I. Introduction

II. Defining the Digital Divide in the United States - 2001

A. Rural areas
B. Lower-Income Americans
C. American Minorities
D. The American Uneducated
E. Americans with Disabilities
F. Single Parent Households

A. Background - Then & Now (1934 & 1996)
B. Purpose

1. Universal Service Fund
2. The Lifeline Assistance Program
3. The Link-Up Assistance Program
4. The E-Rate Program

A. Telecommunications providers challenging the USF

1. Universal Service Fund Support is being limited and restricted
2. Universal Service Fund being challenged as Unconstitutional

B. Customers challenging the USF

A. Why is Universal Service Fund is necessary

1. Now or Never

B. Why it should be done

1. Economic justification
2. Equity justification

A. Legislative Reform

1. The Internet a truly democratic tool

B. Models for success

1. National Models
2. International Models

There are two main reasons a nation might want to encourage its federal and local governments to subsidize access to its telecommunications infrastructure.  The first is economic.  A nation with ubiquitous access to information infrastructure will be better prepared to compete globally with other countries' economies.  It will provide that nation's businesses with access to a larger and more skilled labor pool.  That nation will enjoy a better-educated workforce and culture.  But most of all, it stimulates the current economy by giving more people an ability to become participants in our information based economy.  It provides people the ability to conduct business online and it provides the business sector with increased access to a larger customer base.

Second, there is the equity argument.  People on the losing side of the digital divide will be at a serious disadvantage.  To be disenfranchised in an information based economy is to be without access to online, banking, shopping, training, and education; without access, there will be no opportunity in the future to participate in online group discussions, or provide consumer feedback about products, or even vote online.  People on the losing end of the Digital Divide become, in effect, the Digital Homeless, with neither a voice nor a presence.  They become "virtually" non-existent.  In one sense, the Digital Divide is only a new manifestation of the economic and educational gaps that have existed in the US and indeed most of the world long before there was a microchip or the Internet.  Those who are "left behind" may never have an opportunity to close this gap.  With technological innovations in the telecommunications industry these people will continue to find themselves at least one step behind this constant progression.  However, the Digital Divide is not solely the result of economic have-nots.  It also includes, for example, people who can afford access but do not have access b/c they live in rural areas.

Arguments about equity, equality, and access to privileges is an age-old problem, not likely to be solved any time soon and certainly not by one little subsidy program of the Federal Communications Commission.  Moreover, "equity" is not always a persuasive argument in times of government agency cutbacks, a decline the US's economy, declining consumer confidence, and the need to justify any government action in terms of economic ends.  To make a case for the continuation, let alone the expansion of the Universal Service Fund there must be an economic justification for this subsidy.  How will the US be better off economically as a result of supporting this program?  What are the real economic gains?  For those who do not find the policy reasons persuasive by the end of this paper the economic justifications will be clear.

According to a report by the Commerce Department's National Telecommunications and Information Administration (NTIA) entitled "Americans in the Information Age Falling Through the Net", generated from relevant US Census data as it relates to Internet use, a Digital Divide does exist in America.1

The latest report by the National Telecommunications and Information Agency (Oct. 2000) defines digital inclusion as those households and individuals that have a computer and Internet connection.2  Therefore, the Digital Divide defined in its broadest sense, is equivalent to the difference between those with access to the best information technology a nation has to offer and those who for some reason do not have this same access.3  The Digital Divide defined in its most simplest terms is equal to the gap between those with access to the Internet and Internet technology and those who for one reason or another are without similar access to the Internet or Internet technology.  As of August 2000, 41.5% of the US's 105 million households, or 43.6 million homes, had Internet access.  This means 61.6 million US households are not connected electronically and are therefore, affected by the Digital Divide.4

A. Characterizing and Defining who exactly is part of the Digital Divide in America

Who are the people living on the losing side of the Digital Divide?  Who are those falling even further behind?  According to the NTIA report although digital inclusion is rapidly increasing, "nonetheless, a digital divide remains or has expanded slightly in some cases."  4  According the latest NTIA report "Toward Digital Inclusion" digital inclusion proceeds unevenly and is growing for people with disabilities and "large gaps for Blacks and Hispanics remain when measured against the national Internet penetration rate."5  There are six basic categories of people who have lower Internet penetration rates: (1) those living in rural areas; (2) those living in poverty; (3) minorities; (4) the uneducated; (5) Americans with disabilities; and (6) single parent households.

1. America's Rural Areas

According to the 1999 NTIA Fact Sheets, rural areas magnify the Digital Divide.6  Rural areas lag behind the national average in computer and Internet access, regardless of income level.  People living in urban areas are 50% more likely to have Internet access than those earning the same income in rural areas.7  According to the 2000 NTIA report, only 38.9% (this is a 75% increase from 1998 when only 22.2% of rural households had Internet access) of all rural households have Internet access.8  That means that of the +54 million living outside metropolitan areas (rural areas) according to the 2000 US Census Bureau, roughly +32 million (32,450,322) Americans living in rural areas are without Internet access.9  This represents over 11 percent of the entire US population that is without Internet access.10  This is a sharp increase from 1997 when only 14.8% of rural households had online access.11  This increase shows that programs like the Universal Service Fund are working, however, there is still 60% of rural households without Internet access, which is over 10% of the US's population that is without access simply because of where they live.

