April 21, 2000

April 21, 2000 | News Releases on Internet And Technology

What Digital Divide?

WASHINGTON, APRIL 21, 2000-In a country where Internet-ready computers are now cheaper than televisions-and even given away for free-the notion that a digital divide separates the technological "haves" and "have nots" doesn't compute, says a new Heritage Foundation study.

"Today's dynamic market for personal computers and access to the Internet is generating a 'digital deluge' of opportunity for Americans to get connected," says Adam Thierer, Heritage's Walker fellow in economic policy studies. "Free computers and inexpensive computing technologies are filling any digital divide that remains."

Thierer examined the prices of Internet-ready computers at 18 different vendors and found four machines priced under $400 and one machine priced under $300. Even the cheapest machine was more than adequate for most of today's computing needs (with a 466 megahurtz processor, 32 megabytes of RAM, and a 56K modem). By comparison, the price of a 25-to-27 inch color television at the vendors surveyed by Thierer ranged from a low of $288 (Wal-Mart) to a high of $402 (Circuit City), with an average price of $332.

"If Americans can purchase an internet-ready PC for less than the cost of many TVs, just how real is the digital divide?" Thierer asks. "After all, 99 percent of all Americans-including 97 percent of all poor households-now own a television set."

Thierer also notes that a number of companies are now giving away "free" computers if the customer signs up for Internet service, usually for 36 months. At the six companies Thierer surveyed, the highest monthly fee was $29.99 and the lowest a mere $21.88. "With the 'free PC' era now in full swing," he says, "it would seem there is little reason to create a national computer entitlement program," a reference to a proposal to give low-income families a $500 tax credit toward the cost of a PC.

And even if computers remain too pricey for some families, Thierer says emerging technologies are rendering the PC irrelevant. He sees particular promise in hybrid systems known as "Internet appliances" or "dumb terminals"-stripped-down machines, often costing less than $99, that provide instant Internet access without the need of a hard drive.

"If Americans really want a personal computer and access to the Internet, they can get them at very little cost," Thierer says. "Expensive federal entitlement programs will not facilitate this process. In fact, they could make things worse by putting pressure on computer prices to hold steady or increase."

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