Archives: Internet

REPORT UPDATE TO "Expanding the Digital Divide and Falling Behind on Broadband":

NTIA REPORT CONFIRMS THE WIDENING OF THE DIGITAL DIVIDE:

The Glass is Three-Quarters Empty, Not One-Quarter Full

A September report recently released to the public by the National Telecommunications and Information Administration (NTIA) confirms the findings of a joint Consumer Federation of America/Consumers Union study, which demonstrated that the digital divide – both the gap between the haves and the have-nots in home Internet access, and the gap between the U.S. and others in the developed world – is growing and will continue to grow if the Administration's policy of neglect continues. 

Although the NTIA report claims that the digital divide has dissipated, the underlying data paints a vastly different picture.  Its data show that 1) penetration of the Internet has slowed; 2) low- and middle-class Americans continue to lack access to broadband Internet in the home; and 3) blacks and Hispanics are particularly vulnerable to the digital divide.  (See attached charts.) 

• The rate of increase in the penetration of the Internet plummeted from 24 percent per year (December 1998 to September 2001) to only 8 percent (September 2001 to October 2003) and over 40 percent of all households still did not have the Internet at home (see Exhibit 1). 
• While almost half of all households with incomes above $75,000 have broadband, but only one out of six households with incomes between $25,000 and $50,000 and fewer than one in ten with incomes below $25,000 have broadband (see Exhibit 2).  
• Approximately 55 percent of all blacks and 63 percent of all Hispanics are non-Internet users, compared with 35 percent of whites (see Exhibit 3).

The NTIA report and underlying data provide even stronger evidence for the conclusions of the original CFA/CU report, "Expanding the Digital Divide and Falling Behind on Broadband."  That report found that:

• The Administration has exacerbated the problem of the digital divide by ignoring it.  This is most tellingly illustrated by comments of FCC Chairman Michael Powell, who quipped:  "I think there's a Mercedes Benz divide, I'd like one, but I can't afford it."  Of course, not be connected in this Internet-based world is much more severe than not having a luxury car – a family will not be able to prosper.
• Being disconnected means being disadvantaged in many aspects of life.  The ability of a household to participate and prosper in the new economy is severely restricted if it is cut off from technology. The Internet is not just a communications tool, a means of commerce, or an entertainment medium. It is also a technological revolution that promises to enhance productivity in many aspects of life and increase the standard-of-living for all those who use it.
• The primary cause of the digital divide is that consumers pay inflated prices for the basic services needed to connect to the high-speed Internet.  In fact, U.S. consumers pay more than consumers in other parts of the world for broadband, and generally experience lower service quality (in the form of slower speeds).  For example, Americans pay ten to twenty times as much as consumers in Korea and Japan for broadband, and the U.S. has fallen from third to thirteenth in the world in the percentage of citizens with broadband service.
• Hopes that competition between cable modem service and DSL will bring prices down have no basis in reality.  As the leading providers, the cable operators do not behave that way (see Exhibit 4).  The failure of direct broadcast satellite to discipline cable rates and the recent round of cable price increases is proof of that.

The attached charts provide more information about the NTIA data and the digital divide.  Expanding the Digital Divide and Falling Behind on Broadband: Why a Policy of Neglect is Not Benign is available at: http://www.consumersunion.org/pub/ddnewbook.pdf.

Adoption Of The Internet Has Slowed Dramatically, Leaving A Significant Minority Of Households Unconnected

Exhibit 1: Household Internet and Broadband Penetration

Source: A Nation Online, Current Population Survey Data Base

Low- and Middle-Income Households Have Fallen Behind In Internet Adoption And Even Farther Behind in High-Speed Use

Exhibit 2: Internet Adoption By Income Groups

Source: A Nation Online, Current Population Survey Data Base

Blacks And Hispanics Suffer A Much Larger Digital Divide Than Rural Americans

Exhibit 3: Internet Adoption By Racial/Ethnic And Rural Urban Groups

Source: A Nation Online, Current Population Survey Data Base

Competition From Satellite Has Not Slowed Cable Rate Increases

Exhibit 4: Cable Rates And Satellite Market Share

Source: Federal Communications Commission, In The Matter Of Annual Assessment Of The Status Of Competition In Markets For The Delivery Of Video Programming, Tenth Annual Report, January 5, 2004, Table 1; Ninth Annual Report, December 2002, Table B-1; Sixth Annual Report, Table C-1; For 1995 Through 2002; Paul Kagan Associates, History Of Cable TV Subscribers And Revenues, 1997, For Pre-1995; National Cable Television Association, Industry Overview, May 2004; Press Accounts For Recent Price Increases And Satellite Penetration.