PART I

HOUSEHOLD ACCESS

A. Introduction

Over the last five years, NTIA has measured household connectivity as a means of determining which Americans are connected to the nation's telecommunications and information infrastructure. Part I updates the earlier household penetration surveys released in NTIA's Falling Through the Net: A Survey of the "Have Nots" in Rural and Urban America (July 1995) and Falling Through the Net II: New Data on the Digital Divide (July 1998).⁽¹⁾

As in our earlier surveys, we have measured household telephone, computer, and Internet penetration rates across America to determine which Americans own telephones and personal computers (PCs) and access the Internet at home.⁽²⁾

The 1998 data reveal that, overall, U.S. households are significantly more connected by telephone, computer, and the Internet since NTIA issued the first Falling Through the Net report, which was based on 1994 Current Population Survey (CPS) results.⁽³⁾ (Chart I-1) Penetration rates have risen across all demographic groups and geographic areas. Nevertheless, penetration levels currently differ -- often substantially -- according to income, education level, race, household type, and geography, among other demographic characteristics. The differences in connectivity are most pronounced with respect to computers and Internet access.

The following examples highlight the breadth of the digital divide today:

• Those with a college degree are more than eight times as likely to have a computer at home, and nearly sixteen times as likely to have home Internet access, as those with an elementary school education.
• A high-income household in an urban area is more than twenty times as likely as a rural, low-income household to have Internet access.
• A child in a low-income White family is three times as likely to have Internet access as a child in a comparable Black family, and four times as likely to have access as children in a comparable Hispanic household.
• A wealthy household of Asian/Pacific Islander descent is nearly thirteen times as likely to own a computer as a poor Black household, and nearly thirty-four times as likely to have Internet access.
• Finally, a child in a dual-parent White household is nearly twice as likely to have Internet access as a child in a White single-parent household, while a child in a dual-parent Black family is almost four times as likely to have access as a child in a single-parent Black household.

The data reveal that the digital divide -- the disparities in access to telephones, personal computers (PCs), and the Internet across certain demographic groups -- still exists and, in many cases, has widened significantly. The gap for computers and Internet access has generally grown larger by categories of education, income, and race.

These are just a few of the many disparities that persist across the United States today. As discussed below, however, the divide among households with telephones is narrowing. Some gaps for computer ownership (between certain income and education levels) are also closing. As the following discussion explains, Internet access remains the chief concern, as those already with access to electronic resources make rapid gains while leaving other households behind.

As a mature technology, telephones are now a likely feature in most American homes. Unlike computer and Internet use, telephone penetration rates have generally stabilized (at about 94.%).⁽⁴⁾ That stabilization, however, masks disparities that still exist among different demographic groups. Certain groups, such as low-income, young, and certain minority households, are still far less likely to own telephones than higher-income, older, or White or Asian/Pacific Islander households. These disparities are particularly noticeable in rural areas.

The good news is that the differential between traditional "haves" and "have nots" has decreased in recent years. For example, on average, no group is more likely to own a telephone today than Black households earning $75,000 or more (traditionally less connected than White households at the same income level).

1. Stable Telephone Penetration

As noted, the 1998 data reveal that telephone penetration rates among households have changed little overall in the last few years. From 1994 to 1998, at-home telephone ownership in America has increased slightly from 93.8% to 94.1%. (Chart I-2) All geographic locations -- whether rural, urban, or central city -- have experienced a similar marginal growth, although central cities have continued to lag behind rural and urban areas. Id.

2. Disparities in Telephone Penetration

The likelihood of owning a phone still varies significantly, however, by the household's income, education level, race, age, or household makeup. Additionally, where a person lives can also greatly influence the likelihood of telephone ownership. While rural areas are generally as connected as urban areas, those groups that are less likely to own phones have especially low penetration rates in rural areas.

The following demographic and geographic breakdowns are particularly important determinants in household telephone penetration rates:

Income. Generally, telephone penetration correlates directly with income. Only 78.7% of the lowest-income households (i.e., less than $5,000 annually) have telephones. (Chart I-3) If you are poor and living in a rural area, a household's chances are approximately three out of four of owning a phone. At the opposite end of the spectrum, if a household earns more than $75,000 and is located in central city and urban areas, it is particularly likely (98.9%) to own phones. Id.

