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One Wired Nation, Indivisible? Or One Big Boondoggle?


Washington Outlook

One Wired Nation, Indivisible? Or One Big Boondoggle?

When President Clinton unveiled his agenda for the year 2000, he drew cheers from Democrats by proposing a $2 billion initiative to close the gap between computer haves and have-nots. Fighting the "digital divide" has become a motherhood issue for politicians, who have gone from promising a chicken in every pot to a computer in every family room. But however well-intentioned, few pols have thought through how to attack techno-illiteracy at its roots. Skeptics worry that throwing money at the problem may produce a boondoggle that subsidizes the computer industry.

For now, pols are too busy getting into the act to bother with such details. Both Vice-President Al Gore and former Senator Bill Bradley vow to narrow the digital divide. And Senators Spencer Abraham (R-Mich.) and Ron Wyden (D-Ore.) advocate tax breaks for companies that give PCs to needy groups.TOO COZY? President Clinton outdid them all on Feb. 2 with his Digital Opportunity initiative. Flank by America Online CEO Steve Case, Clinton announced a plan to give tech companies $2 billion in tax incentives over the next 10 years to build and support community technology centers, donate PCs, and provide training. "If you look at the people and places that have been left behind in this economy," Clinton told BUSINESS WEEK, "one of the quickest ways to catch them up is to make sure they have access to the Net."

On the same day, in San Francisco, Gore's top domestic policy adviser, David Beier, unveiled a private-sector initiative, dubbed Clickstart, that hopes to take advantage of Clinton's new plan by supplying computer and Internet access to up to 9 million poor families for a token fee of about $15 a month. Clickstart, which seeks to tap into $380 million in federal grants that the Clinton plan also would make available, grew out of a Democratic fund-raiser that Novell CEO Eric Schmidt held last October.

Some critics question the cozy relationship between the White House and the high-tech industry. They contend that efforts to bridge the divide may be largely political in an era of plunging PC prices and free Web access. Already, 23% of African American households are online, as are 36% of Hispanic households, according to Forrester Research Inc. "We're entering the age of free computing," says Adam D. Thierer, a Heritage Foundation scholar. "This could be a new form of corporate welfare." Counters Bruce Lincoln of Columbia University's Institute for Learning Technologies: "This is not about digital welfare, it's about digital economic development."

Even some business lobbyists think there's a better way. The U.S. Chamber of Commerce, for instance, says that before spending new money, Congress ought to train teachers to use the billions in new hardware already supplied to the nation's schools. "If you don't know how to use it, what good is that computer?" says Rick Lane, the Chamber's director of e-commerce.

Republicans suggest that Clinton's timing is impeccable. The proposal, they say, is a giveaway to two key constituencies--low-income minorities and Silicon Valley, which is key to political fund-raising this election year. "The last thing we need is to turn the Info Superhighway into a public works project," says Republican National Committee spokesman Mike Collins.

"This is not a political deal," Clinton insists. "If I had waited for the market to solve universal telephone access, there'd still be places in Arkansas where people wouldn't have a phone." But the biggest legacy of his mini-New Deal for the Net-deprived might be better bottom lines in techland.By Lorraine Woellert; Edited by Paula DwyerReturn to top

Amoco's Horrible Week

It was a bad week for BP Amoco PLC. The Federal Trade Commission on Feb. 2 voted to block the London-based oil giant from merging with Arco. At issue: The FTC believes that BP Amoco's Alaskan unit, when combined with Arco's operation, would have too much oil-production and gasoline-pricing clout. Settlement talks between the FTC and BP Amoco failed shortly before the FTC vote, prompting a nasty legal battle that could go to the Supreme Court. Meanwhile, on Feb. 1, a federal judge socked the same Alaska subsidiary with a $500,000 criminal fine for failing to report the dumping of hazardous waste. When the cost of a related civil case is added, BP Amoco could spend $22 million to resolve the charges.Edited by Paula DwyerReturn to top


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