The Urban / Rural Gap

Seattle-SkylineI have written a lot about the urban/rural broadband gap. I work with a lot of rural communities that have either no broadband or connectivity so slow it shouldn’t count as broadband. In today’s world it’s nearly as frustrating to be stuck with a 1 Mbps Internet connection as it is to have no connection.

But in the last two weeks I have spent time in places like Philadelphia and Seattle/Tacoma and it strikes me that there are now a huge number of ‘gaps’ between urban places and the rest of the US. People in those urban places have opportunities that the rest of us don’t have. The tech press is full of news about various new start-ups, and a lot of these new businesses only do business in big cities. I suspect that people who haven’t recently spent time in downtown cities don’t realize how fast life there is changing.

So what kind of gaps am I talking about? Here are some examples, though you can find plenty more:

  • Wireless Coverage. There is a huge gap between the quality of cellular data in cities and the rest of the country. I routinely visit suburban and rural places where you still have to hunt for a signal. In the early days of cellular this was common everywhere and it used to be comical to watch people roving around airports trying to catch a bar of service. But this problem has largely been solved in urban areas. Now most urban places not only have good coverage, but there is usually good 4G coverage almost everywhere. This means that people in cities can use apps that don’t work well, or at all, in places with worse coverage. But even in urban areas there are holes in the coverage. For example, I talk to a friend in DC who loses voice coverage every time he drives across one of the Potomac bridges. But overall, the cellular experience in urban areas is far superior to the coverage in the rest of the country.
  • Sharing Economy. While the sharing economy is booming in urban areas, it’s harder to find anywhere else. The concept of sharing resources is applied to many services people need in cities. Cities have Uber and Lyft which makes it a lot easier to get around without a car. But if somebody in a city wants a car there are numerous vehicle sharing services like Zipcar and Car2Go where you can conveniently share a fleet of cars with others and use one whenever you need it. You can also walk up and grab a shared bicycle using Spinlister or other bike sharing services.
  • Delivery of Basic Services. It’s now possible to get almost anything delivered to you on demand if you live in a city. I live in an upscale small town in Florida and our only food delivery is a few pizza places. But in cities there are delivery services that will bring you food from almost every restaurant. People in cities now routinely shop for groceries online and have them delivered. And almost anything else you can imagine can be routinely and affordably delivered in a city.
  • Instant Shipping. There has been a lot of press in the last few years about Amazon and other delivery services offering same day, or even just a few hour, shipping. But these speedy services are only available in cities.
  • Ubiquitous WiFi. It is getting to the point in cities where you can walk around and find WiFi almost everywhere. It’s still a hassle at times to keep logging into new networks, but that is going to be fixed soon with the widespread deployment of Hotspot 2.0. Free WiFi allows people in cities to stay connected cheaply everywhere, which is a huge contrast with the rest of the country where there might be WiFi in a few restaurants and other places, but otherwise public WiFi is a rarity.

There have always been differences between living in a city versus living other places. But the proliferation of these better services in the cities is widening the gap much more than in the past. Years ago I lived in downtown cities like Dallas, St. Louis, and San Francisco and the differences were not nearly as great as they are today. Cities have always been noisier and more crowded and hard places to own a vehicle. Of course there has always been the added benefits of the accessibility of a lot of choices for food, entertainment, and culture. But overall it wasn’t all that different living in a city and you didn’t experience a huge change in lifestyle when you went outside the city.

But the proliferation of easy-to-use services, largely fueled by the Internet, is making city life very different than what the rest of us experience. One can imagine people being raised in the city who are going to feel like life elsewhere in the US is an alien experience. And these differences are going to grow greater as cities get even more services that are enabled by ubiquitous bandwidth and that also benefit by the economy of scale of large places. For many years it’s been common for young professionals to take jobs in big cities and then move out to the suburbs when they have kids and a family. But people that get used to the amazing service economy in cities might find that transition harder to accept than in the past.

Europe Attacking Our Tech Companies

european unionIt’s clear that the European Union is attacking American technology companies. Evidence is everywhere. Consider the following examples or recent crackdowns against US technology in Europe:

  • Last year stringent rules were imposed on Google and other search engines to allow people to remove negative things from searches – these rules are being called the “right to be forgotten”.
  • The European Union is getting ready to file a massive anti-trust case against Google for the way that it favors its own search engine over others. The estimates are that the fines they are seeking could be as high as $6 billion.
  • Last year the EU voted in favor of making Google divest into multiple companies.
  • Numerous countries in Europe have blocked services from Uber.
  • The EU is going after Apple’s fledgling music business saying that they have the market power to persuade labels to abandon ad-sponsored sites like Spotify.
  • A decade ago there were several major antitrust cases filed against Microsoft.

There are numerous reasons for the antipathy that Europe seems to have towards American companies. President Obama said in an interview last month that the negativity was largely driven by economic competition and that Europe wants to find a way to support its own burgeoning tech companies over the behemoth tech companies like Google, Facebook, and Microsoft. He thinks a lot of the complaints by the EU are due to lobbying by European tech companies. He said that “oftentimes what is portrayed as high-minded positions on issues sometimes is designed to carve out their (European) commercial interests.”

But the president also admitted that some of the reaction to American tech companies is in reaction to the European history of suppression of freedom by dictators. For example, Germany just spent decades merging with East Germany and their history of oppression from the Stasi, the secret police. This makes some of these countries very sensitive to the recent revelations of the extent of the spying by the NSA. This one revelation might eventually be the beginning of the end of the open Internet as numerous countries are now building countrywide firewalls to shield them from such spying. It’s natural that this mistrust carries over to companies like Google and Facebook, which clearly have a business model based upon profiling people.

Another reason for going after American companies is tax revenues. The American tech companies have become adroit at claiming revenues in jurisdictions where they pay little or no taxes. Of course, this means that they avoid claiming profits in European countries which have fairly high tax rates. (This also means they avoid paying taxes in the US as well).

Finally, there might be an even more fundamental reason for the apparent European distrust and dislike of American technology. In this article published by Business Insider UK there is a look at the fundamental differences between the way that Europeans and Americans view entrepreneurship, technology, and uncertainty avoidance. The article shows the results of a survey and study done by the European Commission looking at how citizens in various countries look at certain issues. I think there has been a natural assumption that since both places are democratic and share a lot of first world values that we naturally think the same about technology. But the study shows some major differences between Europe as a whole and the US. Interestingly, England is very similar to the US in attitudes and perhaps our Yankee ingenuity and willingness to take risks is really part of our British heritage.

Here are some of the findings of that study:

  • Over 90% of Americans think that individualism is more important than compliance with expected social values. In Europe only a little less than 60% of people value individuality first. And in some places like Russia and Denmark less than 30% valued individualism more than compliance with social expectations.
  • When asked to agree or disagree with the statement, “entrepreneurs exploit other people’s work”, only 28% of Americans agreed with that statement (and the American dream is largely to own your own business), while the results in Europe spanned from only 40% agreeing in France, to 50% in the Netherlands, and over 70% in parts of southern and eastern Europe.
  • The US has a much lower threshold of uncertainty avoidance (unwillingness to take a chance on new ideas and new technologies). In the US only a little over 40% of people view themselves as risk adverse while in Europe it’s over 70%.

This means that to some extent the European Union is representing the will of its people when they crack down on US technology firms, which are viewed negatively as entrepreneurial and high risk. These kind of cultural gaps are very hard to bridge and US companies might have problems in Europe for decades – if they’re even resolvable at all.