Race/Origin. Race and ethnic origin are also significant factors.⁽⁵⁾

Approximately 95.0% of all White households have phones, regardless of where they live. (Chart I-4) This contrasts sharply with minority households, particularly those such as rural-dwelling American Indians/Eskimos/Aleuts (76.4%), Hispanics (84.6%), and Blacks (85.4%). Id.

The disparity based on race/origin is also affected by income level. At the highest income level ($75,000 or higher), there is virtually no difference among household penetration rates. (Chart I-6) At the lowest income level (less than $15,000) the disparities are pronounced: American Indians/Eskimos/Aleuts (72.3%), Blacks (78.1%), and Hispanics (81.9%) have the lowest penetration rates, compared to Asians/Pacific Islanders (90.9%) and Whites (89.1%). Id.

Education. As with income, the degree of phone ownership closely correlates with the level of education. For those with college degrees, the rate exceeds 97.0%. (Chart I-7) At the other end, those with only some high school education have the lowest penetration rates, particularly in central city areas (85.0%). Id.

Household Type. Whether one is married or has children also affects the likelihood of having telephone service. Married couples with children are particularly likely to have telephones (96.4%). (Chart I-8) Single parents with children have the lowest phone rates in this category: male-headed households in central cities (85.9%) fare worst, followed by female-headed households in rural areas (86.8%). Id.

Age. Seniors remain the most connected of all age groups by telephone (95.6%), with 45-54 year-olds following closely behind (95.4%). (Chart I-9) Households headed by those under 25 are the least connected (87.6%), with particularly low rates in rural (84.2%) and central city (87.7%) areas. Id.

Region. Viewed in the aggregate, there is little disparity in telephone penetration by region. The Northeast, Midwest, and West all have penetration rates of approximately 95.0%, although the South lags at 92.4%. (Chart I-10) The differences come into play when one looks at the location within a region. Rural areas in the Northeast (96.7%) and Midwest (96.0%) exhibit the highest telephone ownership rates. At the lowest end are the central cities in the Midwest and South (both 91.8%), followed by rural areas of the South (92.1%) and West (92.3%). Id.

State. State telephone penetration can be grouped by tiers (Table I-1)⁽⁶⁾ In the high tier, Minnesota, North Dakota, Maryland, and others lead the way with rates of 96% or more. In the middle tier lies the majority of states, ranging from Ohio (95.8%) to Florida (92.3%). The low tier primarily contains southern states, with Oklahoma, Arkansas, and New Mexico exhibiting rates below 90%. Id.

To conclude, over the past five years, the aggregate level has remained virtually unchanged. However, closer inspection reveals that not all groups or regions have fared the same. If you are low-income, a minority, less-educated, a single parent with children, a young head of the household, or live in the South, then you are less likely to have a telephone at home. Households that belong to one of these groups and are located in a rural area or a central city, are likely to be among the least connected.

3. Closing Penetration Gaps

While there are still acute disparities among different demographic groups, the encouraging news is that certain disparities appear to be shrinking over time. The racial divide, for example, between Whites and Blacks, and Whites and Hispanics, has shrunk significantly between 1994 and 1998. In 1994, there was a 10.6 percentage point difference between telephone penetration rates in White and Black households. By 1998, that gap decreased (by 25.5%) to a 7.9 percentage point difference. Similarly, the White/Hispanic differential of 10.2 points in 1994 has decreased by 37.3% to a 6.4 percentage point gap in 1998.

Most of this closure has occurred just in the last year. In the period between 1997 and 1998, the White/Black household gap decreased by 20.2% (from a difference of 9.9 percentage points in 1997 to a gap of 7.9 percentage points in 1998), and the White/Hispanic household gap decreased by 31.9% (from a difference of 9.4 percentage points in 1997 to a gap of 6.4 percentage points in 1998). (Chart I-5)

The narrowing of the divide has not, however, occurred across all income levels or proceeded at similar rates. During the period between 1994 and 1998, the White/Black divide decreased most significantly for households at income brackets of less than $15,000: the racial divide shrunk by 37.5% (or 5.4 percentage points). The gap also shrunk by 8.5% (or .4 percentage points) for households earning between $15,000-34,999. In contrast, the White/Black gap for the $35,000-74,999 bracket increased during 1994-98, widening by 0.9 points (a growth of 52.9%).

