The Internet Innovation Alliance (IIA) ( www.internetinnovation.org/) released its 10 ways broadband contributes to job creation and serves as a connector of job seekers, employers and employees. Sources for the research include the American Library Association, the Federal Communications Commission, and SNG.
Click here for the top 10 list.
In the spirit of lists, we’ve come up with our own for this month’s issue of Bandwidth. Using SNG’s Digital Economy Analytics Platform (DEAP), containing data from regions across the U.S. and the globe, we present the…
by Derek Murphy & Michael Curri
The digital divide has long been commonly understood to mean unequal access to the Internet and its accompanying resources and services.
But as connectivity expands to more households, attention shifts to how people use and benefit from the Internet. Not surprisingly, another dimension to the digital divide emerges as not everyone is equally able to use and benefit from the Internet, even when they have and use the Internet. The same factors that impact adoption of the Internet have a pronounced impact on how effectively people are leveraging the Internet.
At SNG, utilization is a key metric we examine in all regions. In the past year, SNG collected utilization data in four states from over 12,534 organizations (commercial and non-commercial) and 4,638 households giving us unique insights into this new dimension to the digital divide. Some findings are not surprising while some provide new and unique insights that cause us to take a step back and wonder how we – as an industry – should define the digital divide moving forward.
The Big Picture:
Not surprisingly, SNG’s research shows that age and income have very significant impacts on how people use the Internet. Our proprietary Digital Economy index (DEi) summarizes how households use thirty distinct Internet activities. The higher the DEi, the more Internet activities a household engages. The Digital Economy index progression from 1 to 10 (10 being highest) reflects the number of e-solutions being utilized – 10 being a household at 100% utilization.
Utilization is impacted by income and age – the lower a household income or the older the household, the lower its Internet utilization. The differences (or divide) is most pronounced for those over 55 and those making less than $30,000. So the digital divide is actually expanding as younger, higher income households best leverage e-solutions.
Click on chart for a larger version.
Without a ‘Next Step,’ It’s Just Numbers
SNG’s research (above) clearly shows:
- As we all know, computer and Internet skill levels affect broadband utilization, but more interestingly:
- The lower your income, the lower your utilization.
- The older you are, the lower your utilization.
So lower income individuals ages 55-plus land at the lowest level of utilization. Conversely, younger and upper income households are at a higher level of utilization, leveraging broadband more effectively and deriving the most benefits – further increasing the digital divide.
Simply connecting… or even basic adoption does not complete the process of bringing people and households into the digital world. Even among those who are already using the Internet, there is a digital divide.
So we need to do better, including designing Internet outreach and training programs to the groups that are still experiencing the divide. How will the older generation be able to use Telehealth if they can barely accomplish basic Internet activities?
Digging deeper, for those interested in the details!
Where, specifically, are household struggling to adopt Internet activities? Our studies show that some skills and activities are easier to learn than others – the table below shows the activities where there is still a divide. E-mail, browsing and research are actively used by 80% or more of households. However, teleworking, selling online and using VOIP are significantly more challenging – but that’s where the biggest benefits from utilization are derived.
Click on chart for a larger version.
The earning ability of lower and middle income households is enhanced by the very Internet activities for which they’re least skilled. Economic development investments by government or nonprofits should focus on helping drive the utilization of e-solutions that generate the most benefits for individuals. A starting point might be more focused, targeted training for those e-solutions that have the most significant, long-lasting socio-economic impacts.
by Doug Adams
If you haven’t moved for a job, you know someone who has. More than a decade into our broadband revolution, the knowledge economy, and e-everything, it’s a bit discouraging to find that, even today, geography can still dictate individual or organizational potential for success. Still, in 2011, the digital divide limits job and opportunities, either at an organizational or an individual/entrepreneurial level, in rural areas.
Of course the digital divide is nothing new – but lately it seems that the class warfare in the haves and have-nots has shifted from an economic divide to a geographic one. With major investments being made across the globe to increase capacity and deliver 
broadband to the under and un-served (most notably with investments in Australia and the United States), there are still some that would have you believe that investing in broadband just isn’t worth it for some.
