Digital inequality has consequences. “Many people in the U.S. still lack access to the internet, which limits their ability to access educational, health care, and financial resources,” says ITOM Professor Karthik Babu Nattamai Kannan of SMU Cox. In new forthcoming research at Management Science, a top journal, Nattamai Kannan and coauthors uncover the implications of smartphone dependence, data caps and ways to reduce digital inequality. From detailed household-level data across 2015-2016, during the advent of 4G technology, the authors’ research directly informs the Federal Communication Commission (FCC) policy debate about bolstering digital access. “Internet access is no longer nice-to-have, but need-to-have for everyone, everywhere,” says chairwoman Rosenworcel, referring to data caps and competition.

Nattamai Kannan shows that removing data caps on mobile plans leads to increased usage of educational resources, which benefited disadvantaged communities the most. Smartphone dependence played a key role in access to education. He will be presenting his paper to the FCC October 24th.

An interview with Information Technology and Operations Management Professor Nattamai Kannan about the research follows.

JW: With this research, could you give me a high-level summary of your work from your perspective?

Kannan: This project is about exploring novel ways of addressing digital inequality. Many people in the U.S. still lack access to the internet, which limits their ability to access capital enhancing content such as educational, healthcare, and financial resources. Those who already have access to these resources continue to further increase their consumption, hence the beneficial outcomes. However, those on the wrong side of the digital divide end up with lower levels of access, which eventually widens the gap between the haves and have nots, i.e. digitial inequality. Policymakers are trying to find ways to reduce this inequality. About 5 to 10% of people in the U.S. and worldwide still don’t have internet access. One way to address this is through policy changes in mobile data plans.

Traditionally, the FCC and U.S. government have focused on new cell towers and fiber installations to provide access to underserved areas. While this increases access to those who never had access before, it does little to improve access to those who already have access, however limited, to the internet. However, many people have smartphones with mobile internet, but their usage is limited due to data caps. We focus on the effects of unlimited data plans (i.e. dropping the data caps) on data consumption.
We analyzed the effects of removing data caps in data plans to see if households would increase their use of capital-enhancing resources like education. The short answer is yes. We found that when households adopt unlimited data plans, the benefits primarily go to those in rural areas or low socioeconomic status, compared to their higher socioeconomic-status urban counterparts.

JW: So, disadvantaged communities utilize that more when data caps are removed?

Kannan: That’s correct.

JW: Did you analyze the usage for educational purposes specifically?

Kannan: Yes. We looked at the types of websites accessed—whether they were educational (.edu) or others. Internet providers categorize this usage, allowing users to see how their data is being used across different categories.

We focused on overall data usage, and specifically on education. We found an increase in educational data usage, which is crucial for reducing inequality, especially as the gap between low and high socio-economic status continues to widen.

The mechanism is significant because there’s a growing reliance on smartphones among low-income and rural households. Buying a computer or broadband is expensive, but a good smartphone can provide access to most resources. This is why areas with low-income households have higher smartphone penetration and benefit more compared to urban households.

JW: So they benefit in terms of access to education and resources?

Kannan: Yes, both.

JW: What percentage of the U.S. lacks access to the internet?

Kannan: In 2019, about 5-10% of U.S. adults do not have internet access. It’s worth noting that “lack of access” and “not using” the internet can be different things. Some people may have access but choose not to use it, while others may lack access due to various factors like infrastructure or affordability.

JW: And there’s a lot of variation in what kind of access people have, especially concerning data caps?

Kannan: Exactly. During our study period, most data caps were 1GB to 10GB. With the introduction of 5G, those caps have increased significantly—perhaps to 50GB or 500GB. Currently, there are fewer data caps, but when new generations like 6G come, they often start with caps.

JW: How far along are we with 5G in the U.S.?

Kannan: I believe 5G penetration is around 80 to 90%.

JW: So most people have access to 5G, but we don’t know about data caps?

Kannan: Right. The plans vary a lot. Our study was based on 4G data from 2016, during the initial widespread smartphone usage.

JW: When did this explosion of smartphone data usage occur?

Kannan: It correlates with the introduction of 4G around 2014.

JW: So 2014 was a turning point?

Kannan: Yes, that’s when data usage really started to grow.

JW: What about the differences between educational usage and entertainment like gaming?

Kannan: We noted a significant increase in overall usage, which benefits the economy. However, there was a much larger increase in media usage, like Netflix and social media, compared to educational usage.

JW: People often consume educational content through platforms like Netflix.

Kannan: Exactly. Our estimates are conservative; we only counted pure educational content.

JW: What did your study reveal regarding the increased use of books, given the increased access to education from data cap removals?

Kannan: We found that low socio-economic status households were using about five more books per month compared to high socio-economic status households.

JW: Your study period was from January 2015 to December 2016, right?

Kannan: Yes.

JW: Imagine if you had conducted this study during the pandemic!

Kannan: That would have been interesting!

JW: What’s unique about your study? Any key takeaways?

Kannan: Our study directly addresses an open policy debate posed by the FCC. Not many studies can do that. We hope to contribute to their analysis and policymaking.

JW: Was there a key takeaway that stood out to you personally?

Kannan: During the review process, we discovered the concept of smartphone dependence. By linking private data with census data, we identified that increased data usage and education access among low-income households is driven by smartphone dependence.

JW: So, smartphone dependence is crucial for understanding the increase in data usage?

Kannan: Yes, tying both data sources together revealed the mechanism driving these trends.

JW: That’s an interesting perspective, especially considering global differences in smartphone dependence and infrastructure.

The paper “Can Improvements to Mobile Internet Service Help Reduce Digital Inequality? An Empirical Analysis of Education and Overall Data Consumption” by Karthik Babu Nattamai Kannan of Cox School of Business, Southern Methodist University, and Eric Overby and Sridhar Narasimhan of Georgia Institute of Technology is forthcoming in Management Science.

Interview by Jennifer Warren.