Digital divide as a symptom

Digital divide as a symptom
By Tim Clark
Staff Writer, CNET NEWS.COM

Don't ask Canadian futurist Don Tapscott about the small stuff. His consulting firm, Alliance for Converging Technologies, recently launched the program "Governance in the Digital Age," which asks whether government is obsolete in a networked society.

His quick answer--No. As Tapscott discusses in this conversation with CNET News.com, the notion of an electronic town hall polling the citizenry is not the model for the future. He calls that idea an "electronic mob," putting him at odds with the Net's neolibertarians.

Government can become cheaper and more efficient using network technologies, but he insists that we must address the broader issue of being "e-citizens" in the networked age.

Tapscott spreads his views in books and lectures. His 1997 book, Growing Up Digital: The Rise of the Net Generation, grew out of watching how easily his own children picked up computer skills that baffled adults.

His most recent book, Blueprint to the Digital Economy, builds on his 1996 book The Digital Economy.

He also has coauthored Paradigm Shift: The New Promise of Information Technology (1992) and Who Knows: Safeguarding Your Privacy in a Networked World (1995).

News.com: How do you define "convergence"?
Tapscott: Three previously separate technologies--computing, telecommunications, and content--are converging, and for each of these three technologies there's a corresponding industry. These industries are crashing together as everyone attempts to exploit the middle of the triangle because that's where you create value for customers. You don't create value on the corners.

If you're a computer company you don't create value by making computers. Hardware has become a commodity, margins are razor thin. You create value through software and services. Evidence is that IBM's services revenue in the last eight years has gone from $2 billion to $28 billion. The most valuable computer company in the world doesn't make computers--that's Microsoft.

The same is true for telecommunications. Long distance companies will not get revenue from long distance telephony in seven or eight years. Given that long distance is 80 percent of revenue today for some companies, that's a problem. A long distance telephone call has gone from $120 a minute to 5 cents a minute. In 2005 it will be zero cents per minute because when voice becomes bits, the voice bits get lost in the rounding figure. So WorldCom can acquire MCI no problem.

The same is true for content. Increasingly the action is not in content, it's in the services. Movies, for example, are the billboard for ancillary rights in Hollywood. You may make money off the movie if you're lucky, but the real money comes not from Godzilla the movie--but from Godzilla the CD, Godzilla the game, Godzilla the ad rights, Godzilla the fuzzy toy, and Godzilla the popcorn and cappuccino. It almost outgrosses the movie.

What's your take on AT&T merging with TCI?
It makes a lot of sense for companies to seek new partnerships or for AT&T to merge with TCI because the action is not just in the pipes, the action is in the value-added software and services.

It makes sense for them to expand their pipes to create all kinds of new value-added services. But arguably, the actual transmission will be a commodity and possibly even not a source of revenue. It will just be a platform for delivering other services.

Recently AT&T chairman Michael Armstrong made a speech in New York about major new investments in IP and IP telephony. How does that fit into your analysis?
It's about time.

How does wireless fit into this convergence?
Wireless is just another transmission medium, but the benefits of portability and access anywhere on the planet are huge. Imagine a youngster in a remote area of Africa being able to communicate with the rest of the world for the first time through a $50 telecommunications and Internet appliance. This holds wonderful opportunity.

In Argentina, it used to be you couldn't make a phone call without extreme pain. Now everyone's walking around with a cell phone. Some developing nations can leapfrog over developed nations that are still writing off their copper wiring and other traditional technologies.

Wireless and portable remote, ubiquitous communications will be really important.

Convergence was first discussed five or six years ago, and the symbol was another merger--TCI and Bell Atlantic, which never happened. What's different today?
The TCI/Bell Atlantic merger predated the real growth of the Web. The Web, in particular the rise of Mosaic, leading to Netscape, made interactive, multimedia communications real to people. That merger really was an extension of cable television--downloading movies and fairly limited applications.

Since then, the Web has changed user acceptance. We've seen costs dropping, bandwidth exploding, the Net becoming more ubiquitous and rich in function. So people don't just see an opportunity for on-demand programming, they see an opportunity for all kinds of things. Not just shopping, but to do their homework, communicate with office colleagues, participate in videoconferences with clients from their summer place. A big technology push and a demand pull positions this whole thing to fly now.

How important is deregulation?
Very, it's very uneven around the world. In Argentina, half of the country has one telephone company that provides cheap access to the Internet and the other half is still pay-per-minute. You pay for local telephone charges, which is a huge demotivator to using the Net.

Is this convergence inevitable?
Paradoxically there's a counterforce, which is the growth of all kinds of highly unique, proprietary, ubiquitous information appliances. Take the PalmPilot. It's an example both of converging technologies (it's a communication device, a computer, and a device for storing and communicating content) but it's also divergent in that it's unlike any other device.

What about other devices?
Your shirt will be an information appliance in a couple of years. Around 2000, it will have a chip in it. It'll know where it was manufactured and how it moved through the distribution channel and where it was sold. If you take the shirt back, it'll know about you--when you bought it, how much you paid for it, where you bought it. So you're not a wearer of shirts--you're a user.

