Clinton Budget for NTIA Includes Big Increase for Digital Divide Programs

(February 8, 2000) The Fiscal Year 2001 budget proposal released by the Clinton administration on February 7 includes a huge increase in funding for the NTIA, to be spent largely on programs related to the "digital divide".

The budget proposes creating a new $50 Million grant program titled the Home Internet Access Program. Its purpose is to provide low income people with connections, training, and support. The budget would also increase the level of funding for TOP (formerly called TIAAP) grants from $15.5 Million to $45.1 Million.

Congress reduced the level of funding for TIAAP grants from FY 1999 to FY 2000. Many Members of Congress are openly hostile to the program. However, Greg Rhode, the new head of the National Telecommunications and Information Administration (NTIA) is not deterred.

The NTIA, which has conducted surveys of access to telephones and Internet service, states that there is a "digital divide" between those with access to the Internet and information technologies and those without. In particular, its Falling Through the Net reports have found that higher percentages of whites and Asians have Internet access than blacks and Hispanics. The report also finds differences between income categories, and between urban and rural areas.

Greg Rhode held a briefing on the FY 2001 budget proposal for the NTIA on Monday afternoon, February 7. He outlined some of the major changes.

"One of the items is, of course, funding to do this Falling Through the Net report on an annual basis: 400,000 dollars," said Rhode.

"Another significant part of this proposal is to basically triple the funding of the TOP program, Technology Opportunities Program, that previously was known as the Telecommunications Information Infrastructure Assistance Program. And, one of the reasons why we changed the name was because I had trouble pronouncing it."

"It is currently funded at 15 Million dollars. The President's proposal takes it up to 45 million dollars," said Rhode.

"A new initiative by the President is to establish a new program here at NTIA, which would be funded at the tune of 50 million dollars, which purpose is to expand access into homes for low income families, minorities, and people in rural -- basically, the people who are falling behind, that we have seen in the statistics, have been falling behind, is to expand computer access to the home."

"Another piece of the digital divide initiative is 2 million dollars for research and development for broadband capability for next generation Internet. A lot of what this funding would go for, if approved by Congress, would be to provide funding for research, as well as standards development."

"That gets us to a total of 97 million dollars, just about a hundred million dollars worth of initiatives that are focused exclusively on closing the digital divide," concluded Rhode.

 David McGuire, from Newsbytes, asked about how the Congress would react. "Congressional Republicans to some extent have not been too open into the whole digital divide idea, and particularly, some of them have even criticized the findings of the Falling Through the Net. Do you think that you are going to be able -- you are going to have to fight to get funded?"

Rhode responded: "Yeah. We will have to fight for it. But we are prepared to fight for it. I also think that it is a fight that I look forward to, because I think it is a case we will make."

"Certainly it is a challenge. It has been a challenge in the past with some, to some degree, to protect the TOP program in the past. But, I certainly think the time has come. I think there is a greater awareness that we have segments of our society that do not have the same opportunities to participate in this information revolution. That is what these programs are designed -- to try to expand that access."

One of the Republicans in Congress who has been skeptical about NTIA grant programs is Rep. Bill Tauzin (R-LA), the Chairman of the Telecommunications Subcommittee, which oversees the NTIA.

For example, at a May 11, 1999 hearing of the Telecom Subcommittee on NTIA reauthorization, Rep. Tauzin stated that "I also expect that the flaws in TIIAP will be fully addressed before any attempt is made to authorize it. If we do go down that road, we need to fully explore appropriate conditions or limitations on the program."

He also called the TIIAP (now TOP) grants the NTIA's "largest expenditure, and its area of largest controversy." Rep. Tauzin continued that he was concerned that TIIAP duplicates the work of other agencies, and also that grants were being given to entities that compete against private firms.

The concept of federal government intervention to close divides in access to communications technologies has been criticized in the private sector.

For example, Bruce Owen, President of Economists Incorporated, wrote a book published in 1999 titled The Internet Challenge to Television. In it he criticized existing universal service subsidies for telephone service, and predicted, but advocated against, the extension of such subsidies to Internet services.

"The fact is that very few people surf the net. Doing so requires time, money, technical skill, and interests that the average consumer lacks. Users of the Internet, especially for services beyond e-mail, constitute a tiny fraction of the population," wrote Owen. "Even today only a small minority of consumer households have access to the Internet. But a constellation of commercial interests hopes to profit from Internet development."

"For years, convoluted telephone industry pricing and other distortions have perpetuated subsidies that have no rational basis and for the most part never did. For example, the supposed telephone subsidies running from long-distance service to local service, from business service to residential subscribers, and from urban to rural callers for decades have been treated as sacred cows by regulators and legislators, to the point that policy changes designed to make the industry more efficient and competitive have been postponed or rejected whenever those subsidies are threatened. And yet there is little evidence that any of the subsidies accomplish even such simple objectives as benefiting needy people or other groups with any claim to benefit at their neighbor's expense."

"Commercial and political interests use these subsidies as a power base, and fight ferociously to keep them in place."

"There are signs the Internet may be headed down the cross-subsidy road," wrote Owen. "Predictably, the politicians want to make sure that the new technology does not merely benefit the rich and the information-elite -- that is, those willing and able to pay for it. So programs are designed to bring the "information superhighway" to the urban and rural poor, to the bedridden, to elementary schools, to libraries, and so on, whether or not those targeted recipients have any use for it or value it more than other services that could be provided at the same cost."