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ABSTRACT  By reducing the cost of performing isolated economic activities in remote areas, information technology might serve as a substitute for urban agglomeration. The paper assesses this hypothesis using data on Italian households' usage of the Internet, e-commerce, and e-banking. The results do not support the argument that the Internet reduces the role of distance. Internet usage is much more frequent among urban consumers than among their non-urban counterparts. The use of e-commerce is basically unaffected by the size of the city where the household lives. Geographically remote consumers are discouraged from purchasing goods by the fact that they cannot inspect them beforehand. Leisure activities and cultural items (i.e., books, CDs, and tickets for museums and theaters) are the only goods and services for which e-commerce is used more in isolated areas. Finally, e-banking bears no relationship to city size. In choosing a bank, non-urban customers give more importance to personal acquaintance than do urban clients, partly because bank account holders in remote areas are more likely to have taken out a loan from their bank.