In the year 2005, that shirt communicates with the washing machine. And if you are Procter & Gamble, you have a big interest in that conversation--you want the shirt to be saying something like "Are we using Tide? Tide washes whiter. This doesn't feel right."

The implications for customers and for P&G are huge--P&G changes from being a soap company to becoming a homemaker company. And it may not be the molecular structure of Tide that gets the clothes whiter--it may be the services that are bundled in with Tide on the Net. The Tide box probably becomes an information appliance too--it probably makes sense to have a chip in it, worth a few cents, that would help deliver services to the homemaker.

Look around your world. My car key--it's a smart communicating device. My hotel room--the door is a smart communicating device. It's got a chip in it, it's internetworked. My camera was stolen from a hotel room in Miami and the door had knowledge--it knew about me. It knew who had been in and out of the room.

Tires and logging trucks are smart. They know about the road because they're linked through an onboard computer to a geographic positioning system. They change their inflation level as they move. Payback period is half a year or so because when the tire knows about the road and it has the proper level of inflation, the truck has lower maintenance and can go faster.

So this extends increasingly out into our world--all these inert objects have developed sensors. They become smart and internetworked.

NEXT: The generation lap

The generation lap

What are the social implications?
This is a time of great opportunity and it's a time of great danger. We need to tackle many real, significant dark side issues. Privacy. The changing nature of the workforce, retraining, and employment. Censorship.

One of the biggest issues is this digital divide. In my book, Growing Up Digital there's a very depressing graph on access to computers in the home. The top third of kids in terms of income have access; the middle third are getting access quite quickly; the bottom third are completely flat. By the time they ever get access they won't be kids anymore.

This is very dangerous. From a social point of view it's called creating a structural underclass--haves and have-nots, knowers and know-nots, doers and do-nots. But this is an issue that can be fixed.

Is the digital divide our biggest problem?
To me, the digital divide is a subset of another fundamental issue, the nature of governance. The future of governance is not just the business of government, reinventing government, and better, cheaper government. More broadly, it's how we move from the citizen as a consumer to the citizen as a shareholder in government.

What's a citizen and what kinds of responsibilities and rights do we have in this new global economy? What are the best ways to organize ourselves to receive services that we all fund and to influence the course of things? What does it mean to have democracy in an age of networked intelligence?

Are you talking about an electronic town hall where everybody gets to vote every night on the evening news?
That sounds like an electronic mob to me--that's a real danger. Many people think the Net obviates the need for government--you should just get rid of governments, period. This is used as an ideological justification for cutting back on government services.

What are you trying to do with your "Governance in the Digital Economy" program?
It's looking at the two interrelated issues. One is transforming the business of government by using the Net to change the way we deliver government services to reduce costs, unnecessary bureaucracy, and overhead. We also need to improve the [government's] quality of service to the consumer.

But we're at a bit of a logjam now because we're coming up against the boundaries of the paradigm. We're really fundamentally tinkering with the old industrial model of government, and to make real progress on that issue, we need to look at the broader issue--governance itself and the nature of democracy. That's the second set of issues that we're tackling.

There are several pieces there: What does electronic democracy look like? What are the best models? What happens to e-politics? Is there a role for intermediaries like political parties, and if so, what are they and how might they be different than our current intermediaries? What is the "e-citizen," this new consumer of services and shareholder in government?

Finally, there is the whole question of the nation-state, which came out of a previous economic revolution, the rise of the industrial economy. Our government very much parallels the traditional industrial organization, but now we're moving to a new global digital economy.

The current financial crisis shows that these government structures based on the nation-state may be woefully inadequate. What kinds of new structures, new processes, new relationships make sense?

There's a big role for governments. We must find a way to wire the schools, add an Internet connection to every desktop of every kid, and get kids laptops so they can have a sense of ownership.

What about the private sector?
At the World Economic Forum in Davos, I proposed a campaign to close the digital divide where every company would fund community computing centers and give computers to their employees to take home.

Could companies afford that?
The cost of a computer capitalized compared to the cost of an employee gets lost in the rounding figure. Furthermore, when you give your employees computers to take home the kids will teach the parents and the fluency of your workforce will go up.

At Davos, the CEO of a half a billion dollar Midwest company responded, "We did exactly that and what you said would happen did happen. It was measurable. The fluency of our people went up dramatically. People started getting turned on about using technology at work. We became a desirable place to work in our community. We started seeing real productivity and innovation impacts."

You've talked about the "generation lap." What's that?
For the first time in human history, kids know more about the big innovations in society than their parents. We could listen to children and learn from them.

My own kids could effortlessly use all this sophisticated technology that adults seem to have trouble with. They have no fear of it because it's not technology--it's like the refrigerator.

At first I thought my kids were prodigies, but then I realized that all their friends are like them, and the theory that all their friends were prodigies was a bit of a stretch. So I studied them and that led to my book Growing up Digital: The Rise of the Net Generation. They're the first to be bathed in bits.

There's no more powerful, positive force for change than this new generation. If we listen to them, they can teach us much.