Dallas digital haves and have-nots
Dallas Morning News, Melissa Repko and Allan James Vestal, August 30, 2019
Catandra Hollins knows both sides of the digital divide.
During her high school years in Highland Hills, a neighborhood near Paul Quinn College in Dallas, she juggled debate team, advanced placement classes and a college-level dual-credit program — all without internet in her home.
Her mom, a teacher, couldn’t afford Spectrum, and AT&T didn’t offer service in their southern Dallas apartment building.
Before and after classes, she’d find a spot in the computer lab to do homework, research scholarships and apply for college. Now a student at Texas Tech, the 21-year-old has fast, reliable internet access for the first time.
AT&T, the nation’s largest internet provider and a leading Dallas corporate citizen, plays a major role in deciding where speedier internet is rolled out in its hometown. And those decisions can influence who advances in a digital economy — and who doesn’t.
In Dallas-Fort Worth, AT&T invests in newer, faster internet in neighborhoods with higher property values and upgrades it later — or not at all — in areas with lower property values. That’s according to an analysis by The Dallas Morning News of data the company supplied to federal regulators.
It also spends millions of dollars lobbying for laws in Texas, including one that limits the tools Dallas can use to encourage AT&T and other providers to invest in underserved areas. The company prices internet service so that Dallas households with slower speeds pay as much as, and sometimes more than, those with faster service.
AT&T said it adds faster connections in newer neighborhoods because it’s easier and less expensive to install high-speed lines during construction.
It takes pride in its regional philanthropy, from a homelessness initiative in Dallas to community betterment projects, and it defended its record in serving lower-income neighborhoods. The company said it has added 130,000 fiber-optic cable connections in southern Dallas but declined to provide supporting data, saying it’s proprietary.
As wireless technology advances, AT&T also said it’s becoming less important to dig up streets and yards to bury high-speed lines in older inner-city neighborhoods.
It’s that next generation of technology that threatens to widen the divide.
The coming of 5G
AT&T and its rivals are spending billions to build out networks for 5G service by laying fiber, upgrading cell towers and installing small cells.
The antenna-based small cells are installed on street lights and utility poles to boost cellphone reception and build a 5G network. This next-generation wireless technology will bring faster, more reliable cell service and a new way to deliver home broadband.
The company had applied to install about 580 small cells in Dallas as of mid-July, according to city records. Only 66 of the proposed sites are south of the Trinity River, a historically lower-income area that includes nearly a third of the city’s households. This sets the stage for history to repeat itself, with service in poorer neighborhoods like Fair Park looking different from affluent areas like Uptown.
AT&T CEO Randall Stephenson has said he expects 5G to replace home broadband within three to five years. That shift could bring new competition and faster speeds to neighborhoods — if they have the infrastructure.
5G will also cost customers more and require new phones, Stephenson has said.
Ed Drilling, AT&T senior vice president of external and regulatory affairs, said AT&T is deciding where to add small cells by “looking at traffic patterns and where we need the relief” and “looking at where our biggest [5G] opportunities are.”
“We never have been in the business of letting somebody else design our network and tell us where we need to put sites,” he said. “We do it based on very specific information about where we see the need and where we know our customers will value this extra capacity the most. That’s what drives our decisions.”
Higher speeds and better internet also make it easier for people to seize economic opportunities.
Jordana Barton, a senior adviser at the Federal Reserve Bank of Dallas, studies the connection between internet access and upward mobility.
“If we create haves and have-nots, the people that do have connectivity and don’t, basically you’re saying, ‘You’re not going to participate in the economy. You’re not going to participate in the workforce. Your children are going to have a disadvantage in school. They’re not going to be able to get the best education.’ Then you’re creating cycles of poverty,” she said.
Teens are stuck typing essays for college applications on their phones. Parents can’t take online college courses.
“The kids growing up in South Dallas have no less talent than a child growing up in Plano,” Barton said. “It’s the opportunity that’s different. And that’s why infrastructure and closing the digital divide is so critical right now. It’s the biggest ethical challenge that we’re facing of the technological revolution.”
For internet providers, as with any for-profit businesses, the mandate to make money can be at odds with serving community needs. AT&T can choose where to invest its money to generate the most return. In 2018, it brought in $28.5 billion in revenue from internet service — giving it the biggest share of the national market at 25%, according to research firm IBISWorld.
But the company’s business also relies on real estate that’s owned by the public to install fiber-optic cable, antennas and other equipment. Some argue that makes internet service more like electricity or any other utility that should be accessible to everyone.
Dallas ranks among the worst-connected for U.S. cities of its size. It’s not much better than cities long associated with economic hardship, such as Detroit, Cleveland and Baltimore.
Nearly 42% of Dallas households don’t subscribe to fiber, broadband or cable home internet, according to 2013-17 estimates from the U.S. Census Bureau.
But drive 10 or 15 miles north, and you’ll find some of Texas’ best-connected cities. In the affluent suburbs of Frisco and Allen, only about 12% of households don’t subscribe to home internet.
