The Digital Divide and Rural America
Testimony Before the House Committee on Science, Subcommittee on Technology
Vancouver, Washington
July 2000

Madam Chairwoman, and members of the Subcommittee, thank you for inviting me here today to discuss the digital divide and rural America.

Access to computers and the Internet, and the ability to effectively use these technologies, are becoming vitally important for full participation in America’s economic, political and social life. The Internet is not merely a place to shop, but also a space where students learn, people find employment, and communities communicate. People are using the Internet to find lower prices for goods and services, to work from home, or start their own businesses. Increasingly, the Internet is used to acquire education and new skills, and to make better informed decisions about health care needs.

Having access to the Internet will only become more important in the future. The amount of information available on-line has increased tenfold over the last three years to more than a billion pages, and three million new pages are being added every day. As more people and businesses connect to the Internet, the value of being online to each Internet user increases. For work, education, communications, shopping, and acquiring the information needed for daily living, Internet access is rapidly becoming a necessity.

Computer ownership and Internet access have grown across every group, and in all locations in America, but growth has been uneven. There are serious concerns about groups that are currently “falling through the Net,” creating a divide separating American information “haves” and “have nots.” The Commerce Department’s National Telecommunications and Information Administration (NTIA) has released three reports since 1995 tracking connectivity to computers and the Internet. NTIA has found that Americans living in rural areas lag behind in the use of computers, access to the Internet, and deployment of high-speed, broadband Internet capabilities.

	“black households in rural areas are among the least likely American households to own a computer.”

Computer Ownership: Americans from every geographic area have experienced a significant increase in computer ownership. According to NTIA’s July 1999 report, nationwide, PC ownership was at 42 percent in 1998, up from 24 percent in 1994. About 40 percent of rural households own computers, slightly below the national average. This is also a lower ownership rate than urban households, but higher than households in central cities. Lower income rural households are less likely to have a PC than lower income households in urban and central city areas. The gap in computer ownership is especially large between low income households (earning between $5,000 and $9,999) in rural America and high income households (earning more than $75,000) in urban areas: 8 percent versus 76 percent. At a 23 percent computer ownership rate, senior citizens in rural areas lag behind young rural households (27 percent), and lag even more behind those rural households headed by the middle-aged (55 percent). In terms of demographics and geography, black households in rural areas are among the least likely American households to own a computer.

Access to the Internet: There also have been significant increases in the numbers of Americans on-line. In December 1998, about one-quarter of U.S. households had access to the Internet, up from 18 percent just the year before. Yet, at every income level, households in rural areas are significantly less likely—sometimes half as likely—to have home Internet access than those in urban or central city areas. For example, at most income brackets below $35,000, those living in urban areas are at least 25 percent more likely to have Internet access than those in rural areas. The lowest income households in rural areas (those with incomes below $20,000) have connectivity rates in the single digits. `Black rural households are among the least connected groups in terms of Internet access, with just 7 percent of these households with Internet access, compared to almost a quarter of rural white households and rural households of Asian and Pacific Island descent.

For rural Americans, the K-12 school is an important point of Internet access. Thirty percent of rural persons use the school for Internet access outside the home, compared to a national average of about 22 percent. According to the Department of Education, rural schools are just as likely to have Internet access and, actually, have more instructional rooms with Internet access than urban and city schools. Also, rural schools have the fewest students per computer with Internet access.

Broadband: Broadband is the next stage in the evolution of the Internet. Today, most Americans access the Internet over an ordinary phone line, and often experience the “world wide wait.” Yet, a wide range of telecommunications companies are beginning to provide high-speed Internet access to homes and small businesses that is 10 to 100 times faster than today’s Internet.

	“Broadband is increasingly important for rural economic development.”

At higher speeds, the Internet can rapidly transmit a digitized x-ray, enable someone with a disability to work from home, or allow a geographically distributed team of engineers to collaborate in the development of a new product. Benefits could be especially large for those who live in rural areas, who could use high-speed connections to tap external markets and employment opportunities, urban medical centers, or large universities offering specialty courses.

Broadband is increasingly important for rural economic development. Rural businesses will need broadband Internet access to:
• Allow their employees to upgrade skills using distance learning,
• Communicate electronically with their customers and suppliers, and
• Participate in the rapidly growing business-to-business electronic marketplace.

Without affordable broadband Internet access, existing rural businesses will have difficulty participating in the digital economy. Rural communities will also find it more difficult to attract new businesses, since the availability of an advanced telecommunications infrastructure will become an increasingly important factor in corporate site selection.

A range of technologies are available that provide high-speed access, including cable modems, Digital Subscriber Line (or DSL) which uses existing phone lines, wireless, satellite, and fiber-to-the-home. Only two of these technologies--cable modem and digital subscriber line- -are being deployed on a broad scale, mostly in urban markets.

Rural communities are in danger of being left behind. According a 2000 NTIA and Rural Utilities Service (RUS) report on the subject, while more than 56 percent of all cities with populations exceeding 100,000 had DSL available from a Regional Bell Operating Company, less than 5 percent of cities with populations less than 10,000 had such service. More than 65 percent of cities with populations over 250,000 have cable modem service, but less than 5 percent of towns of 10,000 or less have this service. Deployment in rural areas is far lower, and remote areas present a special challenge.

