorization system to serve less than 100 percent of their designated service territories—a provision that led critics like the City of Cleveland to warn of the exclusion of poorer neighborhoods."

The new law prohibited economic or racial discrimination, and "AT&T dismissed the idea that providers would redline or cherrypick communities," the report said. AT&T began an aggressive deployment schedule in 2008, but "there is no indication that AT&T has expanded its FTTN infrastructure to any new areas of the city of Cleveland since 2013," the report said.

Last year, AT&T told Light Reading that almost all of the company's new builds are fiber-to-the-home, with fiber-to-the-node upgrades occurring only "on a case-by-case basis." AT&T launched its fiber-to-the-home service in parts of Cleveland in August 2016, and it has brought the network to more than 50 metro areas nationwide. But the company makes no promises to bring fiber to all homes in any given city.