Thursday, February 17, 2005
Corporate Incentives
In this week’s readings I’m most curious about something that was stressed in the “Digital Divide: Bridging the Technology Gap” report. “Aggressive enforcement of the 1996 Telecommunications Reform Act is essential if we are going to give consumers more bandwidth and more options to obtain bandwidth at a lower price” (P.9) is an interesting statement. By deregulating the telecommunications industry to allow for this competition to reach all people, it has led to greater competition, and buy-outs and corporate mergers. On page 8 of the same report, there’s a statement that letting the markets work naturally will allow technology providers the capability to reach their targeted customers. What incentives do corporations have to reach those left behind technologically? Another point that was stressed was how rapid the internet became an essential part of everyday life. Is it just too soon to gauge the market?
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I was a little surprised that everyone at the hearing had so much faith in the virtues of the free market system. They mentioned deregulation of telephone service as a postive thing that caused competition that drove down prices. Maybe it did, I'm too young to remember, but I do know that at present every telephone company has a lot of ways to stick a bunch of extra fees on your monthly bill so you wind up paying much more than the price they quoted you. If that happens with Internet service providers, it's going to make the income-based digital divide worse.
ReplyDeleteI don't think tech corporations have much natural incentive to reach out to low-income consumers. People without much money won't buy expensive computers, and they won't upgrade to a newer model very often. There's not a lot of money to be made in that market. I'm not sure how the lower-income market could be made more appealing to the tech corporations -- someone at the hearing suggested tax breaks, but I'm skeptical as to how well that would work.