The primary reason for the slower deployment rate in rural areas is economic--the cost of providing the so-called “last-mile to the home.” For example, low population density is linked to a high cost-to-serve for any technology, especially for wireline technologies such as telephone or cable TV. This is because customers in close proximity, whether in small towns or big cities, can be served with less wire than a similar number of customers scattered throughout the countryside, where the wire cost can be orders of magnitude greater.

Broadband service over cable and DSL is limited by technical problems incurred by distance and service to a smaller number of customers. For example, DSL can only be offered if customers are within 3 1/2 miles of the central office of the telecommunications company, where the company locates the equipment needed to provide services.

Despite low deployment rates, rural areas may not necessarily be ignored for long. Some competitive local exchange carriers, and small and rural telecommunications providers, now offer or are planning to offer broadband access to some rural areas. For example, at the end of 1999, New Edge Networks, a competitive local exchange carrier, was offering DSL in Sequim and Port Townsend, Washington, and other small towns throughout the Western States. Northwest Telephone and Electric Lightwave agreed to offer high-speed services to businesses in Wenatchee, Washington, as well as other communities in the state.

In addition to cable modem and DSL, advanced services in rural areas are also likely to be provided through new technologies, which are still in the early stages of deployment, or in a testing and trial phase. Satellite broadband service has particular potential for rural areas, since the geographic location of the customer has virtually no effect on the cost of providing services.

But there is a large investment required for these systems, as well as long lead times which may be incompatible with today’s rate of technical change in telecommunications. Wireless broadband services are also planned for rural areas, though they also have drawbacks. For example, there must be a clear line of sight for terrestrial microwave transmission systems, and operators may need a large customer base over which to spread their high fixed costs. Their transmission towers alone can cost up to a million dollars each.

In short, there are a number of technologies that can bring broadband to rural America. However, it is important to remember that there is probably not one technological “silver bullet.” Providing broadband service to rural America will likely require a combination of these, and perhaps other, technologies.

Closing the Digital Divide: Closing the digital divide has been a high priority for the Administration, and several Federal initiatives have helped the country make progress in bringing new information technologies and Internet access to all Americans.

The E-Rate program provides discounts ranging between 20 percent and 90 percent for telecommunications and information services for all public and non-profit K-12 schools, based on the number of students eligible for the National School Lunch Program. The E-rate program, with an authorized funding level of $2.25 billion dollars, has had a significant impact on rural areas, providing vital Internet connections in communities where deployment is generally slower. In the past two years, 43 percent of funded applications in the E-rate program involved rural applications. In some cases, E-Rate funding has enabled broadband applications in rural areas and small towns.

The Technology Literacy Challenge Fund has helped states provide software and Internet access for students, and provide technology training for teachers. The fund has $425 million for FY 2000 and is administered by the Department of Education.

NTIA’s Technology Opportunities Program provides competitive matching grants to state, local, and tribal governments; health care providers; schools; libraries; and other non-profit organizations. These grants are used to purchase equipment for connecting to networks, to buy software, train staff and users, and to purchase communications services. TOP projects demonstrate how networks support education and training, assist in the delivery of heath care and public services, foster communication, and support economic development in rural and urban communities. Since 1994, TOP has awarded 421 grants totaling $135 million, leveraging $203 million in local matching funds. Approximately 65 percent of TOP grants have gone to projects supporting rural areas.

The Department of Agriculture’s Rural Utilities Service (RUS) Telecommunications Programs provide two sources of funding for advanced telecommunications infrastructure in rural America. RUS provides loans for telecommunications infrastructure investment for commercial, non-profit, and limited liability companies that provide or plan to provide local exchange telecommunications services to rural areas. Today, about 825 RUS-financed carriers serve 5.5 million rural customers. In 1993, Congress directed RUS to finance plants that are capable of transmitting and receiving one megabit per second broadband services, and RUS is supporting advanced services capable plants in even some of the most difficult-to-serve rural areas. RUS also provides loans and grants for distance learning and telemedicine initiatives, to enhance learning and health care in rural schools, libraries, and health clinics.

The Department of Education provides computer and Internet access, broadband in some instances, through its Community Technology Centers program. The program’s goal is to promote the development of model programs that demonstrate the educational effectiveness of technology in urban and rural areas, and in economically distressed communities. In its first year, the program awarded grants to 40 organizations, totaling $10 million. For FY 2000, authorized funding is $32 million.

	“America has an important choice to make: we can allow unequal access to deepen existing divisions along the lines of income, educational level, race, and among rural Americans and those living in more urban and suburban areas. Or, we can use technology to create digital opportunity for all Americans.”

President Clinton launched a New Markets Tour this past spring to focus national attention on the digital divide. The tour has highlighted communities that are using information technology to enhance education and training, and create economic growth and high-tech, high wage jobs. Also, earlier this year, the President issued a National Call to Action to close the digital divide, challenging industry leaders to redouble their efforts to bridge the digital divide by endorsing the call to action; working with local schools; and expanding high-tech career internships for women, minorities, and disadvantaged youth; and leading grass roots efforts to close the digital divide. Hundreds of leading high-tech organizations have already endorsed this pledge.

In closing, America has an important choice to make: we can allow unequal access to deepen existing divisions along the lines of income, educational level, race, and among rural Americans and those living in more urban and suburban areas. Or, we can use technology to create digital opportunity for all Americans. I believe we must bridge the digital divide and make access to computers and the Internet as universal as the telephone is today—in our schools, libraries, communities, and homes. The Administration’s proposals outlined here today would accelerate the trend toward expanded access.

Madam Chairwoman, that concludes my testimony, and I would be happy to answer any questions.