The Net: The Other Divide

SAN FRANCISCO (01/04/2000) - The Internet's innate optimism comes through even when it is choosing things to worry about. In late 1999, the shape of the next perceived "menace" of the Net - the digital divide - was becoming clear. But the problem now being defined as the new Net challenge will actually be easier to deal with than one that nobody really wants to talk about yet.

Until recently, the big "danger" of the Net appeared to be that people would use it too much. Youngsters would loiter in chat rooms and be lured away to child porn sites. Teens would find terrorist or Nazi sites and learn how to blow up their schools. Adults would join Net-based millennial sects and wait to be levitated to the stars. It was only three years ago that the mass suicide of several dozen Heaven's Gate members provoked widespread theorizing that the Internet, rather than plain old lunacy, was responsible for the deaths. (A CNN report actually began, "It was perhaps the strongest sign yet that the Internet was coming of age ... .") Now as the Net has become more mainstream, the grounds for concern are reversed. The perceived danger is no longer that isolated cultural minorities will use the Net too much. Instead it is that racial minorities, and others at an economic disadvantage, will not use the Net enough.

Thus the "digital divide," the fear that the many benefits brought by the Net will intensify, rather than ease, the existing splits in society. In December, politicians and industry titans joined to express concern over this prospect.

The Commerce Department held the Digital Divide Summit in Washington, attracting the likes of AOL's Steve Case and C. Michael Armstrong of AT&T.

President Clinton invited the summiteers to the White House and told them, in peppy language typical of the beginning rather than the end of a presidential term, that America must "slam shut the digital divide," and that civil rights organizations should be "ready, wired and able" for the task.

A few days later, at a Washington forum sponsored by the New America Foundation, CEOs Eric Schmidt of Novell and Eric Benhamou of 3Com agreed that there was a "divide" problem and proposed ways for the industry to work with the government to eliminate it. (Minor disclosure: I was the emcee of this panel, which included other dignitaries. Major disclosure: the term "digital divide" appears to have been coined by The Standard's Jonathan Weber, when editing an article four years ago at the Los Angeles Times.) What's so optimistic about this concern? Simply that if the digital divide is defined as unequal access to the Net and its wonders, then the problem will very likely cure itself.

"Access" to the Net means two different things: whether people can make a connection to the Net, and whether they actually choose to do so. Access in the first sense is clearly a matter of basic social fairness. As telephone networks, electricity, water and sewage systems, and other elements of modernity came into service, most societies quickly decided that they should be distributed as widely as possible, rather than limited to those who could pay.

Regulators have set basic telephone and electricity rates low enough that almost everyone can afford them; 95 percent of U.S. households now have phones.

By comparison, just under half of U.S. households have a computer, and only about half of those have modems. When Net connections and devices become as cheap as basic phones are now, there will be similar demands for universal service. Until then, the most important "equal access" step is to ensure that schools and libraries across the country offer connections to those who can't afford them at home. 3Com is among the companies that have supported E-rate, a federal fund that offers $2 billion a year to support Net connection costs for libraries and schools. This, Benhamou says, continues to be money well spent.

And if the digital divide means that people who could afford to use the Net have, for now, chosen not to ... well, if only all our national crises were this trivial. Yes, there are countless studies (many available on showing that today's patterns of Net use mirror existing patterns of privilege. The richer, the better educated and the whiter you are, the more likely you are to say you like to spend time online. But one thing we know about the Net is that people spend time there when it offers something they find valuable, mostly starting with good old e-mail. And the Net's ecology, with tens of millions of competitors scheming for ways to attract attention, guarantees that sooner or later it will cater to every conceivable taste.

So if market forces, Moore's Law and regulation together will solve the U.S. digital divide as it's currently defined, is there any other divide to fret about? Indeed there is: the more persistent, wider gulf between economic haves and have-nots created by the Net.

Let's consider two tiers of Net beneficiaries: the thin, top layer of entrepreneurs whose startup gambles have paid off, and the much larger cadre of skilled engineers, designers, marketers and dreamers who keep the companies growing.

Those in the first group (with their VC tagalongs) have created - and shared in - the most rapid accumulation of wealth in history. Those in the second group, as Novell's Schmidt points out, have average earnings about twice as high as the norm for the U.S.

These citizens of the Net economy vary among themselves, but as a group they differ from the rest of the U.S. in distinct ways. They're better educated, which is only natural. A higher proportion are male, for reasons I'll let someone else explain. And their racial makeup is very different from the U.S. norm; fewer of them are white.

As a study from the California Institute of Public Policy pointed out last summer, immigrants from India and China alone were responsible for 29 percent of Silicon Valley startups between 1995 and 1998, and were running a quarter of all tech firms - not counting U.S. citizens of Asian ancestry. (Handy comparison: the U.S. Senate contains no naturalized citizens, and has only two Asian-American members, Senators Akaka and Inouye of Hawaii.) And essentially none of the members of the new, rising class comes from groups that were economically behind to begin with: African Americans and Hispanics.

What makes this pattern intriguing is that it can't be traced to "normal" racism. Net companies are filled with dark-skinned people; they just don't happen to come from the U.S. It also can't be a matter of pure old-school connections. Friendships and informal networks still matter in the Net world, like when you need to staff up in a hurry or decide where to take an investment risk. (Here at least we have historic continuity: In her new biography of J.P.

Morgan, Jean Strouse quotes his maxim that in making an investment, "the first thing is character ... . A man I do not trust could not get money from me on all the bonds in Christendom.") But a Net company won't survive unless it ultimately judges its people on their ability to produce the code and make the sale.

This pattern has to reflect long imbalances in technical preparation and education within the United States - which means the debates we've had for generations about education and equity will soon extend to the Net. For two decades, political parties have waged bitter war over affirmative action plans, or preferential racial hiring. Yet the opportunities at stake in these battles - jobs with the police or fire departments, or admission to state universities or law schools - are chump change compared with the potential rewards of the Net. And there's nothing in today's market dynamics to suggest that, unlike the other kind of digital divide, this one will cure itself.

Bill Gates may have pointed to one solution, with his Millennium Scholars program to train African-American and Hispanic technologists. He won't be the only one expected to have an answer.

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