Digital Divide May Narrow by 2005

SAN FRANCISCO (06/15/2000) - The digital divide -- a technology gap between rich and poor -- will close slightly during the next five years, according to a new study by market research company Jupiter Communications Inc.

The study, titled "Assessing the Digital Divide(s)," joins a host of other recent reports that have that concluded the digital divide is an economic gap -- not a racial one.

One startling statistic that backs up that conclusion: less than half of U.S. households with an average annual income under US$15,000 will become part of the Internet population by 2005. That group of have-nots will represent 19 percent of the total U.S. population.

Although bleak, the numbers mark an improvement from today, when only 15 percent of U.S. households with an average annual income less than $15,000 are surfing the Internet.

"For the Internet to be a true mass medium, it will have to achieve higher penetration among all consumer segments," David Card, the lead analyst on the report, said in a statement.

On the bright side, Jupiter notes that the Internet has reached a critical mass and advises more businesses to take note of that fact. The critical-mass threshold for media or communication services, according to Jupiter, is 15 to 20 percent penetration.

In 1999, Internet penetration exceeded that threshold among African American, Hispanic and Asian American households. And by 2005, the Internet is expected to become significantly more pervasive across races. Jupiter forecasts that 64 percent of African American households will use the Internet in 2005, compared with 30 percent in 1999; that 68 percent of Hispanic households will be online in 2005, compared with 33 percent in 1999; and that 84 percent of Asian American households will be online in 2005, compared with 65 percent today.

The percentage of whites using the Internet is expected to grow from 47 percent in 1999 to 76 percent in 2005.

"The key message here: Web ventures need to start looking at this as a mass-marketing opportunity," concluded Vipul Patel, a senior analyst at Jupiter who contributed to the report. "The increasing mass marketing nature and expansion of Internet penetration provide a much richer audience."

But those without riches will continue to be excluded from that audience to a large extent, the study notes.

The poorest segment of the online population is expected to total only 3 million by the end of the year and reach only 9 million by 2005. By stark contrast, the wealthiest households online -- with annual incomes of more than $75,000 -- will total 15 million by the end of 2000 and approach 20 million by 2005.

To bridge this chasm, Patel said, personal computer prices and Internet access costs will have to drop and the public's awareness of the Internet's offerings will have to grow.

A substantial portion of the older population (65 and older) also will remain offline by 2005, according to Jupiter. By then, 36 million U.S. consumers age 50 or older will not be Internet users, in part because they are intimidated by high technology and because of their generally lower incomes.

Internet penetration will be highest -- 79 percent -- among people ages 19 to 49. Youths ages 2 to 18 years old will trail, with 68 percent of that age group using the Internet by 2005. Among adults over 50, 58 percent will be Internet users.

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