Data deserts

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5 min read

If we live in an information economy, why are so many affordable rental and public housing properties data deserts?

In policy-speak, a “food desert” is a low-income area, usually urban, where affordable healthy food is hard to obtain, especially for those without a car. Similarly, a data desert is a low-income neighborhood, community, or multifamily property where in-home high-capacity broadband with Internet access is unavailable, unreliable, or expensive.

Advocates have linked food deserts to problems of nutrition, obesity, and overall health. The resulting publicity has encouraged urban revitalization projects, often funded with new markets tax credits, anchored by organic or health-food grocery chains. Despite the name, no one is starving in urban food deserts, while in urban data deserts people are being starved of twenty-first century essentials. These include information, knowledge and learning, connectedness, access to social media and political voice, and economic opportunity.      Information access – real-time, user-defined, streaming and social – isn’t just a resident amenity or resident service; it’s the essence of modern urban society. The more citizens are fully and continuously connected, the better – and this starts at home. Home is where the next generation of workers grows up, where current lower-income workers live, and where retirees extend their healthspan (i.e. by staying lively, happy, mobile, and independent). If home fails, the young grow up unskilled and unmotivated; the elderly drift into isolation, depression. Both young and old become burdens on the present instead of resources for the future.

Gateway to Amazing Possibilities

Give people free broadband to access the Internet and their world instantly opens to amazing, life-affirming possibilities.[1] Conversely, when the urban poor – young, adult, or old – lack access, they are unable to be educated, search for and find jobs and bargains, connect to culturally or linguistically similar communities, and generate income and pursue economic opportunity.

So strong has been the desire for broadband and the value-additive services it has produced (e.g., Airbnb and Uber/Lyft) that in less than a decade omnipresent broadband has become the fifth utility – available everywhere for free, from Starbucks to train stations. But while private infrastructure grids can proliferate rapidly, they are financed and built only when the sponsor can recoup the large initial capital costs through user revenues. Hence these grids always end up serving the most affluent customers and neighborhoods and are feasible “down-pyramid” only when justified by marginal economics. Thus today’s data deserts are gaps in the information-infrastructure grid that are as damaging as homes off power, transportation, or sewer grids.

The market dynamics of broadband installation work against affordable housing because:

 

  • Affordable housing residents, because they have low incomes, are less likely to own laptops or iPads or be willing to pay the monthly cost for what might seem (especially to the elderly) as a discretionary expenditure.
  • Most affordable or public housing properties are decades old and not wired for the Internet. Retrofitting can be hindered by thick, load-bearing walls unconducive to broadband.
  • Financially, lending, regulatory, or subsidy restrictions codified in contractually binding documents are now anachronistic barriers to the installation of (say) cell phone towers or high-capacity routers and networks.

Government, Corporate Support Needed

Given these obstacles (neither fatal nor immaterial) the expeditious installation of broadband in affordable and public housing properties will only occur if the government rebalances the marginal economics through incentives,[2] something that all levels of government do today to promote the production and preservation of affordable rental housing. Given all the amenities that QAPs incentivize in low-income housing tax credit projects, why isn’t free broadband among them and at the top of the list? Why don’t Apple, Google, and Microsoft provide grants to help residents of affordable or public housing buy inexpensive desktop systems and receive assistance from bright young people to set them up on Skype?

The Community Reinvestment Act was born in 1977 out of a (correct) belief that cities were becoming money deserts, with capital taken from the urban poor (in the form of deposits) but not provided to them (in the form of equity, loans, and financial inclusion). Where is our IIRA – Information Infrastructure Reinvestment Act – to require the tech giants to extend their information network grids into the places that need them most – the homes of poorer Americans? The time for correcting this inequity is today.

David A. Smith is Chairman of Recap Real Estate Advisors, a Boston-based real estate services firm that optimizes the value of clients’ financial assets in multifamily residential properties, particularly affordable housing. He also writes Recap’s free monthly essay State of the Market, available by emailing [email protected].

 

[1]  For example, elderly retirees in Chicago are tutoring Brazilian teenagers in English via Skype in a program established by CNA English School. Both parties benefit, in knowledge exchange, genuine friendships, and virtual extended families. See http://cna.com.br/speakingexchange/.

[2]  Nineteen years ago, when Henry Cisneros and Nic Retsinas were at HUD, the Department sponsored the creation of Neighborhood Networks, computer centers in common areas of affordable housing properties. Nearly 1,500 were established before being rendered obsolete by the broadband and mobile Wi-Fi revolution.