There are arguments that people living in rural areas are not entitled to Internet access because of lifestyle tradeoffs, or that it is simply their choosing not to have Internet access because they want to live in a secluded area of the country.  These arguments are persuasive because there are some people without Internet access (in any group) who simply do not want access.  In 2000, of the "never-connected" households who actually had a computer, 30.8% stated that their most dominant reason for not being connected was because they "didn't want it."13  This is a significant percentage of the population and any statistic that represents the Digital Divide will always be skewed by those who simply do not want it.  However, this does not indicate the whole problem because of those who do not access the Internet and have a computer, there are those living in rural areas who would like to have access and can afford it but do not have access to the appropriate infrastructure because of the area they live in.  This is the exact problem of the Digital Divide, not to force people to have the Internet in their homes but rather, to give access to those people who want it, can afford it but cannot access the Internet, mainly because of the high cost of providing these rural geographic areas with basic infrastructure.  These arguments would also be more persuasive if the Internet was merely a luxury item, but it is not, the Internet is becoming an essential tool that people must incorporate into their everyday lives to become successful or even just maintain.

2. Americans with Lower-Incomes

In the United States there are roughly 32.3 million Americans living below the poverty line.14  Obviously, one of the most significant determinations if not the most significant determination for household Internet access continues to correlate closely with income.15  Income level is a strong determinant of a person or household's Internet access.16  Only 12.7% of Households with less than a $15,000 income have Internet access.16  That is roughly +28 million Americans living in poverty that are without Internet access.  That is almost one-tenth of the US population without Internet access mainly because they cannot afford access.  Among all households with computers 24% indicated some cost problem for their reason for never accessing the Internet.17  Persons making under $25,000 generally cite cost as the primary reason for not using the Internet at home, while those earning more than $25,000 are more likely to say they "don't want it."19  This indicates a fundamental problem stemming from the confusion around the Digital Divide.  For those individuals that can afford Internet access and simply do not want it, are wrongly being classified into groups within the traditional use of the term Digital Divide (either those who can afford it, and want it but have no access because of where they live, or those who want it but cannot afford it).  The concern should be over those people who want Internet access but because of cost cannot afford this access because they must make fundamental survival decisions, like that between the need for food, or shelter, versus the need for a computer or Internet access, and those who because of where they live telecommunications carriers have determined that the area they live in is not a cost effective area to supply this necessary infrastructure (this could be a poor or rural area that would not provide enough customers).

Obviously, the USF is not going to be able to solve the quandary of the age-old problem of poverty.  Some argue that there will always be a poverty class in a capitalistic economy, however, because the poor are without access and make-up a significant portion of the US population, these statistics are relevant for the simple fact that the poor make up a significant part of the Digital Divide.  However, one positive indication that these programs designed to help poor Americans gain access to the Internet is working, is in the form of public access facilities, the poor are more likely to use community access centers, however, public resources available to date have not alleviated the significant gap between rich and poor, in terms of Internet access.21

3. American minorities

With the exception of Asian-Americans whose Internet penetration rates are rapidly increasing22, the digital divide between "Whites" and most minorities continues to grow.22  Although, income, education and geographic area are the primary factors for determining an individual's or household's Internet access, race or ethnic origin still plays a significant role in a household's access to telephone, computer and Internet access.23  However, with the combination of race and living in rural areas, the digital divide is even more pronounced.24  Minority groups living in rural areas, have experienced significantly lower penetration rates: 19.9% for Blacks and Hispanics.26  Because these two groups as a whole have lower incomes and lower education levels than the national average, it is clear that being an African-American; having a Hispanic / Latino origin; or being Native-American makes you part of a group that is likely to be significantly affected by the Digital Divide.28

This gap is less pronounced when income and education are not a factor.  Household's earning above $75,000 are most likely to have Internet access (78.6% for Whites, 70.9% for Blacks, 63.7% for Hispanics, and 81.6% for Asian American households).29  Because this gap is less defined at higher income levels, this suggests that if prices of computers and Internet access continue to drop, the gap between information rich and poor may also begin to narrow at low-income levels.30  Large gaps for Blacks, Native-Americans, and Hispanics remain when measured against the national average Internet penetration rate.  It is hard not to overstate the effect the Digital Divide will have on Blacks, Hispanics and Native Americans, especially because, substantial disparities have continued to widen, both when comparing these groups against the national Internet penetration average and when comparing them against "Whites".

Finally, Native American households and individuals may be doing the worst among any US minority group because they are most likely to be poor, uneducated and live in rural areas.  Because of these facts, Native-Americans are steal dealing with basic communications needs.  The telephone penetration rate for Native Americans is 76.4%, well below the national average of 94.1%.31  Native-Americans are more likely to say where is my telephone line before they ask for Internet broadband access.