The Federal Communications Commission defines broadband as 25 megabits per second or faster. Some of AT&T’s internet offerings are slower than that.
The News examined the availability of three types of infrastructure: the minimum broadband speed, the fastest internet with fiber-optic cable and the planned locations for small cells for 5G service.
In Dallas-Fort Worth, AT&T’s slower internet services were found more often in neighborhoods with lower property values. That’s according to an analysis of AT&T’s latest available reports to the FCC from 2014 to 2017 and county appraisal district data from the same years.
Across a five-county area, homes in census blocks where AT&T did not offer broadband at the end of 2017 had a median property value of $118,000 — more than 50% less than the median for homes in blocks where it offered faster speeds.
AT&T said it has continued to bring faster options to neighborhoods across D-FW since the end of 2017. The FCC has not released 2018 data, and the company would not provide newer reports it has submitted to the agency.
AT&T’s rollout of its fastest internet option — fiber to the home — was uneven and followed a similar pattern in some parts of the region, too, according to The News’ analysis.
In suburban counties, AT&T deployed its fastest internet option with speeds of up to 1 gigabit per second in wealthier neighborhoods, according to The News’ analysis. At the end of 2017, the 85,000 homes in Collin, Rockwall and Denton counties in census blocks that had fiber service available had a median value of more than $352,000 — nearly $90,000 above the median of the 410,000 homes that did not. In urban counties such as Dallas and Tarrant, the relationship was less clear.
“In fast-growing suburban areas, it’s easier and more cost-efficient for us to deploy our equipment during their construction and development,” AT&T spokesman Jim Greer said in a statement. “However, we continue to deploy fiber in all areas, and if you look at the region as a whole, nearly 60% of our build is in older neighborhoods.”
Academics and nonprofits who studied AT&T’s internet investments in other cities reported similar findings. In Cleveland, for example, an analysis of 2016 FCC data found that AT&T had not made broadband improvements in the vast majority of Cleveland census blocks with high poverty rates, despite upgrades in surrounding suburbs.
Oklahoma State University professor Brian Whitacre, who studies the economic impact of internet in rural areas, was hired by a law firm to map AT&T’s broadband service in Cleveland, Detroit and Dallas as part of an FCC complaint. His findings were the same across all three cities: Higher-poverty areas tended to have lower-quality internet options.
Some advocates describe AT&T’s investment practices as “digital red-lining.”
AT&T said it has invested $3.4 billion over the past three years in its Dallas-Fort Worth wireless and wired networks — but it would not say how much of that boosted home internet options.
“It’s our hometown, so we are dedicated to providing the best service that we can all across the city,” said Drilling, the senior vice president.
In Dallas, Cassandra and Joseph Laster have seen the differences in AT&T’s internet speeds firsthand. In early May, they moved from a townhome in Old East Dallas to a two-story house in Fair Park.
But the couple soon discovered they couldn’t get the same high-speed internet from AT&T that they had gotten just 3 miles away. AT&T offered one option: an internet plan that maxed out at 768 kilobits per second, so slow that it would be difficult to watch the couple’s streaming service: AT&T TV Now.
“It never occurred to us that we would have an issue,” Cassandra said. “Fair Park is right there. We’re close to downtown. Even though it is the south side, I felt like it [high-speed internet] would be available if the customer wanted to purchase it.”
The Lasters now pay more for internet — even though they have a slower speed. They signed up for Spectrum, the only other option they found in the neighborhood.
At their old home, they could get internet with speeds of up to 1,000 megabits per second for $70 a month. In Fair Park, the couple pays $110 a month for internet that’s up to 400 megabits per second.
“Our voice is not as loud, and it’s not a priority,” she said.
Like the Lasters, people who live in neighborhoods that haven’t gotten internet upgrades can wind up paying as much or more for slower service.
In Fair Park, for example, AT&T charges a starting price of $40 a month for its cheapest internet service — but what customers get for that ranges from up to 768 kilobits per second to up to 5 megabits per second.
In Preston Hollow, customers pay $50 a month for up to 300 megabits per second.
In the spring of 2017, lobbyists crowded into a hearing in the Texas Capitol and took turns at the microphone, speaking in lingo that might confuse a casual listener. Small cells. Network nodes. Public rights of way.
The bill lawmakers were weighing had implications for every technology-using Texan — and would shape who gets the fastest and most reliable cell and internet service and when.
To prepare for 5G, AT&T and other providers need city approvals to install antenna-based small cells on street lights and utility poles. The bill capped the fees cities can charge telecom companies for installing small cells on city property.
It passed both houses with overwhelming support, and every Dallas representative supported it.
AT&T helped write the bill along with lobbying for it. In a meeting in a Capitol conference room, AT&T lobbyist David Tate took a draft of the bill out of his briefcase and passed it around to legislative staff and other attendees, said Dallas city attorney Don Knight, who attended the meeting. (Tate did not return calls for comment.)
As the bill moved closer to becoming law, the maximum fee a city could charge fell from $1,000 for each small cell to $250.