The most surprising change has been at the highest income level of $75,000 or more: for that category, the phone penetration level for high-income Whites and Blacks is virtually the same (99.7% for Blacks, compared to 98.8% for Whites) (Chart I-6) Race has ceased to be a factor at the highest income level.

The White/Hispanic divide also varies by income level, but in all cases has declined between 1994 and 1998. For incomes less than $15,000, the gap between White and Hispanic households narrowed by 4.9 percentage points (shrinking by 40.5%). For incomes between $15,000-34,999, the divide closed by 2.1 percentage points (a change of 29.2%). Households earning incomes between $35,000-74,999, or more than $75,000, both experienced a marginal narrowing of 0.3 percentage points (a change of 21.4% and 33.3%, respectively).

In sum, the traditional divide besetting groups of telephone users has narrowed in many instances during the past several years. The gaps have been particularly reduced during 1997-98.

Americans of every demographic group and geographic area have experienced a significant increase in computer ownership and Internet access. Nationwide, PC ownership is now at 42.1%, up from 24.1% in 1994 and 36.6% in 1997 (an increase of 74.7% and 15.0%, respectively). (Chart I-1) Households across rural, central city, and urban areas now own home computers in greater numbers; each area experienced at least a sixteen percentage point increase since 1994, and at least a five percentage point increase since 1997. (Chart I-11) Similarly, households of all ethnic groups, income levels, education levels, and ages have experienced a significant increase. Black and Hispanic households, for example, are now twice as likely to own PCs as they were in 1994. (Chart I-13)

Internet access has also grown significantly in the last year: 26.2% of U.S. households now have Internet access, up from 18.6% in 1997 (an increase of 40.9%). (Chart I-1)⁽⁷⁾

As with computer ownership, Internet access has increased for all demographic groups in all locations. In the last year alone, for example, Internet access increased 40.5% for White households, 45.4% for Black households, and 44.8% for Hispanic households. (Chart I-23)

2. Disparities In Access to Electronic Services

Despite these gains across American households, distinct disparities in access remain. Americans living in rural areas are less likely to be connected by PCs or the Internet -- even when holding income constant. (Charts I-12, I-21) Indeed, at most income brackets below $35,000, those living in urban areas are at least 25% more likely to have Internet access than those in rural areas. (Chart I-21) Additionally, groups that already have low penetration rates (such as low-income, young, or certain minority households) are the least connected in rural areas and central cities.

The following demographic and geographic breakdowns are significant determinants of a household's likelihood of owning a computer or accessing the Internet from home:

Income. PC and Internet penetration rates both increase with higher income levels.⁽⁸⁾ Households at higher income levels are far more likely to own computers and access the Internet than those at the lowest income levels. Those with an income over $75,000 are more than five times as likely to have a computer at home (Chart I-12) and are more than seven times as likely to have home Internet access (Chart I-21) as those with an income under $10,000.

Low income households in rural areas are the least connected, experiencing connectivity rates in the single digits for both PCs and Internet access. (Charts I-12, I-21) The contrast between low income households (earning between $5,000 and $9,999) in rural America and high income households (earning more than $75,000) in urban areas is particularly acute: 8.1% versus 76.5% for computer ownership (Chart I-12), and 2.9% versus 62.0% for Internet access. (Chart I-21)

The impact of income on Internet access is evident even among families with the same race and family structure. Among similarly-situated families (two parents, same race), a family earning more than $35,000 is two to almost six times as likely to have Internet access as a family earning less than $35,000. (Chart I-29) The most significant disparity is among Hispanic families: two-parent households earning more than $35,000 are nearly six times as likely to have Internet access as those earning less than $35,000. Id.

Race/Origin. As with telephone penetration, race also influences connectivity. Unlike telephone penetration, however, households of Asian/Pacific Island descent have the clear lead in computer penetration (55.0%) and Internet access rates (36.0%), followed by White households (46.6% and 29.8%, respectively). (Charts I-13, I-22) Black and Hispanic households have far lower PC penetration levels (at 23.2% and 25.5%), and Internet access levels (11.2% and 12.6%). Id.

