Digital Divide Survives; City Lags in Efforts to Build a Bridge, but New Private Efforts Offer Hope
By Alexander Eule
January 9, 2006

With more than 145 million Americans using the Internet, wiring a building for online access seems the farthest thing from news these days. But when a Bronx housing organization recently accomplished that very goal, it was marked by a well-attended press conference sponsored by the building management, the telephone company and a national non-profit group.

While the Internet has become a major factor in finding jobs, getting health information, even keeping up with news, in much of the Bronx, Internet access is still a cause for celebration.

Studies across the nation show that the ability to connect to the Internet is still far from universal and largely predicted by income and education. According to national tracking data from the Pew Internet & American Life Project, 46 percent of adults in households making under $30,000 lack any type of Internet access, whether high-speed or through slower dial-up connections. For those without high school degrees, 62 percent have no access. On the other side of the so-called “digital divide,” access improves dramatically. At least 78 percent of households making over $30,000 have access. At higher incomes, access is nearly automatic: 94 percent of households making over $75,000 have access, as do 92 percent of college graduates.

New York City and its wide-ranging demographics bring this divide into sharp focus. In Manhattan, for instance, telecommunications provider T-Mobile has 187 different “hot-spots” where subscribers can wirelessly access the Internet through laptops and handheld devices at locations like Starbucks and FedEx Kinkos. In the Bronx, there are four.

While there are no solid statistics on Internet access for New York City residents, the 417,000 New Yorkers living in public housing, for instance, are statistically on the wrong side of the digital divide. According to the New York City Housing Authority, the average family income for such residents is $18,940, well below the $30,000 threshold where the Pew study shows a majority of people still lack access.

The issue has caught the attention of New York City policy makers and technology advocates who say the so-called media capital of the world is lagging behind other local and state government efforts to narrow the connectivity gap. Should the trend continue, they say, a generation of children without access to technology will be at a severe disadvantage.

“If you don’t have the tools to compete, then hopefully you have a very strong wrist, because you’re going to be flipping burgers,” said Alec Ross, vice president of One Economy, a Washington, DC-based national non-profit group committed to bringing Internet access to the homes of low-income families and individuals.

While cities like Philadelphia and Baltimore have already taken active steps in universalizing high-speed Internet service, also known as broadband, for their residents, New York City has only begun to explore the government’s role in improving access. (Mayor Michael Bloomberg two weeks ago signed a bill that creates a joint mayoral and City Council advisory committee designed simply to discuss potential alternatives for wider broadband deployment).

Technology advocates say the city should follow the lead of other state and city governments that are requiring or creating incentives for the inclusion of broadband wiring in the construction of new affordable housing. At least 37 states already have such a policy in place, according to data from One Economy. New York state, in fact, is the latest to add a broadband incentive to its application for developers wishing to receive tax credit on affordable housing projects.

Nevertheless, New York City officials, who have more power than the state when it comes to the city’s affordable housing, argue that such a plan would increase housing costs for low- and moderate-income families in an already high-priced market.

In the meantime, some non-profit developers, in cooperation with private industry, are taking a more market-based approach to closing the divide that they hope will establish a sustainable model for other communities. As the city embarks on Bloomberg’s initiative to build 28,500 new affordable housing units by 2008, advocates see this as a ripe time for action.

“It might be another generation or two before we get this other kind of building spurt,” said Mark Levine, One Economy’s vice president for the northeast region. “This is the moment,” he adds. “There is a real urgency to get the city to act.”

Government efforts

Thus far, Bloomberg and the Department of Housing Preservation and Development have been reluctant to take that step, despite pressure from the City Council, which unanimously passed a non-binding resolution in February urging the city to promote broadband deployment.

The resolution called on city agencies to “use their funding and regulatory power to support and encourage the provision of affordable high-speed Internet service and computer purchases for the benefit of residents of affordable housing.”

New affordable housing construction represents an important opportunity for improving Internet access, technology experts say, because it is considerably less expensive to build the necessary infrastructure into the new construction, as opposed to retroactively fitting a building with broadband wires.

At a November 2004 hearing to discuss the resolution, Harold Shultz, special counsel to the housing department, or HPD, said his agency, along with the New York City Housing Authority, supported the goal of broadband access. But the agency had not had success in previous pilot programs to establish high-speed connections in affordable housing units.  

“Both agencies have found that there is a lack of providers willing to build and maintain the networks in the buildings and to provide the Internet connection at a reasonable cost,” Shultz said at the time. “HPD has also found an unwillingness among our building operators to manage the networks needed to provide Internet access.”

In an October follow-up letter to HPD Commissioner Shaun Donovan, Council member Gale Brewer, who chairs the council’s technology in government committee, pushed the agency to act. 

“Because the Internet is becoming the primary source for almost every kind of information and increasingly every kind of service,” Brewer wrote, “one’s quality of life is substantially diminished without high-speed access to it.”