The idealist in me immediately wants to refute this as ridiculous, short-sighted thinking! How could anyone not know the benefits of broadband including the economic and social benefits that accompany more robust Internet connectivity? Don’t these people realize that to survive and thrive in the knowledge economy, broadband is the key enabler? Haven’t they seen the “build it and they will come” movie where people flock to Iowa in ‘Field of Dreams?’ Hasn’t the availability of broadband and the rise of every broadband enabled device taught us anything about the potential of broadband? Are these people naïve? It may even be a legal requirement as soon the only way my grandmother can access services will be online… does she need to move?
Then I take a step back from my knee-jerk reaction and let the pragmatist in me take over. As a broadband economist, I along with my firm, SNG, dissect where the demand for broadband exists – and where investment will have the deepest, most long-lasting impacts. We do this through a step-by-step methodology that includes direct stakeholder feedback.
Needs vary. It is nice to aspire to ultra-fast, fiber to the home for everyone… but is that practical? Ideally, we would see a world where everyone could innovate with no barriers. Pragmatically, many would just watch higher definition online feeds of Sponge Bob.
Do businesses need ultra-speed Internet? I would argue they will eventually, whether they realize it or not. But pragmatically, we need to – at the very least – get anchor institutions equipped with middle and last mile access so for today’s needs as well as tomorrow’s, communities are better equipped to expand into the world of fiber and ultra-speed broadband. Schools and hospitals MUST have ultra-broadband to prepare students for life… and to save lives with telemedicine.
It is inevitable that the combination of computing power and demand for new and better applications and new approaches such as cloud computing will increase the need for more speed by the majority of users over time – no matter whether they are in New York, NY or in a cornfield in Iowa.
For the Statisticians… Productivity by the numbers
SNG’s research shows that organizations are more efficient the greater the Internet speed they have available to them. Speed matters, regardless of how it is delivered. Move to the greatest access available, ideally fiber. Friends don’t let friends use “basic broadband.”
- For Fiber users the positive ROI on e-solutions for improving productivity is 8.9% higher than Cable and 14.2% higher than DSL.
- For Fiber users the importance of broadband for adopting new operational processes is 8.1% higher than Cable and 10.3% higher than DSL.
- For Fiber users the importance of broadband for improving staff skills is 14.3% higher than Cable and 14.8% higher than DSL.
With all of the hub-bub around broadband build out, it is important not to forget about utilization… and how you drive meaningful utilization in your community.
A great compliment to our recently announced Market Demand Snapshot is an Action Plan for Broadband Utilization. Designed to spur economic development and job creation, and incorporating feedback from stakeholder workshops, SNG can provide you with will provide the tactics, methods and tools needed to drive broadband adoption and meaningful use.
As we continuously preach, broadband availability alone is not enough to realize its social and economic benefits. An understanding of how to effectively use of broadband for commerce, citizen services and the positioning of rural counties as attractive areas for 21st century business and living will play a critical factor in their long-term success of your broadband investment and your ability to impact the lives of the citizens and businesses already located in the regions.
SNG can help your region with effective strategic planning for impactful economic development with a sound, three-step approach:
- Identifying and rallying the key stakeholders that need to be actively engaged in the economic development through broadband adoption process via the application of broadband best practices;
- Laying the foundations for an actionable strategic plan that will enhance broadband adoption, meaningful use and job creation across identified verticals of interest, e.g. residences, schools, businesses, libraries, healthcare facilities, public safety and government;
- Driving efficiencies into the community through the adoption of digital purposes and broadband enabled applications that increase quality of life, the growth of economic and employment opportunities, and spurring commercial investment locally.
If you are interested in learning more about how this structured approach can drive demand, adoption and meaningful use to advance your region’s ability to compete globally, attract investment, realize efficiencies, and create jobs, contact Michael Curri.
Charles Berry
Our friend and colleague Charles Berry passed away at this past Friday. He was 42 – much too young. We loved him dearly.
His life was filled with adventure and achievement, love and laughter. Charles spent every waking hour living life to its fullest – and his ambition and love of life often drove him to sleep deprivation. During his time with us, Charles crammed as much life into every day as anyone you could ever meet..
Charles used to say with pride that he and his family could pack and be on their way to their next adventure in a few hours. He and his childhood best friend and wife Dawn saw so much of this world as work and thirst for cultural diversity and life experiences saw them set down not only coast-to-coast in the United States, but in Japan, India, and France. He dearly loved the Cannes in the French Riviera and the Georgia Coast and wanted us all to experience them with him. Other than his childhood home of St. Louis, the past 4 years in Cleveland were the longest Charles and Dawn had stayed in one place. “Too much to see and do,” Charles used to say with his infectious smile.
