LEGISLATIVE ANALYST REPORT

TO: The Honorable Members of the Board of Supervisors

FROM: Clarice Duma, Sr. Legislative Analyst

FILE NOS.: 011590 : Digital Divide - Free public Access

DATE: November 29, 2001

SUMMARY OF REQUEST:

A request introduced by Supervisor Mark Leno requests the Office of the Legislative Analyst (OLA) to study the City of Houston"s program which pays for free e-mail and Internet services in order to provide city residents with free access on Public Library computers. This report examines the cost and management of this program and considers feasibility for implementing this program in San Francisco.

BACKGROUND

Commerce Department Findings

Computer usage has become an important and popular means for Americans to carry out their day-to-day activities. According to the U.S. Commerce Department, Internet usage by American households grew by 58% between December 1998 and August 2000, with computer ownership increasing from 42.1% to 51%. Additionally, the Commerce Department"s August 2000 report notes that E-mail is the most widely used application, generating 79% of Internet users. Users go online to seek and gather information, for educational purposes, and for leisure. For low income users, the Internet is a tool for conducting job searches. More importantly, the Commerce Department reports that individuals who do not have Internet access at home, rely on schools, libraries, and other public access points for that service. Unemployed individuals, Blacks, Hispanics, Asian Americans, and Pacific Islanders are also more likely to use public libraries for Internet access.

Despite reports of the growing popularity of the Internet nationwide, large gaps still remain in Internet penetration and uptake among different demographic groups. The Commerce Department reports that Black and Hispanic households, despite strong Internet uptake (from 11.2% to 23.5% for Blacks, and from 12.6% to 23.6% for Hispanics), still lag behind, when measured against the national average of 41.5%. Additionally, while a third of the U.S. population uses the Internet at home, similar usage among Blacks and Hispanics was reported at 18.9% and 16.1%, respectively.

THE HOUSTON PROGRAM

In an effort to bridge the digital divide or gap in computer usage between different demographic groups, this year, the City of Houston launched SimHouston, a suite of virtual desktop software applications developed by a local software development company, Internet Access Technologies (IAT). This service allows the City"s residents to use any web-enabled device from any location to gain access to SimHouston for the purpose of creating, modifying, storing, sending documents, and establishing an e-mail address.

Internet Access Technologies (IAT )

IAT is a privately funded company that has been developing web-based office productivity technologies for over two years. IAT offers a complete suite of applications, packaged under the SimDesk label. SimDesk is designed to operate on all platforms and be compatible with other major office software packages. IAT states that its software allows a Service Provider to perform in different modes, including as a Vertical Portal that allows users access to specific types of information. SimHouston is also designed to be transportable, as well as provide users with cross-platform integration and remote and wireless access to data. In addition to using the net for web-browsing, customers will be able to access IAT"s main product, SimDesk, on the Internet. SimDesk provides various software applications for word processing, data management, spreadsheets, personal scheduling, data communications, e-mail, and other personal or business services. IAT claims that customers who access SimDesk can use any Internet-enabled device to create, store, access, modify, and transmit any type of information or file without having to purchase additional software or programs. SimDesk users can also automatically back up data from their computers to disks and tapes maintained on the Service Provider"s servers. IAT maintains that its platform can support 20 million users, and plans to expand its service to 12 other cities in the United States.

Usage of SimHouston by Houston"s Residents

In August 2001, the City of Houston became the first city in the U.S. to launch SimHouston. This software was originally loaded in Houston"s public libraries for access by any of Houston"s 1.8 million residents. In order to gain access to this service, the City`s residents must establish a SimDesk account with IAT. IAT also provides up to 25 megabytes of storage space that each user can utilize to store documents acquired or created over the Internet.

SimHouston was launched this past August 2001 as a pilot in 3 library branches located in 2 low-income communities, and was expanded in mid-September to 32 other branches. According to City Librarian, Barbara Gubbin, IAT is providing the service at no cost to the City"s public libraries and their patrons. However, the free service is linked to a

3-year $3 million contract established by the City of Houston and IAT. The contract allows IAT to roll out SimHouston to City departments, such as Police and Fire, that need to increase accessibility with the public. Additionally, IAT must install, manage, and maintain this City service. Houston"s library staff report that implementing the service has required little training for users since SimHouston is generally a user-friendly application.