4. The uneducated

Level of education plays a key role in determining a person's or a household's likelihood of owning a computer or using the Internet.32  People with college degrees are the most likely to have Internet access at work or home.  Among households headed by someone with post-secondary education, 69.9% had Internet access.  At home, those with a college degree or higher are over eight times more likely to have a computer and twenty-six times more likely to have home Internet access.33    Despite the Internet being a powerful educational resource tool, data shows that only those who have already attained educational success are using the Internet in large numbers.  Consequently, those with less education, who could perhaps benefit from the Internet's educational value, are being left behind.34  However, because there is such a high correlation between education and income levels it is hard not to speak about one without the other; however, the latest NTIA report has presented evidence that both income and education are independently associated with Internet access35, therefore, it is worth mentioning that people who are less-educated are more likely to be on the loosing end of the Digital Divide.

5. American's with Disabilities

The Americans with Disabilities Act defines a person with a disability to be one who has a physical or mental impairment that substantially limits one or more of major life activities.37  There are 45,416 million Americans with disabilities, that is 21.8% of the entire population.38  Of this group 60% have never used a computer.39  However, physical or mental limitations and technological innovations in hardware and / or software rather than lack of access to telecommunications infrastructure may account for the major reason for lack of Internet access among this group.  However, because they comprise a significant portion of the population whom might be significantly affected by the Digital Divide they as a group are worth mentioning.

6. single parent households

Family structure has a significant role in predicting a household's Internet connectivity regardless of income, or race.40  The 1999 NTIA study shows that family households without two parents have lower phone and computer ownership, as well as Internet access.41  Two-parent households are nearly twice as likely to have Internet access as single-parent households (60.6% for dual-parent, compared to 37.7% for male-headed households and 30% for female headed households).42  Because this type of household represents a significant portion of the modern households, it is worth reporting as a separate category; but because this and other categories are not independent, one must always be aware of the importance of the correlation and overlap  these categories have over one another.  An example is that computer penetration drops dramatically at the lowest income levels for almost all-household types.43  The people doing the worst in terms of Internet penetration are a combination of the above stated groups, those who are poor, uneducated, minority, live in rural areas and in single-parent households.

A. Background - Then & Now (1934 & 1996)

In the preamble of the Communications Act of 1934, although it did not textually cite the term universal service, the concept was established with the following words: "as to make, so far as possible, to all the people of the United States...  [a] Nation-wide... communication service with adequate facilities at reasonable charges."45   The Communications Act of 1934 in general was an Act designed by Congress to gain control over the telecommunications industry by granting AT&T a monopoly so that it "could serve all customers at reasonable rates, regardless of the cost of serving consumers in different regions."46   However, the term universal service did not become officially codified until the Telecommunications Act of 1996.47   This was an important first step because before 1996, universal service meant different things to different people and was an unclear "goal of telephone regulation ... since the 1960's."48  However, the 1996 Act was passed primarily in response to "implement a competitive market system in place of the prior monopolistic system."49   Although the 1996 Act did not specifically define universal service, it did mandate that the FCC establish a Federal-State Joint Board to make recommendations to implement the Universal Service program.50  This is the source for much confusion, but it allows the FCC to be flexible in terms of changing telecommunications technology, by taking "into account advances in telecommunications and information technologies and services."51

B. Purpose

The main purpose of Universal Service can be found in the text of the Act (47 USC §254 (3)) - "consumers in all regions of the Nation, including low-income consumers and those in rural, insular, and high cost areas, should have access to telecommunications and information services, including ... advanced telecommunications and information services, that are reasonably comparable to those services provided in urban areas and that are available at rates that are reasonably comparable to rates for similar services in urban areas."52  The FCC offers USF support to: (1) telecommunications carriers in rural, insular, and high cost areas, where telecommunications services are often more expensive to provide; (2) low-income consumers, through the Lifeline Program (which provides monthly reductions in service charges) and [the] Link Up program (which provides reductions in initial connection charges); and (3) schools, libraries, and rural health care providers.53

 1. Universal Service Fund - to Telecommunications carriers

Although, certain customers benefit from the Universal Service Fund (USF), only companies that provide telecommunication services may draw money directly out of the USF, this helps defray the cost of delivering discounted services to customers.54  This program is not designed to target customers, like low-income customers, rather it targets high cost areas in order to help subsidize the high costs associated with providing telecommunications infrastructure and services in these rural, insular, and other high cost areas.  The USF is funded by all providers of interstate telecommunications services.55  Therefore, all telecommunications must contribute to the fund and those that provide service to these high cost regions are eligible to draw on the USF in order to help subsidize the high cost of providing service and infrastructure to these high cost areas.

