Digital Divide Update: The Rhetoric Finally Matches the Reality

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As the old adage goes, "every cloud has a silver lining." Butwhen it came to the question of the availability and spread ofpersonal computers (PCs) and Internet access in the late 1990s, theClinton administration always seemed eager to prove the opposite.In a series of National Telecommunications and InformationAdministration reports entitled FallingThrough the Net, the Clinton administration embarked onwhat future historians may well remember as the silliest ChickenLittle crusade of all time, as apocalyptic rhetoric was used todecry the existence of a supposed "digital divide" in America.Luckily, although the Bush Administration decided to continuepublication of these reports, its first cut at the issue, ANation Online: How Americans Are Expanding Their Use of theInternet, wisely looks at the glass as beinghalf full instead of half empty.

The pessimistic outlook the Clinton administration heldregarding the diffusion of these new technologies was based on thesimple fact that not everyone in America immediately gained accessto them. That is, some citizens (wealthier and more educatedindividuals, primarily) gained access to new high-tech gadgets andservices before others (lower income households in particular).This is hardly a shocking phenomenon. Nor should it ever have beencause for great concern.

First of all, this class of technologies hardly ranks in thesame category as other "life essential" goods, such as heating,indoor plumbing, or electricity. Not every American needs, or evennecessarily wants, a computer in their home or a connection to theInternet. Second, it has been the case historically that wealthierhouseholds act as "early adopters" (read: guinea pigs) for most newtechnologies, and if the technologies prove useful, they spread tothe masses and their cost falls accordingly. The data shows thatthis is the case with computers and Internet access.

Finally, unlike many other technologies, it is unlikely Americawill ever witness anything close to 100 percent householdpenetration for computers or Net access. Residential penetrationrates will always be held down by the fact that workplace access tothese technologies is often viewed as a substitute for householdaccess. Moreover, the rapid pace of technological change in thissector may make desktop PCs an anachronism of the past as the worldenters a Star Trek-esque age of "wearable computing" and ubiquitousWeb access through multiple devices, especially mobile or wirelessgadgets. Who knows how we'll define "household penetration" onceour cell phones are sewn into the buttons on our shirts.

But regardless of these seemingly forgotten realities orprobable future developments, the current story of computer use andInternet diffusion continues to be nothing short of amazing. Aseconomist Wayne Leighton pointed out in a Cato Institute PolicyAnalysis last August on "Broadband Deployment and the DigitalDivide", "the latest technologies, including computer use andaccess to the Internet, are being adopted at a faster rate thantechnologies of only a generation or two ago." Indeed, thesetechnologies are spreading more rapidly throughout American societythan almost any previous good or service. While it tookmany older technologies many decades to reach 50 percent ofAmerican homes (telephones took 71 years; electricity took 52;radio took 28), personal computers were available to half ofAmerican homes within 19 years of introduction and the Internet hitthat mark in just 10 short years. And the Bush administration's newANation Online report makes clear that things will onlycontinue to get better:

  • Net use is exploding: The rate of growth ofInternet use in the United States is currently two million newInternet users per month and more than half of the nation is nowonline. In September 2001, 143 million Americans (about 54 percentof the population) were using the Internet-an increase of 26million in 13 months. In September 2001 174 million people (or 66percent of the population) in the United States used computers.Also, 45 percent of the population now uses e-mail, up from 35percent in 2000.
  • Income matters less: Between December 1998 andSeptember 2001, Internet use by individuals in the lowest-incomehouseholds (those earning less than $15,000 per year) increased ata 25 percent annual growth rate. Internet use among individuals inthe highest-income households (those earning $75,000 per year ormore) increased from a higher base but at a much slower 11 percentannual growth rate. Also, the highest growth rate among differenttypes of households is for single mothers with children (29percent).
  • Race less of a factor: Between August 2000 andSeptember 2001, Internet use among African Americans and Hispanicsincreased at annual rates of 33 and 30 percent, respectively.Whites and Asian Americans experienced growth rates ofapproximately 20 percent during these same periods.
  • Geography makes less of a difference: Over the1998 to 2001 period, growth in Internet use among people living inrural households has been at an average annual rate of 24 percent,and the percentage of Internet users in rural areas (53 percent) isnow almost even with the national average (54 percent).
  • Broadband connectivity increasing: While 80percent of Americans access the Internet through dial-up service,residential use of broadband service is rapidly expanding. BetweenAugust 2000 and September 2001, residential use of high-speedbroadband service doubled-from about 5 to 11 percent of allindividuals, and from 11 to 20 percent of Internet users.

But perhaps the most exciting and certainly most underappreciated numbers regarding Internet access and broadbandavailability are contained in the Federal CommunicationCommission's recently released "ThirdReport on the Availability of High Speed and AdvancedTelecommunications Capability". Specifically, the new FCCreport notes that over 70 percent of homes have cable modem serviceavailable to them; 45 percent have telco-provided digitalsubscriber line (DSL) service available; 55 percent of Americanshave terrestrial fixed wireless broadband options; and almost everyAmerican household can purchase satellite-delivered broadbandtoday. These numbers are very important because they illustratethat broadband availability is increasingly rapidly,regardless of what the subscription data look like. Stateddifferently, the key issue is not how many people are subscribingto broadband now, but rather how many people have the option to doso. Why aren't more people subscribing? Cost is still an issue formany. So is lack of content or "killer aps," some say. Regardless,there is certainly no role for policymakers in terms of boostingdemand outside of eliminating ongoing regulations that hinderdeployment efforts. Companies are rolling out broadband and nowit's up to consumers to subscribe if they feel that it's worthit.

So, hopefully, now that the rhetoric of recent governmentreports finally matches marketplace realities, this will put an endto the myopic efforts by some government officials to take"a snapshot view of a complexworld," as Cato Institute executive vice president David Boazhas referred to the static analysis that pervaded past reports.Goodbye "digital divide;" welcome to the world of endless digitalopportunities.