"Closing the Digital Divide"
By John Conyers, Jr. and Mel King
In the same way that the technology sector fueled the economic boom in the latter part of the 1990s, the implosion of the technology sector is creating a drag on economic recovery. Since 2000, technology companies lost nearly $2 trillion in paper value on the stock market, witnessed the elimination of 225,000 jobs one-fifth of the total jobs lost in the country and accumulated as much as $400 billion in questionable debt.
In our quest to revitalize this essential sector, we must realize one of its past shortcomings: too few people participated in the information revolution. Indeed, only 30% of African Americans, and 32% of Hispanics use the Internet, usage rates less than half that of the general population. And while the next and most promising generation of Internet transmission technology known as DSL or broadband is available in 85% of American households, only 12% of households actually choose to use the pricey service.
Revitalizing the technology sector requires first and foremost public policies that will bring more Americans into the information age as full participants. This is especially important in African American and other communities of color where technology, if readily accessible, helps our communities overcome historical racial inequities in the marketplace. Problems of dusty, outdated school textbooks can be clicked away on line; innovative software knows no color barriers.
One of the most important things that Congress ever did in this respect was to pass the 1996 Telecommunications Act. It required the Bell monopolies open their transmission pipelines to competitors who wanted to develop innovative services. The law gave the Bells some handsome benefits it allowed them to charge these competitors profits leasing these transmission lines, and to enter the lucrative long distance market as well.
It was a first step, and is now showing great promise. It has opened the door for hundreds of our small businesses African American Latino, Asian and Native American to be part of the information age as entrepreneurs. These small telecom companies now offer service to 16 million consumers, generally at prices 10-50 percent less than the Bell companies. And in states like Michigan where competition is vigorously enforced, the Bells have been forced to slash basic phone rates by a third, from $21 to $14, saving consumers in that state $27 million annually.
All told, competitors have invested well over $65 billion in new networks, and today account for over 60% of local Internet traffic passed over new networks built by local competitors. Surveys show that consumers and small businesses prefer their services. And it is these small businesses that are the ones likely to provide the necessary service at affordable rates in urban communities and communities of color.
The policy idea behind all this is called "market-access" or "open systems." And it's become the acid-test of civil rights in the technology arena. Because without open systems, our small entrepreneurial firms can't get access to the essential transmission pipelines and will never bring their innovative services to the market. And without open systems, there will be no competition to bring down prices so Americans of modest incomes can participate in the information age on equal footing. It's the technological equivalent of getting a seat on the bus.
Amazingly, Congress is now considering legislation that would not strengthen the 1996 Act, but effectively repeal it. Why would it consider such a thing? If you're guessing that the Bell monopolies are pushing it as their number one Washington priority you're right.
The truth is that, while the Bells told us they'd support the democratizing requirements of the 1996 Act, they never fully supported it. In Massachusetts and elsewhere throughout the country, they've been fined over $2 billion for thumbing their nose at the Act.
Their goal is to wear down competitors and regulators to keep their systems closed. According to numerous published reports, they have repeatedly attempted to put out of business one of the most promising young African American telecommunications entrepreneurs Keith Machen of Baltimore by repeatedly thwarting his access to the transmission lines. As such, they've managed to cling to their monopoly, holding onto to nearly 90% of the market, and controlling nearly every phone line going into the home.
The Bells argue today that we must revert back to closed systems, because leasing their transmission lines to competitors, they say, causes them to lose money they would otherwise use to deploy more fiber for broadband networks.
But in Verizon v. FCC, the conservative and pro-business U.S. Supreme Court called their story "patently absurd," and noted conversely "actual investment in competing facilities since the effective date of the Act simply belies the no-stimulation argument's conclusion." Further, the problem is not deploying new high-speed (a.k.a. broadband) networks 85% of American households has access to them. The problem is that prices as high as $50 per month puts them out of reach for most Americans, including in our communities of color.
Does the proposed repeal of the 1996 Act sound counter-productive and anti-social yet? Well there's even more. Their bill proposes to preempt state regulators from protecting Massachusetts consumers from overcharges and other abuses. One state recently found that its Bell company had overcharged consumers $350 million for local telephone bills and millions more for DSL service that consumers never received. Questions have also been raised as to whether Verizon, through accounting games, is passing on false equipment expenses to Massachusetts consumers.
Other countries, by contrast, have seen the light. South Korea champions competition as its principle policy to keep its telecommunications sector vibrant. Broadband usage there is four times as high there as it is in the United States. Economic growth and civil rights go hand in hand. Bringing more people to the economic table means more innovation, lower prices and a bigger customer base. And there is no principle that ushers that along better than market-access. It's a calling card for economic civil rights in this new millennium.
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John Conyers, Jr. of Michigan is ranking Democrat on the House Judiciary Committee.
Mel King is senior lecturer emeritus in MIT's Department of Urban Studies and Planning and a former state representative from the South End and Roxbury.
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