TCS Daily

How the High-Tech Sector Is Bridging The Digital Divide

By Helen Chaney - December 4, 2000 12:00 AM

The "digital divide," a term much in the news during the campaign season, refers to the gap between technology haves and have-nots. While still the subject of much debate, politicians and policymakers are devising welfare plans to bridge this perceived gap.

President Clinton has proposed a $2 billion technology plan, wherein the government would siphon dollars from the pockets of taxpayers to offer high-tech companies tax incentives to donate computers, sponsor community technology centers, and provide technology training for workers. Vice-President Al Gore has floated a variety of proposals, including one that would offer low-income households a subsidy to cover the monthly cost of Internet access. Another piece of legislation that was proposed would give Americans a tax credit of $500 to subsidize the cost of a new personal computer (PC). But when Congress convenes next session, legislators should recognize that government plans to spread access are pushing against an open door.

High-tech companies have already devised a number of innovative ways to spread technology down the economic ladder. "Falling Through the Net," a government study released in the summer of 1999, had the media, politicians, and public spinning over the "racial ravine" separating whites from minorities online. The foreboding image of a racial divide was splashed all over the front pages of newspapers and, not surprisingly, found its way into the speeches of politicians. In all the excitement, hardly anyone noticed that the government report was based on information from surveys taken in 1998 and earlier. By the time the Commerce Department released the report, more current data from Forrester Research were available, revealing the divide had already narrowed considerably. The report also showed that both Asians and Hispanics beat whites as the groups most likely to be wired to the Internet.

According to the most recent data from Forrester gathered in January 2000, only 43 percent of whites had Internet access, compared with 69 percent of Asian Americans and 47 percent of Hispanics. Roughly one third of African-American households were wired, and they are joining the online population at a faster rate than any other group. These facts have led Ekatrina O. Walsh, author of the Forrester report, to conclude that "there is no digital divide in terms of race." Instead, she says, "it's an economic issue."

If the digital divide is purely a question of economics, then it won't take long for market forces to solve it. Propelled by both the profit motive and philanthropic goals, high-tech companies are bringing the benefits of technology to low-income communities at a rapid pace. Numerous studies show that Internet access is quickly spreading to the low-income population.

A study by the Pew Research Center reveals that only 21 percent of those with incomes under $20,000 in 1997 used the Internet. By 1998, 44 percent of those who earned less than $20,000 per year were online. The figure rose to 67 percent by 1999. More recent data in a study by Media Metrix, Inc.; reveal that the number of online households earning less than $25,000 annually has jumped 50 percent within the past year from five million in June 1999 to 7.5 million in June 2000.

At this rate, it won't be long until all of those who desire Internet access will have it.

Americans can obtain Internet access for free and log on to the World Wide Web using a new low-cost PC or a NIC Internet computer. Those of limited means can access technology and tech training through one of the many community initiatives currently in place, many of which are sponsored by high-tech companies.

To the extent that a government-sponsored digital divide entitlement program could increase technology access among American households, it would do so only at the expense of other goods that recipient families may judge to be more important. Americans should be given the freedom to choose their purchases, instead of being forces by the government to send their tax dollars to purchase technology equipment and services. Technology, in the end, is no more special or important than other goods and services, such as transportation, housing, or medical care.

A federal entitlement to bridge the digital divide could destroy the incentives that are guiding private sector approaches to making technology available to all. A monthly subsidy for Internet service could cause the price of Internet service to rise, while, at the same time, forcing a decrease in demand for "free" ISPs. In the same way, granting a government subsidy of $500 for a PC could cause PC prices to rise, while decreasing demand for Internet appliances.

Awarding tax credits to companies for their contributions of technology tools and training would hinder the functioning of civil society, which through voluntary participation is helping to give all Americans the opportunity to participate in and profit from the New Economy.

The only digital divide in need of government attention is the one separating the educated from the undereducated. If the government wants to spread Internet access, it can begin by empowering parents and students through the expansion of school choice and competition. This will ensure that all Americans learn the skills needed to make full use of the Internet, and that more Americans are equipped to be creators, not just users, of new technology products.

This piece originally appeared on the Pacific Research Institute website.

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