ANALYSIS: Feasibility of Replicating the Houston Program in San Francisco

The Digital Divide in the Bay Area: As reported earlier, data from the Commerce Department points to the growing popularity of the Internet among all demographic groups in the United States, including Western states such as California. In regard to San Francisco, the OLA found scant information on computer usage in this region. Data compiled between September 1999 and January 2001 by the Public Policy Institute of California (PPIC) sheds some light on computer and Internet usage and the digital divide in the Bay Area. PPIC reports that Hispanics (compared to Asians, Caucasians and Blacks), individuals with some high school or less, low wage earners, and unemployed individuals lag behind other groups when it comes to their usage of computers, whether it is to go online for the Internet or to use e-mail. PPIC"s findings are summarized below in Attachment 1.

Current Public Access and Usage in San Francisco: San Francisco"s urban environment combined with its Silicon Valley association has produced a population with high computer penetration levels compared to other major cities in the United States. Local public libraries, schools, and non-profit organizations have also been involved in efforts to provide computers and Internet access to individuals who do not own computers. According to the City Librarian, the Main Library has also conducted a survey to gauge computer proficiency among library patrons, and found that younger, ethnic groups, especially Latinos indicated a need for increased access to the Internet. In response, the San Francisco Public Library system is now equipped with a total of 38 computers in the Main Library and 150 computers in the 26 branch libraries that provide graphical access to the Internet. In the near future, the total number of computers should increase, according to the City Librarian. The City Librarian also reports that currently most patrons use the Internet for e-mail. Most library facilities require patrons to sign up for half-hour time slots on the library"s computers in order to take advantage of various applications loaded in the library"s computers. The library cal also send users requested information by e-mail. Users can also utilize library PCs for word processing. This service is free in some branches and is available at the Main Library for $6 /hour, but it is being phased out in January 2002. As a replacement, the public computer lab in the Main Library will be available at certain times for desktop applications including word processing. Some library branches are also equipped with computer labs, which offer training workshops on computer usage.

Adding New Online Services, such as SimDesk : According to the City Librarian, the Library"s priorities include transitioning from a text-based on-line system to a web-based on-line system, and expanding current on-line usage to web-based systems, which would benefit users who want access to various software applications. For minority groups and other low income users who do not have computers or Internet access at home, easy and free access to such applications in public areas, such as libraries and schools, would serve an important function. Currently, computer users can take advantage of free services offered by various Internet Service Providers such as Yahoo and Hotmail to establish free e-mail accounts, post resumes, and create personal calendars. Sun Microsystems and other companies also offer users free access to word processing and spreadsheet applications. These companies do not, however, provide the portability and the storage capabilities offered by IAT through its desktop applications. Neither do they offer a package of advanced technologies that enable users to share documents, create calendars and address books, as well as have instant messaging with other subscribed users. This kind of "packaging" is a relatively new development in the competitive field of software technology, which few companies, such as IAT are just beginning to explore. As this technology advances and expands, users are likely to benefit from the convenience and immediate access such desktop applications can deliver.

Installation, Management, and Maintenance of SimDesk - Currently, the installation, management and maintenance of the City"s library computer systems is a joint function of the Department of Technology and Information Systems (DTIS) and library staff. IAT has indicated that if the City were to acquire the SimDesk software, IAT would take charge of installation, management and maintenance. IAT staff would also install and host the SimDesk applications on computers located in the City"s public access points, such as public libraries. Additionally, the City as a Service Provider could "private label" or customize the product (as is the case with "SimHouston") and host the software or applications in their own data environment or allow IAT to perform that service. IAT would also provide 25 megabytes of remote storage to each user. The local version of SimDesk would include templates for creating resumes, letters, faxes, memos and business plans. At cost to users, IAT could also offer customers the SimDesk software suite for home or office use.

