âThe private sector has as much responsibility as the public sector to make devices and broadband available to millions of young Americans,â said Broderick Johnson, President Obamaâs cabinet secretary and chairman of a White House task force that worked with Sprint on its new program.
Free and low-cost broadband programs have been around for a while, with Comcast rolling out one called Internet Essentials in 2011, Google offering free broadband in public housing, and Dell and Microsoft providing free or discounted devices to schools. But the new initiatives could reach much larger populations and are directed toward specific digital divide problems, such as the struggle for children without broadband at home to complete their homework.
Yet while telecom and web companies cite altruism as propelling free or low-cost broadband programs, what is often left unsaid are the benefits the services bring to the companies. Itâs part of a textbook business strategy known as âloss leaders,â when a company provides discounted or free goods to get customers to buy more once they are in the store.
The strategy is increasingly important for the telecom industry, where growth has slowed and new broadband customers are harder to find.
Internet service providers âare trying to go after those folks who are willing to pay less, but not to appeal to those willing to pay more,â said Robert Seamans, an associate professor at New York Universityâs Stern School of Business and a former economist at the Obama White House.
Some of the companies acknowledged the business strategy involved in providing low-income products. But Sprintâs chief executive, Marcelo Claure, said the priority has been to work on a problem that telecom firms are best positioned to help solve. âThe internet is one of the few things that doesnât discriminate, but the one thing that does discriminate is who can get online and who canât,â he said.
Sprint, the fourth-largest mobile carrier in the United States, typically charges customers about $ 60 a month for high-speed internet service. In the last six months, Mr. Claure, who emigrated from Bolivia as a college student, has made the digital divide an issue within the firm and assembled tech and nonprofit partners around the effort.
Credit Lynne Sladky/Associated Press
The mobile carrier is particularly focused on bridging the âhomework gapâ that exists for students without broadband, which Mr. Claure said particularly hurts low-income African-American and Hispanic children. âBeing a Hispanic C.E.O., this bothers me,â he said.
Sprintâs new program, called the 1 Million Project, will provide high school students from low-income families free laptops, tablets or smartphones and 3 gigabytes of free high-speed data every month. After reaching that data limit, which is the equivalent of browsing for 60 hours or sending 3,000 emails, students will be switched to slower broadband speeds but still have free texting and calling.
The program will be rolled out in seven to 10 cities, including Kansas City, Mo., early next year, before becoming more widely available in the 2017-18 school year. Nonprofits including My Brotherâs Keeper Alliance and EveryoneOn will recruit students for the nine-year program and Sprint will use its retail stores and customer service representatives to sign up and serve the students.
Mr. Claure plans to introduce the program to President Obama in a meeting on Tuesday in Greensboro, N.C., along with My Brotherâs Keeper Alliance, of which Mr. Claure is a board member. The White House has started several programs in the past year with corporate partners to provide free or subsidized broadband to schools, libraries and public housing.
The new programâs cost to Sprint is minimal because it doesnât require additional network upgrades; instead, it would be the equivalent of adding more cars to a highway, the company said. And there is social value for Sprint in doing this.
âPeople will look at Sprint as a good guy,â Mr. Claure said. âBrands that create social value by making a meaningful difference in peopleâs lives are in a stronger position to attract new customers.â
Comcast has also expanded its Internet Essentials program, which began by serving families with children in free- or reduced-cost lunch programs. It now targets low-income populations that live in public housing. Comcast offered the program in 2011 as a voluntary commitment to the Justice Department and the Federal Communications Commission to make its acquisition of NBCUniversal a public benefit, which was one of the requirements for approval of the deal.
David L. Cohen, senior executive vice president of Comcast, said in a statement, âThe purpose of the program is not to convert Internet Essentials customers into paying customers.â
More recently, Facebook has been working to persuade United States officials to approve its Free Basics program, according to four people involved in the discussions, who spoke on condition of anonymity because the conversations were private.
The Silicon Valley company, which has been vocal about connecting everyone on the globe to its site, has already rolled out Free Basics in such countries such as Malawi and Indonesia. But it ran into issues in India last year, when public interest groups protested that the program discriminated against certain websites by providing free access only to Facebook and its partners. Regulators ended up blocking the service.
In the United States, Facebook has met with several members of the F.C.C. and officials at the White House to assure them that the service wonât disadvantage or block other websites, according to several people who have been at the meetings. The Washington Post reported about the meetings last week.
Facebook did not offer a timeline for a rollout of Free Basics in the United States.
âWhile we have nothing to announce, Facebookâs mission is to connect the world, and weâre always exploring ways to do that, including in the United States,â the company said in a statement.