2. The Lifeline Assistance Program

The Lifeline program provides between $3.50 and $7 a customer to telecommunications providers to help them reduce eligible consumer's monthly charges.56  The Lifeline assistance program is targeted to mainly low-income customers.  To qualify a customer must meet specific state established criteria, and those customers in states that do not participate in the Lifeline assistance program may still qualify if they are enrolled in one of the following federal programs: Medicaid, Social Security Income, federal public housing assistance; or Low-Income Home Energy Assistance Program.57

3. The Link-Up Assistance Program

The Link-Up program offers eligible low-income customers either a reduction in the initial connection charges a telephone company charges (either half of cost or $30 whichever is less) or a deferred payment plan that waives any interest payments.58

4. The E-Rate Program

The main purpose of the E-Rate Program is to provide affordable access to telecommunications services for all eligible schools and libraries, particularly those in rural and economically disadvantaged areas.59  This program is designed to bring every school and library into the Information Age.60

A. Telecommunications providers challenging the USF

1.  Universal Service Fund Support being limited

The best way to illustrate the specific reasons why the USF is not adequately building a sturdy bridge over the Digital Divide is through the legal disputes that have challenged the Universal Service Fund.  In Iowa Utilities Board v. F.C.C., 218 F3d 756 (D.C. Cir. 2000) a telecommunications provider sued for USF support, however, the federal court in that case held that Universal Service Fund support is not available to all telecommunications providers.  To qualify a telecommunications carrier must be classified as a "common carrier."  The FCC has determined that to be a Common Carrier a telecommunications provider must hold themselves out to all potential users and must allow customers to transmit intelligence of their own design and choosing.  Once a telecommunications provider shows that they qualify as a common carrier then they are eligible for USF support.  The USF gives common carriers either: an amount equal to the aggregate discount given to customers (a reimbursement); or an offset against the carrier's obligation to participate in or contribute to the Fund.

It is arguable that the USF needs to be limited, however, there is a concern that if too many restrictions and limitations are placed on USF support, then the overriding purpose to lay telecommunications infrastructure, will be delayed or hindered.  Limitations and restrictions placed on the USF is a major problem in its effectiveness as a subsidy program.  If there are too many limitations put on USF support or if the restrictions on USF support are too burdensome to be received, telecommunications infrastructure will not be provided to the people being left behind in any time efficient manner.  If the limitations placed on the USF are too burdensome then USF will not be an effective regulatory tool to overcome such problems.  The precise nature of the burdensome effects of the limitations placed on the USF is concisely articulated in, USF, Hindering ... Technological advancements in rural and insular regions, 52 Fed. Comm. L.J. 117 at 123, which states that under the current system, USF support is only available to telecommunications carriers in only seven states.61  It is undisputed that more than seven states are in need of USF support.

2. Universal Service Fund being challenged as Unconstitutional

In another case involving a telecommunications carrier, a telecommunications carrier challenged the USF as unconstitutional, inter alia.  In Alenco Communications v. F.C.C., 202 F3d 608 (5th Cir. 2000), a telecommunications carrier challenged the required USF contributions as an unconstitutional taking.  The court held that the FCC's orders tailored to achieving universal service and local competition was not a cognizable, unconstitutional taking that is mandated by the Telecommunications Act of 1996.  The court articulated that the primary goal of the FCC under the Telecommunications Act of 1996 towards Universal Service is making Universal Service work from a monopoly to a competitive market, which means that not all carriers are guaranteed success under the USF.  Further, the court stated that the USF is designed to help customers not carriers (by giving customers lower prices and higher quality telecommunications services).  It is understandable the resistance by telecommunications providers who are fighting to maintain profits yet are faced with the prospect of failure because they must contribute to the USF.  This concern was articulated in a Federal Communications Law Journal article that claims that the USF is a hidden unconstitutional tax.62  This article argued that Congress has unconstitutionally delegated to a regulatory agency its power to levy taxes.63  These legal challenges over the USF exhibits telecommunications carriers resistance towards contributing the USF, which has the practicial effect of limitating and restricting the USF even though these suits and arguments are not ultimately successful.

B. Customers challenging the USF

This article also brings up the second issue: that consumers are actually paying the USF fees, and thus consequently have the right to challenge the USF in court.  This article addreses the issue that consumers in urban and moderate to low cost regions are the ones actually paying for the USF yet are not receiving any of the benefits.64  It is argued that because consumers are not being told about this contribution it is a hidden unconstitutional tax.  In Evans v. AT&T, 229 F3d 837 (9th Cir. 2000), this concern was articulated by a private citizen who brought suit against his telecommunications provider for unconstitutionally passing on their USF fee obligation to their customers without telling them, through an assessment fee.  The court dismissed the case because the filed-rate doctrine bars any federal or state claim from attacking a common carriers collection of the USF assessment that is in compliance with the terms of filed tariffs or schedules of charges.  Although in each of the indicated cases, the corresponding suits were dismissed, it illustrates the resistance by telecommunications providers, private consumers, and even scholars toward making these required contributions to the USF.  However, even if these arguments are not successful on the merits they do have the affect of limiting and restricting the application, discussion, and growth of the Universal Service Fund.

