Digital Divide Separates Urban & Rural Residents

For many years, the term digital divide has been used to describe the gulf between high- and low-income Americans’ ability and willingness to subscribe to high-speed broadband services like DSL and cable modem.

These days, the price of broadband service has dropped to the point that just about anyone can afford the service (I pay $24.95 per month), and just about every library and school has high-speed Internet access, extending access to nearly everyone… in the cities. Rural Americans seem to be stuck in the ’90s, as the increasing demands of Wall Street squeeze telecoms, reducing their willingness to invest in infrastructure that will serve low density population centers.

ISPs to rural America: Live with dial-up (ComputerWorld)

For example, in Minnesota, broadband penetration is just over 39% in rural areas, while in the Twin Cities area — where infrastructure has been built out — that number is 57%. The Chinese government has a program in place aimed at reducing the divide between rural and urban populations, and Indian telecom Bharat Sanchar Nigam Ltd. sells high-end services to corporations, using the profits to extend connectivity to poor and rural areas. Even though U.S. broadband penetration is close to 60%, the United States is now behind 15 countries, including Iceland, Canada, and Korea.

• Minnesota’s digital divide (Twin Cities Daily Planet)
• More money to be spent on digital divide: premier (The China Post)
• BSNL to focus on bridging the digital divide (The Hindu Online)
• FCC Ignores Digital Divide While US Broadband Drops Worldwide (Website Optimization)

The U.S. Congress has had several initiatives to try to address the divide, but none has yet made a big impact on rural customers. With the telecoms under mounting pressure from Wall Street to provide high returns on their equity, the big companies are, at best, dragging their feet when it comes to laying down the infrastructure to support broadband in rural areas. The government, in my opinion, has an obligation to provide either regulation or incentives to convince the telecoms to extend their services, just as they were forced to extend telephone service and just as the electric companies were forced to provide power to all areas.

Do you think that the telecoms should build out their infrastructures on their own, or should government regulations and incentives be imposed? Do you believe that broadband, like telephone and electric service, should be a utility that extends even to rural areas? How would you make it happen if you were in charge?

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Great Scrutiny for Europe's Outsourcing Deals

New competition guidelines in Europe are set to put outsourcing deals under greater scrutiny by European Commission regulators.

The Commission's latest updated guidelines--and its interpretation of the 1990 Merger Regulation, which defines the Commission's regulatory role for mergers--now include a section on how an increasing number of joint-venture outsourcing deals can fall under the terms of the Merger Regulation.

This means that where an outsourcing supplier is buying all or part of the IT assets being outsourced by a company, the deal may need to go to the European Commission for approval.

The threshold test for deals that will need Commission approval is if the supplier has sales of $6.8 billion globally and $340 million in Europe, and if the potential sales of the outsourced IT operation also exceeds $340 million per year.

Deals that have already come under European Commission scrutiny include IBM Italia's IT-services deal with Fiat Group's Business Solutions unit in 2001 and Deutsche Lufthansa's IT joint venture with technology services company EDS in 1995. Most deals will be approved within five weeks but a small number that may need greater scrutiny could take up to four months to get the go-ahead from the Commission.

Phil McDonnell, head of competition at London-based law firm Addleshaw Goddard, said companies will have to factor this extra time and possible delay into their outsourcing plans from the start.

"You have got to build in some time into your procurement to give the supplier time to go through the hoops," McDonnell said. "You could also use it to identify suppliers who will give you least aggravation--it might give the smaller suppliers potential differentiation."

Suppliers will also need to factor these likely delays into their planning, but McDonnell also warned that the Commission may eventually start to restrict the number of outsourcing deals any one supplier can hold with companies in a particular sector because of competition regulations.

"There will come a point where a regulator will say a supplier has too many deals in the same sector," he said. "I don't think we are at that point yet, but that is where it is heading."

HP to wait for Microsoft Home Server update before shipping MediaSmart Server

A little over a month since it released to manufacturing the final Windows Home Server (WHS) bits, Microsoft is working on an update to the code that it will push out to its OEMs and customers in about two weeks.

Microsoft’s showcase WHS partner, Hewlett-Packard, has decided to wait for that update before shipping its MediaSmart Server, Microsoft officials confirmed on August 30.

Will HP’s decision to wait for the code result in its WHS product going to market later than September 15, which is the date HP planned to release it to market (according to a leak on Amazon.com’s site a week ago)? I asked HP, but so far no word back.

Here’s the back story: As first reported by SmallNetBuilder.com (thanks to WinBeta.org for the link), Microsoft is issuing an update making WHS more “user friendly.”

Microsoft released the original WHS bits to manufacturing in mid-July and has been rolling out the final code to its OEM and system builder partners over the past couple of weeks. It’s hard to tell if the September update was pre-planned by Microsoft or added as an afterthought.

“As with most Microsoft products, we will offer Windows Updates to Windows Home Server throughout the lifecycle of the product. We (the WHS team) are producing one of those slated in the next few weeks, and another by end of year,” said Steve VanRoekel, Director of Microsoft’s Windows Home Server Solutions Group. “These updates will include enhancements to the product aimed at allowing developers writing add-ins to better utilize Windows Home Server.

“HP has decided to wait for one of these updates (and they are writing add-ins on top of Home Server),” VanRoekel confirmed.

VanRoekel said Microsoft’s current plan is to make the update available “within the first two weeks of September,” following its testing of the code. Any customer systems from PC makers and other WHS partners will automatically download the update once it is posted to Windows Update, VanRoekel said.

“Like other Microsoft products, we will also be slip-streaming updates into the builds from which they build their systems. This will happen over the lifespan of the product,” he said.

If and when I hear back from HP about how this code update will affect its WHS plans, I will update this post.