Brewer added: “A bold policy initiative now would result in a substantial amount of affordable housing being wired for broadband at very little cost to the city and to affordable housing developers.”

Bruce Lai, Brewer’s chief of staff, said, “It’s my impression that HPD considers broadband an amenity, not a necessity. They think it’s a good thing, but I’m not sure whether they think it’s important enough.”

An HPD official said they are happy to work with vendors to bring Internet access to affordable housing units, but that requiring more from developers could raise the cost of housing.

“There’s always a balance between trying to do things that are good and useful, but at the same time making sure housing is as affordable as possible,” HPD spokesman Neil Coleman said. “You don’t want to end up with higher rents.”

Coleman noted that any new affordable units would have standard telephone lines capable of high-speed DSL Internet access.

One Economy’s Levine, however, said that individual DSL lines will do little to lower cost of service for low-income residents. One Economy promotes shared broadband infrastructure that can be installed at the time of construction for approximately $300 per apartment.

Access to DSL, in fact, underlines an important point about the 21st-century version of the digital divide. Unlike the late 1990s, when certain urban centers and rural areas simply had no physical access to high-speed Internet connections, evolving technology has brought broadband to every corner of the globe, whether through cable, phone lines or satellite.
 
The remaining divide, as the national data suggests, is more about affordability. One Economy’s programs aim to create shared networks in urban developments that allow costs to be spread over a building’s many residents. Instead of being responsible for a $40-per-month DSL line, One Economy envisions wholesale access that can be had for as little as $10 a month.

It’s a model, Levine said, that has long been used by corporations. “Fortune 500 companies are always going to have one connection to their building and split it up to individual desks.”

The City Council remains focused on bringing the issue of technology access to the center of public attention. The new broadband advisory committee, originally sponsored by Brewer, is the most aggressive move to date, but its work will focus on discussing potential solutions rather than implementing them

The city of Baltimore can provide one example for the committee to explore. Last month, Baltimore Mayor Martin O’Malley issued an executive order requiring “physical connectivity” for broadband in every unit of future residential developments that receive financial assistance from the city.

Mario Armstrong, Baltimore’s chief technology advocate, said the executive order was part of a multi-faceted plan that would provide physical access to broadband lines, loan programs to purchase computers and a website targeted for Baltimore residents.

The loan program enables families with bad or no credit history to purchase a computer for a down payment of $50 to $100. The website, www.beehive.org, is a self-help portal that gives city residents direct access to government services and provides information ranging from family planning to exercise advice.

Armstrong said the physical access was important but emphasized that the entire “holistic” plan was crucial in promoting new technology as accessible and relevant.

“I think we still have a challenge in this country to proving to a good amount of folks that a computer is a worthwhile tool in the home,” he added.

Market-based solutions

When the Mount Hope Housing Company finished connecting broadband wires to its 1,250 South Bronx units in November, many in the technology world considered the event a watershed event, creating a model for future public and private partnerships.

Underserved communities have long been at the mercy of private industry. A spokesman for the New York City Housing Authority, which manages 2,694 buildings throughout the city, said the private sector has not responded to repeated requests to provide wide-spread access for existing residents.

“We’re unable to do it on our own and have reached out to a firm that might be interested,” said Howard Marder, spokesman for the city housing authority. “But to date we have no indication that anyone would like to do this.”

Under the Mount Hope plan, Verizon Communications is providing the primary broadband connection at a bulk rate, which Mount Hope – a community development organization that rehabilitates and manages affordable housing – then administers and resells at a slight mark-up.

“Mount Hope is a great example that there’s a solution,” said Robert Atkinson, director of policy research for Columbia University’s Institute for Tele-Information.

Such a wholesale approach, in which Verizon is not responsible for the individual connections, allows the telecommunications provider to offer its broadband service at a significantly reduced rate. Ultimately, residents can get high-speed data service for $19.99 a month, a 40 percent discount off Verizon’s market price.

The deal makes good business sense, said B. Keith Fulton, Verizon’s vice president for strategic alliances. “By doing this one-customer deal with Mount Hope, we were able to get in 1,200 some units,” Fulton said. “This isn’t charity.”

Shaun Belle, Mount Hope’s President and CEO said the program was a “win-win,” noting that residents, his management company and Verizon all benefit.

Atkinson, whose institute at the Columbia Business School favors market-based solutions, called the program a “perfect example of a rational division of labor.”

“Verizon is doing what it does best: putting in a highway,” Atkinson said. Meanwhile, Mount Hope has a competitive advantage in collecting money, he added, because the management company has an existing relationship with the residents.

Atkinson said the Mount Hope project sends an important signal to the marketplace about the opportunities in previously underserved neighborhoods. “It will do two things,” he said, “inspire other people to do the same thing and make entrepreneurs realize, ‘I can make money.’”

Belle hopes the program can have a lasting impact in the Bronx and beyond. “It always requires someone to step up and put a good effort in.