A. Why is this necessary?

The main focus over the Digital Divide as it relates to the USF is over those people who are supposed to be benefiting from this program but remain unconnected.  The most effective way to characterize the Digital Divide in its true perspective is through results.  Who remains unconnected in America strictly by the numbers?  There are roughly 39% of Americans in rural areas connected to the Internet.  This means that over 60% of rural households are without Internet access.  This represents over one-tenth of the American population.  Thus over 32 million Americans remain unconnected because they live in rural, insular or high cost areas, which is a fundamental goal of the USF; to provide telecommunications providers with USF support in order to provide these high cost areas with telecommunications infrastructure.

Next, there are roughly 28 million Americans without Internet access because they cannot afford access.65  This represents almost exactly another one-tenth of the entire population that are likely to be on the loosing side of the Digital Divide.  This is another group who should be directly benefiting from USF support, yet only 12.7% of this group is connected to the Internet.  That represents over 87% of this group who should be benefiting from USF support but are not.  These last two groups, although not exclusively independent, represent one-fifth of the American population who are supposed to directly benefit from USF support, yet remain unconnected.

The uneducated represent another group that is likely to be on the losing side of the Digital Divide.  Although this group is not specifically targeted for USF support, the E-Rate program represents the ideological commitment by Congress and the FCC not to leave any student behind.  Although minorities, Americans with disabilities, and single parent households are not identified as groups that directly benefit from USF support, unless they are also within the above categories, people within these groups are likely to be on the loosing side of the Digital access gap and represent a significant portion of the American population.  Therefore, taken in whole there is currently one-fifth of the US population that could directly benefit from USF support yet remain unconnected.  Obviously, that number of Americans is probably larger, because of the Americans who may be included in more than two or three categories but are not identified as a direct beneficiary of USF support.  An example is a single parent minority household, which represents a significant portion of the population, which may not directly qualify under the Lifeline assistance program.  However, because there is no specific statistics representing these groups, it is best just to stick to the basic facts of the Digital Divide.  The basic reality of the Digital Divide in the US is that over 60% of US households are without Internet access.  That is over 168 million Americans currently without Internet access.  Assuming that of the 168 million Americans without Internet access, 31% do not want it, that still leaves over 115 million Americans who are without Internet access and may want it.66  There is also, one-fifth or over 50 million Americans who could directly benefit from USF support yet remain without Internet access.

1. Now or Never

Time is of the essence characterizes the whole nature of Digital Divide.  In other words, those who are affected by the Digital Divide are most likely never to catch up because of the nature of constantly changing telecommunications technology.  Those who are classified in the Digital Divide now are most likely to always be one step behind, in skill, education, and resources.  Therefore, time is of the essence when addressing the concerns of the Digital Divide.

B. Why it should be done

There are two compelling Interests for the continuation, justification, and expansion of the USF: the economic and the equity interest.  In any capitalistic based economy, equity arguments are not all that convincing when there is a need to justify agency budgets on compelling economic benefits and interests.  Therefore, I will start with the economic justification for providing a nation with access to such infrastructure.

1. Economic justification

Why is a nation better off economically when the whole country is provided with access to advanced telecommunications infrastructure?  There are five basic economic justifications for the continuation and expansion of the USF.  First, there is the increase in interstate commerce, and an increased access by businesses to a larger customer base.  Out of the over 115 million Americans without access to infrastructure, who might want it, providing them with access will undoubtedly increase consumer spending over the Internet.  Also, it will help businesses communicate more efficiently with their customers through feedback, which will increase business efficiency in meeting customer demand.

Second, acccess will provide businesses an access to a larger labor pool, including experts.  One of the traditional limits of the labor pool available to businesses is geographic location.  To work for a business, the labor pool must be within reasonable commuting distance to the business.  The Internet eliminates geographic barriers, which allows labor to conduct work long geographic distances.  This means that businesses can expand to other areas of the country and operate those areas with fewer employees who work from home, a remote office or even on the road, yet still communicate with their employers over the Internet.  Additionally, businesses will no longer be limited to the experts within their geographic regions.  Businesses could hire consultants, experts, etc. without having to fly them in every time there is a problem to be solved.  The elimination of geographic boundaries is a distinguishing quality of the Internet as a whole.

Third, the nation's labor force will be more skilled and educated, which will make the United States as a workforce resource more competitive globally.  Fourth, access businesses an increased access to different areas of the country that might available to sell to in the past.  This is not just limited to access to an increased customer base, but rather an increased access to suppliers, distributors, retailers, etc.  This makes businesses more efficient in terms of acquiring resources, meeting demand and acquiring access to new retail market.  The electronic transfer of information will also, make businesses more efficient in terms of inventory, supply chain economics, and meeting demand with less waste.  Finally, there is the cumulative effect on the nation's economy.  With increased access to advanced telecommunications infrastructure, which provides businesses a larger customer base, larger labor pool, more suppliers and retailers, and becoming more efficient in their daily business practices; cumulatively will a positive, stimulation effect on the United States economy.  This also, makes a nation better prepared to compete globally in an information based global economy.