“As providers realized they were winning the political argument, [the fee] kept dropping,” said Bennett Sandlin, executive director of the Texas Municipal League.
Behind the scenes, AT&T had spent several months in talks with Texas cities, including Dallas, to develop a model ordinance. Then it disappeared from the talks and reemerged supporting the plan to cap fees, Knight said.
Sandlin declined to speak about AT&T’s influence on the bill’s outcome but said industry was the clear winner. “We got outgunned — and that’s all I want to say on it,” he said.
The capped fee is a fraction of the $2,000 the city of Dallas planned to charge for small cells, which the city expects will eventually number around 10,000. And the caps don’t apply to private landowners the providers negotiate with.
The lower fees torpedoed a Dallas plan to encourage providers to invest more equitably. City Council member Lee Kleinman said the city wanted to set fees based on real estate values. In pricier neighborhoods like Uptown, companies would have paid a higher fee to install a small cell in the public right of way. In needier areas, the city would charge significantly less.
But with the capped fees, he said, the city can’t afford to cut rates any further.
“If you look at your home phone bill or your internet bill or your cellphone bill, they just continuously seem to go up, and if you look at the stock market returns and the dividends people like AT&T pay to their shareholders, clearly a lot of money is being made in that industry — a lot more than it would ever cost them to pay a fair value for this right of way,” Kleinman said.
Cities fight back
The fight over 5G is pitting the city of Dallas against its hometown telecom provider. Dallas has joined a group of 46 cities challenging the Texas law. The cities say it’s unconstitutional because it’s giving away public property to a private company at a below-market rate.
At a council meeting in January, Dallas council members expressed bewilderment when they learned that their Dallas-area state representatives had backed the bill. And some spoke in frustration about how southern Dallas could get skipped over again.
Knight, the city of Dallas’ attorney, said the state law left cities without bargaining chips to push providers to build infrastructure in poorer neighborhoods.
“Providers chase the customers with the most money and ignore the rest because that is how you make the most money,” he said. “That has real consequences for our communities. While state and local policy makers give lip service to fixing the digital divide, they have removed from local leaders the very tools that could be used to erase it forever.”
Sen. Kelly Hancock, a Republican who represents North Texas, sponsored the small-cell bill. He received more than $158,000 in campaign contributions from AT&T in the past 10 years. The only state officeholders who have received more are Gov. Greg Abbott, Lt. Gov. Dan Patrick and Attorney General Ken Paxton.
Through a staffer, Hancock said he doesn’t discuss laws that are in litigation. But he emphasized in a statement that he listened to both cities and industry.
“Any implication that one stakeholder was given preference during this very lengthy and thorough bill drafting process is a lie,” he said.
Even if cities won a reprieve from the cap on small-cell fees, it wouldn’t solve the digital divide and all of its causes.
Some companies are looking for ways to help. Microsoft, for example, is focused on expanding internet access nationally, especially in rural areas.
Best Buy sponsors 29 teen tech centers across the U.S. where kids can do their homework or take coding classes during the summer. One of them is in South Dallas, next to the Juanita Craft Recreation Center.
AT&T’s most significant broadband-related initiatives were required by the government. The company agreed to several conditions as part of federal regulators’ approval of its 2015 acquisition of DirecTV: The FCC required it to expand its fiber footprint to at least 12.5 million customer locations within four years of closing the deal, provide gigabit speeds to some libraries and schools and create a low-priced internet option for low-income consumers.
That option, AT&T’s Access Program, is available to people who qualify for food stamps and costs $10 a month. The company caps the service’s speed at 10 megabits per second — lower than the FCC definition of broadband — even if faster speeds are available at the person’s address.
AT&T wouldn’t say how many people use the Access Program in the U.S. or in Texas.
Barton of the Federal Reserve said her goal is to make sure fewer young people grow up without home internet.
Priscilla Beltran was one of those kids. She got a brand-new laptop two years ago from Lake Highlands High School. But outside of school, she could do little with the device.
Her Google Chromebook required internet access, which she didn't have at home because her mom couldn’t afford it.
Beltran, now 17, skipped lunch to do homework in the high school library and walked to a public library to study. Her classmates could work on assignments at home until the midnight deadline. She had to scramble to submit them before the library closed.
“It’s kind of like seeing your goal and seeing what you want to do, but you can’t quite grasp it,” she said.
Last year, Beltran moved in with her grandmother, who subscribes to Spectrum internet since AT&T doesn’t offer service to her address. Beltran is taking college-level courses, is senior class president and is a member of the National Honor Society. She also participated in Storytellers without Borders, a grant-funded program organized by The Dallas Morning News and the Dallas Public Library to encourage and develop young writers.
To be part of today’s economy, the Dallas Fed’s Barton said, people must not only have internet options in their neighborhoods but also a way to afford reliable connections that let them build strong digital skills.
That will take cooperation from local governments, nonprofits, educators and companies — a coalition Barton assembled at a recent summit to discuss ways to expand internet access in the Dallas area.
But, she said, it comes down to a simple question: “Do we have the will to do it?”