Commentary

The Myth of an Emerging Information Underclass

By Gary Dempsey
November 20, 1997

Since 1993, the Clinton administration has argued that people without Internet access will be at a serious social and economic disadvantage. Subsidies, one executive white paper claims, are required to bring Internet access to lower-income households. Otherwise, we risk becoming “a society of information ‘haves’ and ‘have-nots.’” Similarly, advocacy groups like the Alliance for Public Technology and the Center for Media Education fear that without Internet subsidies an “information underclass” will emerge in the digital age.

Yet proponents of Internet subsidies make two false assumptions: 1) The fact that people do not log on does not necessarily imply that they cannot afford to do so. They may simply have other priorities. 2) Access to an Internet connection does not necessarily imply that someone is “information rich.” Just as living next door to a public library doesn’t by itself make a person more knowledgeable, there is nothing automatically informative about being wired.

Moreover, there are several reasons to doubt the likelihood that an information underclass will emerge in the absence of government-mandated Internet subsidies.

First, the number of low-income households with Internet access continues to grow each year. In the last quarter of 1996, for instance, a survey by Wirthlin Worldwide found that Internet use by people earning less than $15,000 a year may have increased by as much as 160 percent. A recent BusinessWeek poll found that as many as 18 percent of today’s Internet-using households earn less than $25,000 a year. Such trends have led Novell’s Eric Schmidt to predict, “At the current rate of growth every man, woman, and child on the earth will be connected to the Internet by 2007.”

Second, researchers at Carnegie Mellon University have found that people use the Internet primarily for amusement. That suggests that entertainment, not information services, will drive the Internet’s commercial development. As an entertainment technology, the Internet will likely penetrate households just as VCRs (88 percent of households) and color televisions (98 percent of households) have done.

Third, recent technological innovations like cable modems and wireless local multipoint distribution systems (LMDS) will expand the availability and lower the cost of Internet access. Cable is now available to 97 percent of U.S. homes, according to the National Cable Television Association, and several companies are currently developing cable modems that will allow users 24-hour access to the Internet at speeds unmatched by telephone lines. Transmitting a five-megabyte file over a typical telephone modem takes approximately 22 minutes. To send the same package of data through a cable modem will take four seconds.

Cellular technology is also advancing. Wireless LMDS, for example, will allow simultaneous, high-speed interactive voice, video and Internet services without the expense of laying costly new wires. What both cable and LMDS technologies will provide is Internet access that is diversified, faster and, with competition, cheaper.

Fourth, charitable organizations can offer low-cost or free Internet access as part of their programs. That is precisely what the Plugged In organization does. The East Palo Alto-based non-profit is committed to extending network access to low-income people. The group also offers more than 30 classes designed to give community members basic Internet and computer skills.

Private companies around the country are also stepping forward and offering free Internet access. DIGEX Inc. donates Internet access to the Robert Taylor housing project in Chicago, Illinois, and Imperium Internet donates Internet access to the Eternal Light Church’s public computer lab in urban Canton, Ohio, to give two examples.

Finally, one obvious reason lower-income households lag in Internet access is that they do not have computers to begin with. But that is changing. By 1995, one-fifth of computer-owning households earned less than $30,000 a year, 30 percent more households than the previous year, according to a survey by Computer Intelligence Infocorp. One reason for the rapid growth of computer ownership among lower-income households is the ever-increasing supply of used computers. Fifteen to 19 million used business computers go on the market each year, according to the Gartner Marketing Group, plus an estimated 1 million used government computers. It’s not surprising, then, that 29 percent of all first-time buyers in 1995 bought their computers used, up from 19 percent in 1994.

Added to the growing pool of hardware will be new, low-cost, network computers designed especially for Internet use. Such “information appliances,” as they are sometimes called, are now being introduced into the marketplace. Oracle advertises a $299 version, and Hewlett-Packard and Sun Microsystems plan to introduce sub-$500 models.

What all of this suggests is that an information underclass is far from inevitable. Rather, information technology is on course to spread everywhere without government-mandated subsidies. The voluntary institutions of civil society — markets and charitable giving — are doing it on their own.

Gary T. Dempsey is a researcher at the Cato Institute.