2. Equity justification

The Equity justification is the Age-old debate between why we are better off morally and socially as a country by helping the disenfranchised "rise above" what they are not able to do by themselves.  Providing those on the losing side of the Digital Divide an opportunity to become participants in our information based culture has definite advantages in pursuing democracy because it increases participation not only politically but culturally as well.  It is also, arguable that we should avoid leaving behind over 60% of a nation's population, merely for sake of equity.

Allowing such a significant portion of our population to be defined as disenfranchised by the Digital Divide has three very persuasive political and equity arguments.  First, in times of economic recession and depressions, having such a large portion of the population will lead to political unrest, and ultimately economic instability.  Second, by increasing government access to its citizens through feedback, political and culture participation will help the government operate more efficient, help increase the dialogue between citizens and politicians, which will further the political and social debate over many of the extremely hard problems facing government today.  Examples are increased access to opinion on genetic biological advancement regulation, privacy problems; crime; etc.  Finally, there is the basic reality of not disenfranchising people.  People without access to the Internet will become the cyber-homeless; cyber-serfs and even "virtually" non-existent.  Without access to the Internet, people will not be able to participate fully in society.  It will be necessary to have a computer and Internet access to accomplish routine daily activities and conversely without such access, going the bank, shopping, getting educated, working, and even voting will become very burdensome if not impossible to do without Internet access.  To exist and have a presence in the future a person will undoutebly need a "virtual" presence.

Arguments that such subsidies really will not cure the Digital Divide nor cure the problems facing minorities, the poor, single parent households, disability problems, or the uneducated.  Further arguments against the USF expansion or continuation are: that rather than subsidizing telecommunications infrastructure we should subsidize the poor or minorities directly; others argue that people living in rural areas do not deserve infrastructure access because they make a lifestyle choice by living in rural areas; others argue that we should let the market solve these problems.  Although, such arguments have merit, they miss the fundamental distinction.  These arguments merely see such regulation and subsidies as addressing merely social inequalities.  However, this misses the main premise of this paper that providing such access does not just benefit these particular groups of people, it directly benefits the United States as a whole both economically and socially.

A. Legislative Reform

First, Congress must readdress this problem and decide how important and significant this problem really is in this country.  Obviously, this problem is not just a national concern but a global concern.  Our National Government has responded to this problem by requiring the NTIA to specifically study and address this problem, by setting up a website specifically addressing this problem.67  However, under the current USF program which has been limited to seven states, Congress must readdress the problem by not over emphasizing successes and downplaying problems but rather looking at the results.  If over 60% of American households are still without Internet access, obviously a tremendous gap is beginning to form, even if 30% of that 60% do not want Internet access, that still leaves over 100 million people who want Internet access but have no resources (either physically or monetarily) to connect to the Internet.  Congress needs to address the limitations and restrictions that are beginning to define the USF and possibly expand the USF or establish alternative programs that will address this problem sufficiently and avoid the constitutional challenges that have plagued the USF and FCC, which has worked to hinder the development and implementation of the USF programs.

B. The Internet a truly democratic tool - free Internet

By giving infrastructure access to all Americans, the nature of the Internet market economy will solve many of the economic problems of the digital divide.  Arguments that giving poor people access to infrastructure will not close the Digital Divide because these people will not buy Internet access but rather are forced to spend their limited income on food, shelter, education or healthcare expenses.  This is a fallacy that is actually justifying the status quo of placing external restrictions on the poor.  Poor people will be able to afford such access through free-Internet services.68  Advertisers are craving access to an increased customer base and increased data mining on all of America.  Almost every service on the Internet can and is already being provided for free, if the individual is willing to consent to voluntary submissions of their personal data, or if the individual is willing to put up with a barrage of advertisements or both.  That is what is so great about the Internet it not only provides businesses with prospects of increased consumer base or increased efficiency but also helps the poor through free Internet services, insular minorities and traditionally disenfranchised groups by giving them on-line support groups and resources.  Providing the poor with Internet access is not going to solve the quandry of the lower class, but allow these people to be participants in the global economy and give them an opportunity to obtain an essential modern tool.

C. Models for success

1. National Models

There are a whole host of successful National regulatory subsidy programs that regulated in order to unite the nation.  However, seven programs are analogous to the USF program, because they provide access to something.  One of the earliest was the railroad subsidy program.  Congress gave subsidies to the Railroads to help decrease travels rates, and increase travel, which provided the whole country with access to railroads.  Another, is the Interstate Highway Initiative.  Although this was a military subsidy with the goal to provide the military access to interstate highway, in order to travel more efficiently in the case of a military emergency; it is an example that provided access to interstate travel and as a country we were better off for it.  This also, helped spur the growth of the automobile industry, which will mirror a spur in the growth of Internet services and technology with an increased in customer base.

