Ruling by International Trade Commission is pending
In July, President Obama traveled to Oklahoma to make a relatively little-noticed but important announcement that has the potential to transform the lives of tens of thousands of African Americans, Hispanics and other individuals struggling on the economic margins.
Speaking at a high school in the Choctaw Nation, Mr. Obama unveiled a program that would bring high-speed, broadband Internet to 275,000 public-housing households, as part of a broader effort to close a digital divide that has deprived many low-income families of the educational, commercial and government opportunities that wealthier families routinely access on the Internet.
“Today, we’re going to take another step to close the digital divide in America,” the president said. “Now, I don’t really have to tell you why this is important. Even old folks like me know it’s important. In this digital age, when you can apply for a job, take a course, pay your bills, order a pizza, even find a date by tapping your phone, the Internet is not a luxury. It’s a necessity. You cannot connect with today’s economy without having access to the Internet.”
It is, in fact, striking to consider the degree to which income determines who ends up on the wrong side of the digital divide. Less than half of the poorest American households have a home Internet subscription, Secretary of Housing and Urban Development Julian Castro told The Washington Post. “And they face real barriers when trying to lift themselves up and better their lives because of it,” Secretary Castro added.
To the degree that this divide has been closed, it has been due to the proliferation of smartphones in the age of powerful 4G and LTE wireless networks. Numerous studies have shown that low-income individuals, including a disproportionate number of African-Americans and Hispanics, depend on relatively inexpensive mobile devices to go online in order to perform the basic functions of life in the digital age.
Consider this compelling fact from The Pew Research Center: Sixty four percent of African Americans living in low-income homes rely on mobile broadband for Internet access. How does that compare to more affluent Americans? The figures paint an astounding – and distressing – portrait of digital haves and have-nots. A mere one percent of Americans with annual incomes of $75,000 or higher is smartphone-dependent. In other words, they have access to more expensive desktop computers and laptops to get their jobs done. And here is another telling fact from Pew: 45 percent of Hispanic smartphone owners have used their mobile device to take an online class or look up educational content in the past year.
It is against this backdrop that a rather obscure legal dispute before the International Trade Commission is taking on greater significance, with direct ramifications for President Obama’s goal of ensuring that the most vulnerable Americans are not deprived of the tools for advancement that the Internet provides.
The case before the ITC, which polices unfair trade practices, involves a company that many Americans have probably never heard of, Nvidia. The company claims that chips made by another company, Qualcomm, contain Nvidia’s patents for graphics processing. The case would be just another patent dispute in the cutthroat high-tech industry if it were not for one important fact: the Qualcomm chips are essential to a broad array of devices manufactured by Samsung, the maker of popular and relatively inexpensive smartphones.
What makes Nvidia’s case so relevant to consumers, particularly low-income consumers who depend on relatively inexpensive smartphones like Samsung’s, is that the company is asking the ITC to issue an order that would bar Samsung products in the United States.
If the ITC were to issue such a ruling, the impact on the American marketplace would be extraordinary. Unlike Apple, which produces iPhones that cater strictly to wealthier consumers, Samsung produces devices that appeal to people across the demographic spectrum, including affordable and popular devices for people on tighter budgets. More than that, though, removing Samsung’s devices from the U.S. market would likely create acute shortages that, in turn, would lead to price hikes that would impact low-income consumers especially hard.
There are signs that this marketplace disaster may be avoided. A few members of the ITC have reportedly suggested that they are leaning toward absolving Samsung of any kind of patent infringement claims. Still, with a final ruling not scheduled until later this year or early next year, it is far too early to claim victory.
In the meantime, the commission might do well to consider the inequalities it would unwittingly reinforce by siding with Nvidia in a case with the potential to impact so many individuals struggling to get by.
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