The Internet is becoming an increasingly vital tool in our information society. More Americans are going online to conduct such day-to-day activities as business transactions, personal correspondence, research and information-gathering, and shopping. Each year, being digitally connected becomes ever more critical to economic, educational, and social advancement. Now that a large number of Americans regularly use the Internet to conduct daily activities, people who lack access to those tools are at a growing disadvantage. Therefore, raising the level of digital inclusion -- by increasing the number of Americans using the technology tools of the digital age -- is a vitally important national goal.

This report, Falling Through the Net: Toward Digital Inclusion, is the fourth in the Falling Through the Net series. In this report, we measure the extent of digital inclusion by looking at households and individuals that have a computer and an Internet connection. We measure the digital divide, as we have before, by looking at the differences in the shares of each group that is digitally connected. For the first time, we also provide data on high-speed access to the Internet, as well as access to the Internet and computers by people with disabilities.

The data show that the overall level of U.S. digital inclusion is rapidly increasing:

• The share of households with Internet access soared by 58%, rising from 26.2% in December 1998 to 41.5% in August 2000.
• More than half of all households (51.0%) have computers, up from 42.1% in December 1998.

• There were 116.5 million Americans online at some location in August 2000, 31.9 million more than there were only 20 months earlier.
   
• The share of individuals using the Internet rose by 35.8%, from 32.7% in December 1998 to 44.4% in August 2000. If growth continues at that rate, more than half of all Americans will be using the Internet by the middle of 2001.

• The gap between households in rural areas and households nationwide that access the Internet has narrowed from 4.0 percentage points in 1998 to 2.6 percentage points in 2000. Rural households are much closer to the nationwide Internet penetration rate of 41.5%. In rural areas this year, 38.9% of the households had Internet access, a 75% increase from 22.2% in December 1998.

• Americans at every income level are connecting at far higher rates from their homes, particularly at the middle income levels. Internet access among households earning $35,000 to $49,000 rose from 29.0% in December 1998 to 46.1% in August 2000. Today, more than two-thirds of all households earning more than $50,000 have Internet connections (60.9% for households earning $50,000 to $74,999 and 77.7% for households earning above $75,000).
   
• Access to the Internet is also expanding across every education level, particularly for those with some high school or college education. Households headed by someone with "some college experience" showed the greatest expansion in Internet penetration of all education levels, rising from 30.2% in December 1998 to 49.0% in August 2000.
   
• Blacks and Hispanics, while they still lag behind other groups, have shown impressive gains in Internet access. Black households are now more than twice as likely to have home access than they were 20 months ago, rising from 11.2% to 23.5%. Hispanic households have also experienced a tremendous growth rate during this period, rising from 12.6% to 23.6%.
   
• The disparity in Internet usage between men and women has largely disappeared. In December 1998, 34.2% of men and 31.4% of women were using the Internet. By August 2000, 44.6% of men and a statistically indistinguishable 44.2% of women were Internet users.

• Individuals 50 years of age and older -- while still less likely than younger Americans to use the Internet -- experienced the highest rates of growth in Internet usage of all age groups: 53% from December 1998 to August 2000, compared to a 35% growth rate for individual Internet usage nationwide.
   

• Persons with a disability are only half as likely to have access to the Internet as those without a disability: 21.6% compared to 42.1%. And while just under 25% of those without a disability have never used a personal computer, close to 60% of those with a disability fall into that category.
   
• Among those with a disability, people who have impaired vision and problems with manual dexterity have even lower rates of Internet access and are less likely to use a computer regularly than people with hearing and mobility problems. This difference holds in the aggregate, as well as across age groups.

• Large gaps also remain regarding Internet penetration rates among households of different races and ethnic origins. Asian Americans and Pacific Islanders have maintained the highest level of home Internet access at 56.8%. Blacks and Hispanics, at the other end of the spectrum, continue to experience the lowest household Internet penetration rates at 23.5% and 23.6%, respectively.
   
• Large gaps for Blacks and Hispanics remain when measured against the national average Internet penetration rate.
   

-- The Internet divide between Hispanic households and the national average rate was 17.9 percentage points in August 2000 (a 23.6% penetration rate for Hispanic households, compared to 41.5% for households nationally). That gap is 4.3 percentage points wider than the 13.6 percentage point gap that existed in December 1998.
 

-- With respect to individuals, while about a third of the U.S. population uses the Internet at home, only 16.1% of Hispanics and 18.9% of Blacks use the Internet at home.
 

-- Differences in income and education do not fully account for this facet of the digital divide. Estimates of what Internet access rates for Blacks and Hispanic households would have been if they had incomes and education levels as high as the nation as a whole show that these two factors account for about one-half of the differences.
 

• With regard to computer ownership, the divide appears to have stabilized, although it remains large.
   

-- Similarly, the 17.3 percentage point difference between the share of Hispanic households with a computer (33.7%) and the national average (51.%) did not register a statistically significant change from the December 1998 computer divide.

• Individuals 50 years of age and older are among the least likely to be Internet users. The Internet use rate for this group was only 29.6% in 2000. However, individuals in this age group were almost three times as likely to be Internet users if they were in the labor force than if they were not.
   
• Two-parent households are nearly twice as likely to have Internet access as single-parent households (60.6% for dual-parent, compared to 35.7% for male-headed households and 30.0% for female-headed households). In central cities, only 22.8% of female-headed households have Internet access.
   
• Even with broadband services, a relatively new technology used by only 10.7% of online households, there are disparities. Rural areas, for example, are now lagging behind central cities and urban areas in broadband penetration at 7.3%, compared to 12.2% and 11.8%, respectively.
   

• E-mail remains the Internet's 'killer application'-79.9% of Internet users reported using e-mail.
   
• Online shopping and bill paying are seeing the fastest growth.
   
• Low income users were the most likely to report using the Internet to look for jobs.
   
• The August 2000 data show that schools, libraries, and other public access points continue to serve those groups that do not have access at home. For example, certain groups are far more likely to use public libraries to access the Internet, such as the unemployed, Blacks, and Asian Americans and Pacific Islanders.