National subsidy efforts to give access to public education is obviously, one of the most successful subsidy programs that also, provided a dual role of accomplishing equity concerns while providing the Nation with a better educated workforce.  The economic justifications that followed are indisputable.  Fourth, there is the Communications Act of 1934, which accomplished a national 94% telephone penetration rate.  Although AT&T as a monopoly did not address rural concerns, AT&T was given a monopoly and in combination of rural cooperatives was successful in providing the nation with telephone access.  The similarities between telephone communications and advanced telecommunications access are obvious.  Fifth, there was the National subsidy program of distributing radio and Television licenses in an effort to get TV and radio into as many communities as possible, which was an obvious success, in terms of how many people watch and use television and radio for their information, entertainment, and news. This program is analogous to the USF because it did not buy a TV or radio for everyone, it just provided people who wanted it with access.  Just like the USF, it is not buying computer for everyone, it just provides access and those who want to buy one can then access the Internet.

Sixth, the National program to subsidize electricity, helped subsidize providers in laying electric lines in rural and similar high cost areas, in an effort to get people into the electronic age.  Parallels between trying to get people into the electronic age and the Information Age are obvious.  Finally, there is the National program to subsidize Postal rates, which gave people the access to send something across town and across the nation.  All of these National subsidy programs parallel the USF efforts.  They provided both an economic and a social rationale for supporting these programs.  The common theme behind all of these programs is not giving people these things for free, like a TV, car, or computer, rather just giving them access to the service at a reasonable cost.  This is and should be the extended goal of the Universal Service program.

2. International Models of success

Probably the single most successful international program is the Costa Rican project, which has provided every student an email account.  This is a perfect international model that the E-Rate program could follow.  There are other countries like Sweden and Finland that have done a great job in providing their country with access to telecommunications infrastructure.  However, efforts from these and other countries like Japan, Israel, and Malaysia, are not convincing models for the United States because they are based on socialistic principles rather than capitalistic principles, and because those countries are so much smaller.  In other words, these countries do not have to justify such subsidies on economics because the socialistic policy objectives of the program may be more persuasive while the economic rationales will just be the cherry on top.

The main focus over the Digital Divide as it relates to the Universal Service Fund is over those people who are supposed to be benefiting from this program but remain unconnected.  There are over 115 million Americans who are unconnected to the Internet and could benefit in one why or another from Universal Service.  The US would be better off over the long-run economically, and socially by supporting the continuation and the extension of the USF.  The Internet as a resource tool will solve four of the six categories of the Digital Divide by itself, so long as these groups have access to advanced telecommunications infrastructure.  Once access is provided, then groups that find cost a major factor, such as the poor, single parent households, or the uneducated can access the Internet through free Internet services.  The Internet can educate the uneducated.  The Internet can help minorities by giving them access to support groups and additional resources, which will make them feel included in society.  With stimulation in the Internet economy, technology companies will find ways to include the disabled through advances in hardware and software that will give this group access.

Finally, for people who can afford the Internet but live in rural areas, it will allow people to stay at current businesses, take longer vacations, address family concerns, and maintain a higher quality of life by giving them access to the Internet while still being able to work in remote geographic locations.  The worst problem is over those who believe the problem of the Digital Divide is overblown.  115 million Americans is not overblown.  Those who believe that equity concerns are not sufficient justifications to subsidize such a program, should re-examine their irrational fear of inclusion, rather than giving false pre-text reasons for non access, because the economic justifications are clear.  Parallels to similar national subsidy programs that provided access to something, which made the United States better off as a country, not only socially, but economically as well.  The wonderful tool the Internet is, makes it possible to elliminate cost and geographic concerns.  The first step is to lay the infrastructure, just give the access not actually give people the Internet, and things will take care of themselves.  The goal in the United States and in other countries with similar desires to eliminate the digital divide as a problem in a particular country is to support such national subsidy access programs, and leave the digital divide to those who do not want Internet access, in any category.  

1 NTIA website - Americans in the Information Age Falling through the Net - www.ntia.doc.gov/ntiahome/digitaldivide/ - revised on November 1999

2 www.ntia.doc.gov/ntiahome/fttn00/contents00.htm - Executive Summary

3 DigitalDivide.gov/about.htm - Closing the Digital Divide

4 www.ntia.doc.gov/ntiahome/fttn00/Falling.htm#25

4 www.ntia.doc.gov/ntiahome/digitaldivide/ - Executive Summary

5 www.ntia.doc.gov/ntiahome/fttnoo/Falling.htm#2.1

6 www.ntia.doc.gov/ntiahome/digitaldivide/factsheets/rural.htm - rural areas magnify the Digital Divide

7 ibid.

8 www.ntia.doc.gov/ntiahome/fttn00/Falling.htm#2.1

9 www.census.gov/population/estimates/metro-city/ma99-03a.txt - represents 1999 population estimates of people living in non-metropolitan areas - 54,083,870

10 www.census.gov/ - Population clock as of 3/16/01 = 283,803,928

11 www.ntia.doc.gov/ntiahome/fttn00/Falling.htm#2.1

13 www.ntia.doc.gov/ntiahome/fttn00/Falling.htm#25 - Figure I-17 - Reasons for US households with a Computer/ Web TV never accessing the Internet, Percent Distribution, 2000.