The ability of IAT staff to install, manage and maintain the SimDesk application would be a relief for City staff. However, DTIS staff have also expressed concern about IAT"s proposal, which appears to grant IAT control over a City product, especially since IAT would be providing maintenance of the system from a remote location. Library staff also indicate that there also could be potential conflicts in loading the SimDesk application on library computers which also host many other applications and databases. There are other concerns about IAT"s apparent lack of a track record, particularly since this relatively new company recently launched its SimDesk product this past August 2001. In this unstable economic climate, it is unclear whether such new companies would be able to maintain the private funding which sustains their operations. These are issues the City must explore prior to acquiring any new technology systems.

Cost of SimDesk - IAT plans to market its products to Service Providers who will purchase them either in the form of one-time licensing fees (as is the case with Houston"s contract) or by sharing recurring monthly revenue from end users that subscribe to the SimDesk applications. IAT proposes to charge San Francisco an annual $1 million license fee which would cover the purchase and installation of SimDesk applications. IAT staff state that maintenance costs would be minimal because they would host the SimDesk application. Staff also point out that the bulk of the costs would be associated with the implementation of SimDesk, principally the marketing of the software applications to the public. IAT"s marketing efforts would include issuing a press release on the launch of SimDesk, and creating a public service announcement (PSA) to be broadcast by Citywatch and other local media outlets. IAT staff would also coordinate a citywide training for the City"s residents in a large public venue. They would also market their product by attaching flyer inserts on the residents" utility bills at the beginning of the launch and 6-months thereafter. In addition to the $1 million license fee, IAT could also charge additional costs for the production of the PSAs, for the training session, for printing the flyers, and for additional staff who would work with IAT on marketing SimDesk. Other charges to the City would accrue from use of IAT"s equipment, disk storage, tape storage, remote printer licenses and private label integration.

In terms of implementing SimDesk, DTIS staff have stated that any new software acquired by the City would need to address integration issues with other existing City applications, such as Microsoft Office. DTIS staff expect that integrating all these applications could result in additional expenditures for the City, including subscription fees if the City wanted to add advanced features to SimDesk.

DTIS staff also indicate that the high cost of implementing SimDesk is not justified by the product"s quality and limited benefits. They also point out that the cost savings that SimDesk promises to deliver to the City"s internal operations cannot be realized because the City has already made a significant investment in related arenas. In fact, SimDesk"s solutions would overlap with the City"s extensive use of Microsoft office productivity tools and the current roll-out of a new Lotus Notes e-mail system. Staff also add that the uncertainty around SimDesk"s own survival in the long term raises major concerns about the risk of rolling out applications to the public that may no longer be available in the future if this start-up company ends up joining a growing list of other failed ventures.

Security - SimDesk"s vast desktop applications raise security concerns, particularly if users will be using City computers for the purpose of retrieving and downloading information. In response, IAT has promised security to its clients in the transmission of data and other communications. The company points out that since all e-mail attachments are located on the client"s servers, no data is downloaded to the user"s computer, thus reducing the ability to spread computer viruses over the net.

CONCLUSION

Bridging the digital divide by providing users access to new technologies would be a benefit for both the City"s residents and for the City. By increasing computer proficiency in San Francisco, the City is preparing its residents for the challenges of an increasingly technological world. Applications such as SimDesk are particularly attractive because they offer users access to a suite of desktop applications, which are needed to carry out daily activities, such as job searches, and addressing other information needs. However, because these are relatively new and untested applications, there will continue to be lingering concerns over cost to install and operate new systems. Other concerns involve the capacity of new software companies to successfully deliver their services, their financial stability, and ensuring that new contractual relationships do not jeopardize the City"s interests. Even more importantly, even when services are available, the City must ensure that groups that are lagging behind in the digital divide are informed of these services, trained in using the technology, and that those computer services are located in their communities.

ATTACHMENT 1: Computer and Internet Use in the Bay Area

Source: Public Policy Institute of California (Data compiled: Sept. 1999-Jan. 2001)