The Digital Divide

By Chris O''Malley

Wiley Middleton is exactly the sort of fellow whom small towns love to welcome home. A 45-year-old graphics designer who honed his craft in bigger cities, Middleton moved back to his native Leadville, Colo., 18 months ago, eager to trade urban pressures for the serenity of this historic mining town of 3,421. But Leadville's telephone system is quaint too, and won't let his computer modem send the digital images that are his livelihood. This regularly forces Middleton to drive two hours to Denver to deliver electronic designs for brochures and ads. "I can't compete," he laments, again facing the prospect of leaving Leadville for the city. "The phone line is too small."

Or too narrow, to be more precise. The aging patchwork of thin wires and microwave towers that brings phone service to millions of Americans in remote spots like mountainous Leadville can barely transmit at speeds of 28.8 kilobits per second or less--assuming they can dial up a local Internet service at all. Meanwhile, much of the country has moved up to 56K modems or adopted one of the new broadband telephone and cable-company services that bring the Net to homes and businesses up to 100 times as fast. And the gap between online haves and have-nots appears to be widening.

"There is a growing digital divide," says Philip Burgess, president of the Center for the New West, an advocacy group whose board includes Solomon Trujillo, ceo of regional phone giant US West, and Utah Governor Michael Leavitt. The gulf, Burgess warns, could have "dire implications" for the social and economic fabric of many communities, particularly those in sparsely populated Western states.

Many of the start-up businesses that are driving employment and wealth in the new economy are built around the Internet and won't locate where it can't be speedily accessed. Even established businesses require high-speed Net connections to communicate effectively with customers, suppliers and employees. Professionals consider the bandwidth available in a locality when they decide where to work, live and buy vacation homes. The same calculation is made by affluent retirees who track investments online. At the same time, kids who aren't skilled on the Net face a growing disadvantage in college and the job market.

Not all the barriers to Internet access are geographic. The online population is still largely well educated, pale skinned and upper-middle income--a point the Rev. Jesse Jackson reinforced in recent speeches to Silicon Valley leaders. Whites are twice as likely as blacks to own a computer and three times as likely to be plugged into the Internet.

Dead zones in cyberspace can be found in states like Georgia, Mississippi and Maine, but the digital divide is particularly acute in Western states. Consider that in New Jersey the average distance between a customer and the phone company's nearest switching facility is about 2.6 miles. In Wyoming the distance is twice as far, and the cost to the phone company of reaching a customer is twice as high, according to figures from Sprint. Parts of the rural West have as few as half a dozen households per square mile (compared with thousands in urban and suburban areas); thus phone companies have less incentive to invest in stringing new lines there. "It does not make sense to build out into the rural market today," says Erik Olbeter, a telecommunications expert at the Economic Strategy Institute, a Washington-based think tank.

For decades Washington mandated subsidies that were aimed at putting a phone in every home, and some say that promise should extend to Internet service. "We're going to have to make a commitment to provide some level of [higher-speed] Internet service to rural Americans," says Federal Communications Commission chairman William Kennard. Does that mean cable and computer companies could be required to chip into a universal service fund? "You bet," says Kennard.

That kind of equal-access talk incites the ire of many high-tech capitalists. "To tell me I've got to serve someone at a certain speed regardless of the cost because he chooses to live in the far reaches of Montana is not fair," says Garry Betty, president and CEO of Earthlink, a nationwide Internet-service provider. "Let them pay for it themselves."

Easier said than done, even if you've got the money. Total TV Network, a publisher of Bible-study materials and videos in Plano, Texas, considered moving to Durango, Colo., drawn by the pleasantly paced life-style and natural beauty. But the company was unable to get a couple of broadband T1 lines to approach what it had back home, so it ditched Durango. It's an all too familiar rejection for thousands of smaller cities and towns. In the past year, because Durango lacked sufficient bandwidth, it has had to turn away two firms seeking to open calling centers. Each might have hired 30 or 40 people.

Regional phone companies like US West complain that the FCC has been slow to let them compete with long-distance giants such as AT&T, MCI and Sprint. The long-distance companies, in turn, accuse regional carriers of blocking access to their networks.

Despite the feuding, competition has come to some areas even well outside larger cities. But many of the service providers are cherry picking only the most lucrative business and professional customers, not smaller outfits or homes. For example, small-town ski meccas such as Aspen and Vail, while not far from blighted Leadville, enjoy fast and ready Internet access.

The problems are more than just economic. Not all the technological wizardry that permits high-speed Internet access in urban centers can work its magic in rural areas. So-called digital subscriber lines and 56K modems can't deliver higher speeds when your house is many miles from the nearest phone-switching office, and cable-TV companies often leave the more remote spots to the satellite-dish sellers.

Satellite and other types of high-speed wireless technologies would seem to offer hope for spanning great distances and reaching the thinly wired. Indeed, the cost of downloading Web pages via a rooftop satellite dish is falling. Hughes' DirecPC dish now sells for as little as $299, with monthly service starting at about $30. But this one-way technology won't serve the needs of many businesses and professionals like graphics designer Middleton.

Last month Motorola and Cisco Systems said they would jointly ante up $1 billion over four years to create wireless, high-speed Internet networks. AT&T and others are experimenting with cellular-like services that compress data and bring high-speed Web access into homes. That could help some rural areas. But while wireless towers can easily cover vast stretches of the plains, it's a far costlier matter to erect enough towers to throw signals around the Rocky Mountains. Moreover, many of the companies that are talking up wireless have densely packed urban businesses and mobile professionals in their sights, not rural customers.

A presidential panel this month recommended that federal funding for information-technology research be increased $1.3 billion over the next five years, in part to support an increasingly wired country. But a growing number of small towns have decided to take matters into their own hands. Some are forming cooperatives to string their own wire. Others are pulling strings. In Lusk, Wyo., a cajoling and far-sighted mayor was able to get fiber-optic cable laid into his town of 1,600 and give its two schools access to a T1 line (and Lusk a starring role in Microsoft's ads on TV). Town leaders see it as a matter of survival. "We want our kids to come back here," says Twila Barnette, who manages the county Chamber of Commerce. "But we have to be able to offer them opportunities using this new technology."

--With reporting by Richard Woodbury/Denver and Dick Thompson/Washington

Who should pay to wire America's rural areas? Take our poll on the Web at www.timedigital.com

With reporting by Richard Woodbury/Denver and Dick Thompson/Washington