Again, geography and income influence these trends. Urban Asians/Pacific Islanders have the highest computer penetration rates (55.6%) and Internet access rates (36.5%). Charts I-13, I-22) By contrast, rural Black households are the least connected group in terms of PC ownership (17.9%) or Internet access (7.1%). Id. Black households earning less than $15,000 are also at the opposite end of the spectrum from high income Asians/Pacific Islanders for PC ownership (6.6% versus 85.0%). (Charts I-14, I-24)

The role of race or ethnic origin is highlighted when looking at similarly-situated families. A White, two-parent household earning less than $35,000 is nearly three times as likely to have Internet access as a comparable Black household and nearly four times as likely to have Internet access as Hispanic households in the same income category.⁽⁹⁾

Education. Access to information resources is closely tied to one's level of education. Households at higher education levels are far more likely to own computers and access the Internet than those at the lowest education levels. Those with a college degree or higher are more than eight times as likely to have a computer at home (68.7% versus 7.9%) and are nearly sixteen times as likely to have home Internet access (48.9% versus 3.1%) as those with an elementary school education. (Charts I-17, I-25) In rural areas, the disparity is even greater. Those with a college degree or higher are more than eleven times as likely to have a computer at home (6.3% versus 69.7%) and are more than twenty-six times as likely to have home Internet access (1.8% versus 47.0%) as those with an elementary school education. Id.

Household Type. As with telephones, the makeup of the household influences the likelihood of the household's access to electronic services. Computer ownership lags among single-parent households, especially female-headed households (31.7%), compared to married couples with children (61.8%). (Chart I-18) The same is true for Internet access (15.0% for female-headed households, 39.3% for dual-parent households). (Chart I-26)

When holding race constant, it is clear that family composition can still have a significant impact on Internet access. Overall, dual-parent White families are nearly twice as likely to have Internet access as single-parent White households (44.9% versus 23.4%). Black families with two parents are nearly four times as likely to have Internet access as single-parent Black households (20.4% versus 5.6%). And, children of two-parent Hispanic homes are nearly two and a half times as likely to have Internet access as their single-parent counterparts (14.0% versus 6.0%).⁽¹⁰⁾

These differences are modified somewhat when income is taken into account. Nevertheless, even when comparing households of similar incomes, disparities in Internet access persist. At all income levels, Black, Asian, and Native American households with two parents, are twice as likely to have Internet access as those with one parent. For Hispanics and White households with two parents, on the other hand, clear-cut differences emerge only for incomes above $35,000. For these households, Whites are one and a half times more likely and Hispanics are twice as likely to have Internet access.⁽¹¹⁾

Age. Age also plays a role in access to information resources. While seniors have the highest penetration rates for telephones, they trail all other age groups with respect to computer ownership (25.8%) and Internet access (14.6%). (Charts I-19, I-27) Young households (under age 25) exhibit the second lowest penetration rates (32.3% for PCs, 20.5% for Internet access). Id. Households in the middle-age brackets (35-55 years) lead all others in PC penetration (nearly 55.0%) and Internet access (over 34.0%). Id. The contrasts among age groups are particularly striking between rural seniors (23.3% for PCs, 12.4% for Internet) and young, rural households (27.7% for PCs, 13.3% for Internet) on the one hand, and urban 45-54 year-olds on the other (55.3% for PCs, 36.5% for Internet). Id.

Region. The region where a household is located also impacts its access to electronic services. The West is the clear-cut leader for both computer penetration (48.9%) and Internet access (31.3%). (Charts I-20, I-28) At the other end of the spectrum is the South at 38.0% for PC penetration and 23.5% for Internet access. Id. Looking at the degree of urbanization, the lowest rates are in Northeast central cities (30.4% for PCs, 18.7% for Internet access); the highest are in the urban West (49.2% for PCs, 32.0% for Internet access). Id.