14 www.census.gov/hhes/poverty/poverty99/pov99hi.html or at www.census.gov/hhes/income/income99/99tablea.html

15 www.ntia.doc.gov/ntiahome/fttn00/Falling.htm#2.1

16 www.ntia.doc.gov/ntiahome/digitaldivide/factsheets/income.htm

16 www.ntia.doc.gov/ntiahome/fttn00/Falling.htm#2.1

17 ibid. - Figure I-17 - Reasons for US Households with a computer/web TV never accessing the Internet, Percent Distribution, 2000 - 17.3% - "cost, too expensive"; 6.7% - "computer not capable."

19 www.ntia.doc.gov/ntiahome/digitaldivide/factsheets/income.htm

21 ibid.

22 www.ntia.doc.gov/ntiahome/fttn00/Falling.htm#36 - Asian Americans have the greatest Internet penetration at 58.8% in 2000.

22 www.ntia.doc.gov/ntiahome/digitaldivide/factsheets/racial-divide.htm

23 www.ntia.doc.gov/ntiahome/digitaldivide/factsheets/african-americans.htm

24 ibid.

26 www.ntia.doc.gov/ntiahome/fttn00/Falling.htm#36

28 www.ntia.doc.gov/ntiahome/fttn00/Falling.htm#2.1

29 ibid.

30 www.ntia.doc.gov/ntiahome/digitaldivide/factsheets/african-americans.htm

31 www.ntia.doc.gov/ntiahome/digitaldivide/factsheets/native-americans.htm

32 www.ntia.doc.gov/ntiahome/digitaldivide/factsheets/education.htm

33 ibid.

34 ibid.

35 www.ntia.doc.gov/ntiahome/fttn00/Falling.htm#2.1 - Education

37 www.ntia.doc.gov/ntiahome/fttn00/Falling.htm#61 - Disability - definitions - citing the ADA on footnote (18).

38 ibid. - Table III-1 Disability Status of Persons 16 and above 1999 - difficulty with walking; vision problem; hearing problems;
difficulty using hands; or learning disability.

39 ibid. - Internet access and computer use among people with disabilities

40 www.ntia.doc.gov/ntiahome/digitaldivide/factsheets/single-parents.htm

41 ibid.

42 www.ntia.doc.gov/ntiahome/fttn00/Falling.htm#2 - Household type

43 ibid.

45 quoting 53 Fed. Comm. L.J. 117 at 119, which is citing the Communications Act of 1934, ch. 652 §151, 48 Stat. 1064. (FN5) - by Emily Dawson.

46 quoting 50 FCLJ 255 at 257 - which is citing at FN13 - West, supra note 9, at 166. - by Nicole L. Millard

47 47 USC § 254 - Universal Service

48 quoting 49 FCLJ 1 at 21- who is quoting on FN123 - Mueller, supra note 17, at 355. -  by Thomas G. Krattenmaker.

49 quoting 53 FCLJ 177 at 120 - citing FN7 - Lapointe, supra note 2, at 71 - by Emily Dawson

50 www.fcc.gov/ccb/universal_service/joint.html - What is the Federal-State Joint Board on Universal Service?

51 49 FCLJ 1 at 22 - FN129 - citing Id. sec. 101(a), §254(c)(1), 110 Stat. At 72 (to be codified at 47 USC §254(c)(1)) - by Thomas G.
Krattenmaker.

52 47 USC § 254 (3)

53 www.fcc.gov/cib/consumerfacts/lowincome.html - Overview: Universal Service

54 www.universalservice.org/faqs/ - What is the Universal Service Fund

55 www.fcc.gov/cib/consumerfacts/lowincome.html - What is Lifeline?

56 ibid.

57 ibid.

58 ibid. - What is Link Up?

59 www.fcc.gov/learnnet/#us

60 ibid.

61 53 FCLJ 117 at 123 by Emily Dawson - FN28 - only Alabama, Kentucky, Maine, Mississippi, Vermont, West Virginia and Wyoming are eligible for USF funding under the new forward looking cost model. Citing "FCC approves Increase in Universal Service Funding, Comm. Daily, Oct. 22, 1999 FN13.

62 50 FCLJ 255 - by Nicole L. Millard - Universal Service, ... A hidden tax?

63 ibid. at 270

64 ibid. at 268

65 refer to endnote 16

66 This is assuming that the 30.8% of households who had a computer but indicated they "did not want" Internet access - applies to all sectors of American society - more specifically Americans without a computer and would want Internet access - refer to Endnote 13.  Although this assumption is probably not correct because those with a computer and that do not want Internet access, probably see the Internet as a luxury, while those without a computer will probably see the Internet as a necessity, so even if they do not want it they will get it because it is a necessity.

67 DigitalDivide.gov/about.htm - Closing the Digital Divide

68 www.netzero.com