What do Hoboken Junior-Senior High School and Comcast Corporation have in common?
Bridging the digital divide. Or staying on the wrong side.
Comcast‘s Internet Essentials targeting low-income families is a vibrant initiative that launched in 2011. Hoboken’s school district recently made the hard choice to abandon its dismal, costly program.
The difference also highlights demonstrates how Comcast has evolved as a company and in its social responsibility. Comcast is creating shared value, as introduced by Michael E. Porter and co-author Mark Kramer, “the framework for creating economic value while simultaneously addressing societal needs and challenges.”
Comcast may influence how other corporations view social responsibility and how nonprofits view “corporate philanthropy”. It will do both as it it bridges the digital divide for low-income populations and meets its economic goals.
Hoboken aspired to bridge the digital divide. Mark Toback, current superintendent Hoboken School District, recently went public to say it was ditching the program to benefit other schools. Background: About five years ago, a windfall of stimulus money made it possible for the district to buy about 300 laptops, but “maybe not the best implementation”, Toback said. Damage, theft and cumbersome security software contributed to a program that became “unsustainable”. The teachers, already overextended, were not to blame. Administrators who started it up have left.
Hoboken is seeking a recycler to dispose of about a third of the laptops.
On the other hand, Comcast’s Internet Essentials exemplifies how business can be more effective than government in advancing educational technology. The initiative originally required eligible low-income families to have school-age children. Recently, it expanded its criteria to include low-income adults without children. Children in poor districts may be left behind
Charisse R. Lillie, Vice-President, Corporate Investment, Comcast and President, Comcast Foundation, summed it up: “Digital literacy awareness and training are a critical part of getting more Americans online.”
Internet Essentials deals with the three main barriers to broadband adoption: want of understanding about computer’s relevance and benefits; the cost of a home computer; and the cost of the Internet service. Here’s how:
- Residential Internet service for $9.95 a month plus applicable taxes;
- No price increases, no activation fees, or equipment rental fees;
- A voucher to purchase a low-cost computer for $149.99 plus tax; and
- Access to free digital literacy training in print, online and in-person.
Comcast’s multi-million dollar partnership with nonprofit Khan Academy’s free online education adds another dimension to Internet Essentials. Khan Academy’s mission is “changing education for the better by providing a free world-class education to anyone anywhere.”
Describing the partnership, Comcast Executive Vice-President, David Cohen, sounded ebullient: “So the marriage is perfect – Khan Academy content will help drive broadband adoption; the increased adoption will help get Khan Academy content where it can do incredible good. This partnership will raise awareness to ensure low-income families can take advantage of the symbiotic relationship between the two programs.”
CITIES ESTABLISHING INTERNET ESSENTIALS
Philadelphia and Chicago are among the many cities establishing Internet Essentials’ programs since 2011. They are among the 15 “Gold Medal” cities receiving grants from the $1 million fund to create Internet Essentials Learning Zones.
Philadelphia: At the 2011 launch, Mayor Nutter expressed appreciated at having this program available in Philadelphia, where 230000 lack access to a computer in the home.
Chicago: In its first year, Comcast’s Internet Essentials signed up 7000 families in Chicago. It doubled enrollment to14000 families in year two, actually including 50,000 people in those families.
Recognizing these effective efforts, the U.S. Conference of Mayors honored the City of Chicago and Comcast “Outstanding Award for Public/Private Partnerships".
THE ROLE OF BUSINESS IN PUBLIC SCHOOLS
Can business break down barriers that school systems are unable to mitigate? Internet Essentials addresses several gaps identified below:
- · A national survey on the benefits and barriers to technology reported that 90% of teachers are using technology in the classroom. About 62% would like to use more.
- · However, significant barriers in lack of adequate training in technology they use (46%); and lack of adequate support for technology they use (51%);
- · Foremost, barriers to using technology in the classroom more often are lack of hardware (63%); students lack access to the internet at home (53%); and bandwidth issues at school (43%).
.Business has a role in the federal government’s vision, as well. The Presidents ConnectED (June 6, 2013) called for 99% of schools to be connected by broadband and wireless within 5 years, train teachers, support digital content, leverage the playing field for rural areas, maintain purchase of devices with local leadership, expose students to global opportunities and restore U.S. leadership in the world. (Currently, South Korea continues to lead.)
In February 2014, President Obama announced FCC support of Connect ED with $2 billion in repurposed funding for the FCC’s E-rate program to connect more than 15,000 schools and 20 million students to high-speed broadband. Unfortunately, in cities like Philadelphia, connection does not solve the needs of schools that need hardware because government funding was restricted to technology and networking.
Notably, responding to the President’s appeal to the business community, seven companies made contributions of $750 million in goods and services for ConnectED schools. The companies included AT&T, Sprint, Microsoft, Apple, Autodesk, O’Reilly Media and Verizon.
The Federal Communication Commission (FCC) reports progress and deficiences:
- 19 million Americans—6 percent of the population—still lack access to fixed broadband service at threshold speeds. In rural areas, nearly one-fourth of the population —14.5 million people—lack access to this service. In tribal areas, nearly one-third of the population lacks access.
- Even in areas where broadband is available, approximately 100 million Americans still do not subscribe. The report concludes that until the Commission’s Connect America reforms are fully implemented, these gaps are unlikely to close. Because millions still lack access to or have not adopted broadband, the Report concludes broadband is not yet being deployed in a reasonable and timely fashion.
