Truck and Barter: Universal Email Access

December 23, 2004

Universal Email Access

By Kevin

Back in 1995, instead of trying to get everybody to graduate from college, RAND was advocating universal access to email:

The diverging trends in access based on income and education are placing significant groups of current and next-generation U.S. citizens at a serious disadvantage in relevant job-related skills and in access to social programs and information. Information haves may leave the have-nots further behind, unless concerted efforts are made to provide all citizens with access to the technology. This report gives serious consideration to closing the access gap. The study details the benefits--on the personal as well as national and global level--of e-mail access. It recommends support of a U.S. policy of universal access and addresses the technical and economic aspects of putting such a policy into operation.

Remember that the RAND authors were writing before the 1996 Telecom Act, and the market for telecom services looked a little different then. They couldn't have known that Google would eventually put entire libraries on the internet for free. I must point out that the RAND authors write a very solid overall document; only parts of it seem pretty silly now. Especially the part on "Emerging Equilibrium Market Structure":

If e-mail is to reach the vast majority of the population, marginal consumers--those who would not at current prices subscribe to an e-mail service--will need economic assistance to participate. Two approaches could be considered. The first would place requirements on service providers to offer below-cost service to consumers as a condition of doing business. The alternative approach is to provide funds directly to consumers with which they can purchase e-mail equipment and services.

They predicted equilibrium! Quaint, no? Tremendous decreases in costs made it hard to judge what an appopriate regulated price would be for email. Then, subsidized email for the poor was estimated to cost $1billion annually. Of course, everybody can get a half dozen free email addresses now. Hey, Ian just gave 6 away...

Historically, the integration of email into a single system was far technologically easier, quicker, and less costly than telephone integration, which occurred after years and years of non-interconnected, multiple telephone systems competing head to head. With 20/20 hindsight, I can declare that applying the telephone standard of regulation would have yielded a far less dynamic system.

Cost-price regulation was the norm for local and national phone service; because this was the preferred method of economic analysis of zero marginal cost products, RAND tried applying it to email, noting the drastic differences between phone and email services:

In sum: The costs of basic e-mail terminal capabilities are dropping rapidly, allowing a larger number of potential users to economically add e-mail features to equipment they may acquire for entertainment, computation, or other communications uses. Lower costs, combined with growth in network services and the rapidly growing network community that can be reached, will lead to rapidly rising e-mail penetration among households. Nevertheless, the costs of acquiring a basic terminal will remain a deterrent for some potential users with limited resources and for others who expect only small benefits from an e-mail connection. As mentioned in Chapter Three, the cost may be offset or covered by various advertising offerings, but this option remains quite speculative. Public actions to encourage universal access will need to address this barrier.

Thankfully, "public actions" were never implemented in this fashion...

It seems to me that the government subsidized computer hardware access through libraries. After all, the key component was getting everybody access to a computer on the net. With government spending and charitable additions, public libraries have basically done this in the US. Wal-Mart is only the latest profit-driven force trying hard (1,2) to convert computers into private property of the poor. "Access" is inferior to "ownership".

Still, email itself was supposed to costly, according to RAND's forecast:

Because e-mail is unlikely to be provided to all as a free service, there may need to be some (as yet undetermined) electronic equivalent of postage. [28]

--[footnote] However, simple e-mail riding on top of other services may be "too cheap to meter" and bundled in at a fixed low monthly net access rate, therefore not requiring the accounting mechanisms described in this paragraph. In addition, some services have recently been announced that plan to provide free e-mail in conjunction with advertising. See Juno at http://www.juno.com and Freemark at http://www.freemark.com.

They simply could not forecast the evolution of the net.

UPDATE: Some neat data about internet usage without internet access at home, in table 2:

75% of people with no internet access at home use the internet at least once a week, and half of that use it daily!

Posted at December 23, 2004 06:04 PM

Comments

They're talking about
the -access- -- the whole shebang. Yes, you can
get that free email -address-, once you've shelled out the
$10/mo for a slow line, and the $200 for a computer.
And that's the absolute minimum.

Comment by Chet at December 23, 2004 07:18 PM | Permalink

Actually, the cost numbers I quoted were for email only, not hardware.

Using your $200 & $10/month figure, the cost with a one person household on a per day cost basis comes to less than a dollar.

My point is that the RAND reported consistently underestimated the performance of the market in computer hardware, software, and services.

For instance, the RAND report assumes a much higher cost of computing for the next several decades then actually has already happened:

It may be comforting to assume that PCs will become low-cost commodities like telephones, TVs, and VCRs, and that the universal access problem will resolve itself. After all, each of these technologies had "early adopters" that leapt ahead in use of the technologies (just as the top two quartiles of U.S. households in education and income are rapidly acquiring PCs today), but then the rest of the population caught up as price competition brought the technology into the reach of (almost) all.

For the reasons given above, we believe, for the next several decades at least, that this is a false hope. The difference with PCs may be threefold: (1) A "killer app"[8] has not yet emerged for personal computing that makes a PC a "must have" appliance in every household (as, for example, prerecorded movies did for VCRs) such that mass demand would create the market for a "commodity" PC; (2) the technology is not stabilizing so that "commoditization" can occur;[9] and (3) there are recurring telecommunication costs, including possible need for a second phone line to avoid tying up the family phone.

However, the new under-$500 "network access terminals" mentioned in the previous subsection can play a vital role in providing inexpensive access.

Or people could get the whole shebang at the library, like my homeless co-blogger at the Wal-Mart Blog, Morgan Brown does. (Some libraries offer free dial-up too).

Still the RAND report is based on the following assumption/forecast about computer ownership:

The discussion in this chapter is strongly influenced by the current and projected demographics of access to, and use of, personal computers and on-line services. Extrapolating the data in Figure 2.2 and the discussion within the previous chapter, we conclude that, through normal market mechanisms, less than 50 percent of U.S. households by 2000 will have personal computers.[3] Although only about half of these will have modems, the upgrade cost for a reasonable-speed modem for on-line service access (e.g., 14.4 kilobits (KB) per second) will be relatively small (e.g., about $60). We conclude that PC owners will obtain modems (and they will be increasingly built-in as standard equipment) as on-line services become easier to use and more useful. These PCs are more than sufficient for accessing e- mail services. We therefore concentrate in the following discussion on technical issues involved in reaching the "remaining 50 percent," and in particular on bringing e-mail services to the bottom quartile of our society, based on socioeconomic status.

The study made an accurate forecast for computers, but not internet access. 51% of households had a computer and 41.5% had internet access in 2000. By 2003 this had increased to 61.8% and 54.6%.

Comment by Kevin Brancato at December 23, 2004 09:03 PM | Permalink

(1) A "killer app"[8] has not yet emerged for personal computing that makes a PC a "must have" appliance in every household (as, for example, prerecorded movies did for VCRs) such that mass demand would create the market for a "commodity" PC

If email and web access is not a "killer app" then why worry about people's access to it? If we don't have universal demand, then why do we need universal access?

Comment by Rob at December 27, 2004 09:14 AM | Permalink