State. As with telephones, computer penetration among states is grouped according to tiers due to the ranges of certainty created by the use of 90% confidence intervals (Table I-2)⁽¹²⁾ The top tier ranges from Alaska's 62.4% to Wyoming's 46.1%. The middle grouping is bounded by Arizona (44.3%) and Pennsylvania (39.3%). The low tier includes principally southern states, ranging from Oklahoma (37.8%) to Mississippi (25.7%). Id. Regarding Internet access, the ordering of the states -- ranging from Alaska (44.1%) to Mississippi (13.6%) -- tracks relatively closely the PC rankings, but often with wider confidence intervals at the 90% level. (Table I-3)

In sum, disparities with respect to electronic access clearly exist across various demographic and geographic categories. Similar to telephone penetration, electronic access comes hardest for Americans who are low-income, Black or Hispanic or Native American,⁽¹³⁾ less educated, single-parent families (but especially single-female householders), young heads-of-households, and who live in the South, rural areas or central cities. Dissimilar to the phone profile, however, senior "have nots" are less connected in terms of electronic access. And Asians/Pacific Islanders have reached a leading status with respect to computers and Internet access that they have not enjoyed in telephone comparisons.

3. Expanding Digital Divide

The chief concern with respect to household computer and Internet access is the growing digital divide. Groups that were already connected (e.g., higher-income, more educated, White and Asian/Pacific Islander households) are now far more connected, while those with lower rates have increased less quickly. As a result, the gap between the information "haves" and "have nots" is growing over time. The increasing divides are particularly troublesome with regard to Internet access.

a. Divide by Race/Origin

The digital divide has turned into a "racial ravine" when one looks at access among households of different races and ethnic origins. With regard to computers, the gap between White and Black households grew 39.2% (from a 16.8 percentage point difference to a 23.4 percentage point difference) between 1994 and 1998. For White versus Hispanic households, the gap similarly rose by 42.6% (from a 14.8 point gap to 21.1 point gap). (Chart I-15)

Minorities are losing ground even faster with regard to Internet access. Between 1997 and 1998, the gap between White and Black households increased by 37.7% (from a 13.5 percentage point difference to a 18.6 percentage point difference), and by 37.6% (from a 12.5 percentage point difference to a 17.2 percentage point difference) between White and Hispanic households. (Chart I-23)

Even when holding income constant, there is still a yawning divide among different races and origins. At the lowest income levels, the gap has widened considerably for computer ownership.⁽¹⁴⁾ For households earning less than $15,000, the gaps rose substantially: by 73.0% or an additional 4.6 points between White and Black households, and by 44.6% or an additional 2.5 points between White and Hispanic households. (Chart I-16a) For the households earning between $15,000 and $34,999, the disparities between White and Black households has increased by 61.7% (or 5.0 percentage points), and 46.0% or (4.0 percentage points) between White and Hispanic households. (Chart I-16b)

For the same period, the increases for the $35,000-$74,999 bracket are much smaller for both the White/Black gap (a growth of 6.4%, or 1.0 percentage points) and the White/Hispanic divide (a growth of 15.2%, or 1.5 percentage points). (Chart I-16c) The most striking finding, however, concerns the highest income level of $75,000 or more. For that income range, the gap between White and Black households has declined substantially (by 76.2%, or 6.4 percentage points), while the gap between White and Hispanic households has grown by 4.9 percentage points. (Chart I-16d)

b. Divide Based on Education Level

Households at higher education levels are now also much more likely to own computers and access the Internet than those at the lowest education levels. In the last year alone, the gap in computer use has grown 7.8% (from a 56.4 to a 60.8 percentage point difference). (Table I-4b) The divide with respect to Internet access has widened 25.0% (from a 36.6 to a 45.8 percentage point difference). (Table I-4d) Not all groups, however, are lagging further behind the front-runners. Those with some college education, and those with a high school diploma, are now closing in on those with a college education. Id.

c. Divide Based on Income

The digital divide has widened substantially when comparing households of different incomes. In the last year, the divide between the highest and lowest income groups grew 29.0% (from a 42.0 to a 52.2 percentage point difference) for Internet access. (Table I-4c) The same trends are recurring with respect to all income levels lower than $50,000. Interestingly, however, the gap appears to be narrowing for the mid-range and upper income groups. Households earning between $50,000 - $74,999 are now actually closer (by 0.4 percentage points) to those at the highest income level than they were in 1997. Id.

Middle-income households are faring far better with regard to computers. A significant drop of 11.1% (from a 15.3 to a 13.6 percentage point difference) occurred between the highest ($75,000+) and second highest ($50,000 - $74,999) income brackets. (Table I-4a) And the gaps are also narrowing -- though less significantly -- for those earning more than $25,000.