THE COMCAST TIME-WARNER TRANSACTION AND THE DIGITAL DIVIDE
Comcast’s purpose and success in launching its Internet Essentials initiative is why the Comcast-Time Warner transaction is arguable worthy of the Federal Communications Commission’s (FCC) approval and the U.S.Justice Department.
If the Comcast will control 20 of the 25 cable markets. Consuming fewer than 30 percent of the U.S. pay television video market and about 33 percent of the high-speed Internet market will give unprecedented media dominance. Its Internet Essentials will expand into many of the current Time Warner cities; 19 or 20 cities and the lives of thousands of people of all ages will be enriched. Most recently, it is partnering with the ARC, a disability community rights nonprofit, to expand digital literacy. It is also connecting with AARP for the same purpose.
The Wall Street Journal, Washington Post, Chicago Tribune, and Philadelphia Inquirer (Comcast’s home town paper) have supported the Comcast TWC transaction.
“Consolidation is the only way to ensure these companies have enough capital to invest in new and better technology that will keep their customers happy — or, at least, satisfied enough not to cancel their subscriptions.” (Washington Post, April 2014)
Critics are adamant about the FCC not approving the transaction. Nobel-prize winning economist Paul Krugman rejects what he describes as the “Barons of Broadband”. Katrina vanden Heuvel points out that Comcast would control the news media in Chicago, Los Angeles, Philadelphia, New York City and the District. She adds that if net neutrality is removed, Comcast could charge inequitable rates for high speed internet access. The New York Times regards it as a “Cable Merger Too Far”.
Its acquisition of NBC-Universal in 2010 has also been scrutinized, as it made significant grants to groups seeking recognition. Members of Congress asked about connecting with minorities as an important condition. Prior to the Comcast-NBCUniversal deal, Comcast extended support to Latino groups through grants totaling $320,000 to the Hispanic Chamber of Commerce over five years.
Also pending the Comcast-NBCUniversal partnership, the Center for Public Integrity and the New York Times worked together to research tax documents.
- These included numerous Hispanic organizations. In fact, roughly 60 percent of those who received funds from Comcast prior to the Comcast-NBCUniversal agreement were Hispanic groups. Among recipients:
They learned that Comcast made awards to 55 minority organizations between 2004 and 2012; the donees wrote letters to the Federal Communications Commission in support of the Comcast-NBCUniversal partnership.
- National Council of LaRaza ($2.2 million);
- National Urban League, $835,000;
- Hispanic Federation ($345,000);
- U.S. Hispanic Chamber of Commerce ($320,000)
When the NBC-Universal acquisition was pending, Comcast was responsive when critics asked for change. For instance, the National Coalition of African American Owned Media noted in a full-page ad in The Washington Post that “Comcast Cable allocated none of its channel capacity, nor any of its $8 billion programming budget, to networks that are African American wholly owned and widely distributed to their nearly 23 million subscribers.” Comcast made plans to distribute four new minority-owned and/or operated independent networks on Comcast Cable systems that would launch between May 2012 and January 2014. It would add a total of 10 independent channels to expand its ethnic and independent programming.
CREATING SHARED VALUE
Comcast is revealing more than a conventional role of social responsibility. It is creating shared value - as the business concept was introduced by Michael E. Porter, leading authority on competitive strategy. Professor Porter, with co-author Mark Kramer, first articulated the basis of “shared value” when he introduced it in a Harvard Business Review article that opened with this alarm:
“Capitalism is under siege”
He holds capitalism as unmatched in “meeting human needs, improving efficiency, creating jobs and building wealth”. Creating shared value is the next evolution of capitalism which will “drive the next wave of innovation and productivity in the global economy”. In what Professor Porter has aptly called a “narrow”view of capitalism, opportunities are missed. For example, just as it is beneficial for low-income, disadvantaged people to have cell phones, it can be profitable for the company.
“When businesses act as businesses—not as charitable donors—they can improve profitability while also improving environmental performance, public health and nutrition, affordable housing and financial security, and other key measures of societal wellbeing. Only business can create economic prosperity by meeting needs and making a profit, creating infinitely scalable and self-sustaining solutions.”
Shared value is not old-school corporate philanthropy nor is it “strategic philanthropy” in the textbook sense because is driven by self-interest. As Professor Porter articulates, “This new role for business is not just ‘giving back’ to the community; it is setting social goals and working to achieve these goals.”
Comcast has taken important steps in creating shared value by identifying needs to be met. It clearly appreciates the internal cost of social deficits. Comcast is delivering digital literacy through Internet Essentials - a broadband adoption program. Its role in bridging the digital divide, however, is not an add-on; it is meeting societal goals and economic goals in a deliberate manner. It is not a soft business model. To quote an anonymous contributor, “Vision without metrics is hallucination”.
By creating shared value, Comcast can ultimately accomplish another goal of creating shared value: renewing public trust in capitalism.
For nonprofits, shared value creates deep, genuine partnerships with corporations, not peripheral relationships to “do good”. Comcast has demonstrated that in funding Khan Academy, a nonprofit which can better meet its mission in partnership with Comcast. Comcast, at the same time, is able to increase adoption of broadband. Those who object to this business model would have poor people disenfranchised forevermore if they were to wait for “charity” to bring computers into their homes.
The world is still changing. So is Comcast.
The Comcast TWC transaction is the best thing that could happen to Comcast and the people on the wrong side of the divide.