According to the March 15 online edition of Business Week the racial gap between those who have internet access and those who do not is narrowing. Recent research reveals that 71% of non-Hispanic whites, 60% of non-Hispanic blacks, and 56% of Latino adults access the internet. Apparently the major difference in internet usage between the races is the quality of internet access and where they are able to connect. Only 29% of Hispanics have broadband in their homes, while 43% of whites and 31% of African Americans have this feature. For those who do not have internet in their homes at all, public libraries are a main source of access. (Holahan, 2007)
This information is interesting when considering what type of good the internet is. Presently the internet is a natural monopoly. It’s largely excludable because not everyone can readily access the internet without paying for it, and it is not rival in consumption because one person using it does not stop or diminish the ability of others to use it. The only exception to this is accessing it through public libraries for free, in which case the internet could be classified as a common resource. However, since this type of access is used much less than access via private subscriptions, the internet is currently a natural monopoly.
As a natural monopoly, the supply and demand equilibrium is largely guided by price alone; only those who can afford private subscriptions have access to the internet. But is this fair? Should this be considered an example of market failure? Should the government do more to subsidize internet access?
Taking into account how large a role the internet plays in both business and personal affairs, not having access to this resource could be as damaging to society as a whole as not having clean water, food, etc. Paying household bills, searching for employment, even higher education, are all facilitated by the internet. The social benefits of providing equal internet access to all citizens may be higher than current demand dictates, marking this as an example of market failure. By providing free access at public libraries, the government is taking steps to correct this situation, but a gap still exists. One way to bring the social demand and supply to its optimal equilibrium is to provide subsidies to low income families, perhaps as a branch of the welfare system, for private access. This may include funding part of computer purchasing costs as well as internet subscription fees. Already the internet is an integral part of many everyday tasks, and as technological advances continue, access will no longer be considered a luxury, but a necessity.
Source:
Holahan, Catherine. “America’s Digital Divide Narrows.” Business Week Online. March 15, 2007. Reference URL:
http://www.businessweek.com/technology/content/mar2007/tc20070315_573361.htm?chan=
top+news_top+news+index_technology
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