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Digital Divide A Journey Without Distance Darryl Dennis [ download PDF ]

Information technology is forging a new frontier, causing an upheaval that is shaking the very foundations of business and government. A new economy - a globally connected digital economy - is emerging. However, not everybody is connected and there is a widening gap between those with access to new technology and those without. This "digital divide" is now one of America's leading economics and civil rights issues.

The New Frontier
New technologies are redefining the marketplace, altering business strategies and allowing global competitors to spring-up overnight. Most economists agree information technology is generating more profound changes than those of the industrial revolution.

On-line, digital interactions are driving the new economy. The Internet is not just a network of connected computers, but a vehicle for a new market economy --- one that is global, continuously operating and increasingly automating the process of buying, selling, and distributing. Cyberspace is not a solid structure located in a certain place, but a collection of digital technologies that creates an increasingly believable illusion of place. In the new digital economy, smaller firms will be tied together, not by ownership & bureaucracy, but by bandwidth data and communication links.

Time, distance and organizational barriers between people are being eliminated, organizational structures are becoming flatter and eCommerce is altering economic value chains and creating new business models. The buzz words in the new economy are speed, connectivity and adaptability. Key factors shaping the new economy:

• Internet traffic doubles every 100 days and somewhere between 50-70 million people are on the Internet at any given point.(1)
• eCommerce between businesses is five times as much as consumer eCommerce, or about $43billion last year. By 2003 business to business eCommerce will balloon to $1.3 trillion. That's ten times consumer eCommerce, constituting 9% of all U.S. business trade.(2)
• About 65% of all small and medium size businesses use the Internet and about 41% have a web site.(3) Of all businesses that use the Internet, it is estimated that one third use it to engage in on-line sales.(4)
• As markets become more efficient because of greater connectivity, the size and organizational complexity of traditional businesses become uneconomic. Firms are becoming smaller. The Department of Labor is predicting that by the year 2005 the largest employer in the country will be "self."

A Disparity in Digital Access
Clearly, information technology is driving the new economy, but not everyone is benefiting. Several years ago, the Clinton Administration started raising concerns about the "information disadvantaged." While the number of Americans with access to computers and the Internet is growing at an exponential rate, there is also a growing split -- which breaks down along racial, economic, educational and geographic lines - between the information haves and have-nots.

Recently, the U.S. Department of Commerce issued the report, Falling Through the Net: Defining the Digital Divide. This comprehensive study outlines a number of significant findings:

• Over 60% of people with college degrees now use the Internet, compared to less than 7% of those with an elementary school education or less;
• Households with incomes of $75,000 or more are nine times more likely to have a computer at home and 20 times more likely to have access to the Internet than those at the lowest income levels;
• Whites are more likely to have access to the Internet from home than African-Americans or Hispanics have from any location, even including work; and,
• Regardless of income levels, people in urban areas are more than twice as likely to have Internet access than those earning the same income in rural areas.

People, businesses and whole communities without ready access to information technologies - like the Internet - are being left behind in the fast paced new economy. The implications are staggering for all of us. For instance, small firms - the engine providing jobs and driving the new economy - demand quick access and will not locate where it is not speedily available. Small towns or rural areas that lack high-speed, in-expensive Internet access are finding it harder to attract commerce and are declining in economic growth.

Individuals with limited education, people in rural areas as well as many people of color who do not have ready access to new technologies are finding themselves stuck on a plateau with few opportunities and dimming prospects. If knowledge is the most important asset people will compete with, now and in the future, then ready access to information is the most dynamic dimension shaping our lives.

Ensuring access to the fundamental tools of the digital economy is one of the most significant investments our nation can make. Our country's most valuable resource is its people. Our small and large businesses are only as good as their workers. Highly-skilled, well educated workers generate profitable global businesses.

In a society that increasingly relies on computers and the Internet to deliver information and enhance communication, we need to make sure that all Americans have access. Our domestic and global economies will demand it. Ready access to telecommunication tools will help produce the kind of technology-literate work force that will enable the United States to continue to be a world economic leader.

SBA is striving to make all of its programs and services available to all people in all locations. Our New Markets Initiative is specifically designed to reach-out to people and businesses in distressed communities.

Information technology is forging a new frontier. However, jumping ahead, while leaving so many behind, is like going forward in reverse. Bridging the digital divide is the only real way national growth can be achieved in the new economy.

~FOOTNOTES~ 1-U.S. Commerce Department 2-Forrester Research 3-1998 Survey of Small and Mid-Sized Businesses conducted by Arthur Anderson's Enterprise Group. 4-1999 CDB Research & Consulting Inc.

LINKS Remarks by Larry Irving, Former Asst. Sec. for Communications and Information, U.S. Department of Commerce (National Press Club -- July 8, 1999) Digital Divide Government Website Falling Through the Net, Department of Commerce (July 8, 1999) Digital Divide Summit Website Remarks by Commerce Secretary William M. Daley (December 9, 1999) -- Digital Divide Summit Remarks by President Clinton on Bridging the Digital Divide, (December 9, 1999), The Rose Garden of the White House. Addressed to the Panel of the Digital Divide Summit.