Charles was a brilliant man, evidenced by his numerous career achievements, which culminated in the formation of his own venture with a small group of partners – a broadband consulting firm named Gigabit Squared, which now serves clients all over the globe. It is ironic and sad that Charles’ untimely death came at a point in his life when he was going to get “back to seeing the world” and travelling. The past few months Charles was happier than ever – ready to take on and conquer challenges all over the globe as the company he had help build was ready to take off.
But Charles’ brilliance was most evident when he shared a dinner with a friend – and discussed politics, religion, business, or even the intricacies of the NBA, NFL, or Soccer. Charles was quite competitive and loved a challenge – so he was drawn to friends and colleagues who he could banter back and forth with for hours. Always good natured, always with a laugh and an excited smile, Charles would – as many of his friends called it – ‘hold us hostage,’ saying ‘just five more minutes’ so that we could continue the debate, discussion, and laughs. Time with Charles was always challenging and exhilarating – he was going to push you and laugh with you and make sure that he challenged any of your preconceived beliefs. He loved playing the Devil’s Advocate because he could argue either side of a position brilliantly, and he loved to challenge the minds of the people he cared about.
While Charles was fiercely proud of his nomadic, go anywhere lifestyle with no geographic roots – the roots he did put down were with the people in his life. Fiercely loyal, if Charles counted you a friend, you were a friend for life, no matter the distance. He spent so much time with the people in his life every day that often his workday ended up being 8 p.m. to 5 a.m.
He leaves behind his wife, childhood best friend Dawn, and daughter Magda, 11, and son Nigel, 9. While our relationship with Charles was mostly away from his family, there was no doubt to any of us that they were always close to him. And when we saw Charles with his wife and children, his smile grew even bigger and the twinkle in his eye was less mischievous nature and much more reflecting pure love and admiration for the family that he adored. His children will always know that Daddy loved them more than anything in this world.
We are all still in shock with the untimely passing of our dear friend. Not a day will go by without some reflection, a memory of laughter with this big hearted man. We will miss him dearly, but know what he would tell us. That it is our job to pick up and keep going. To let his life serve as a reminder to pack every bit of life, love, and laugher into every day. There was really no one else like Charles. As his friends, it will be our charter to honor him by challenging our minds, taking time for friends and family, and remember, as he used to tell us, “not take all of this so seriously.”
We’re often asked, specifically, “How does an eSB help our region make better decisions and guide investment? Below are a few examples of how an eSB has helped other regions…
Scenario 1: If fiber is going to be available to Professional and Technical Service firms in your region (i.e. county or economic development region) and the Executive’s focus (i.e. governor) is best practices in science and technology-based economic development – what services should e-Incubator staff promote in their awareness and outreach efforts to Professional and Technical Service firms?
Finding: The top e-solutions that Professional and Technical Service firms plan to use and need help with when on DSL are:
- Delivering Services and Content Online
- Social Networking
- Website for Organization
- Online Advertising and Promotion
- Rich Media and Content Creation
The difference in utilization between firms that are on DSL versus Fiber is significant across all seventeen (17) key e-solutions. If Professional and Technical Service firms are to be competitive, they will need to understand where they aren’t competitive and provide support and training to quickly and efficiently bridge those gaps.
The next question is to identify the most effective means of getting the required information and skill development to these firms.
Findings: Self-directed online learning is the preferred method of information and skill development for professional and technical service businesses.
The top three preferred methods are online reference materials, direct research with vendors, and live webinars with experts. The two least preferred methods are formal classroom and formal online courses.
Scenario 2: There is pressure to improve the productivity and quality of public services, while reducing costs. Senior planning staff have been directed to identify areas where public investments in broadband can be used to further these goals.
Findings: Two areas exhibit slow adoption of modern and cost effective delivery methods:
Telehealth services – Only 6.7 of health service providers currently provide telehealth services to patients in their home (with 3.2% adoption in progress and 7.1% planning to adopt). This is in spite of the finding that an average of over 70% of households are currently, planning or willing to explore telehealth services. Increased use of telehealth services have the potential to improve access, while reducing costs and demand in such areas as emergency room visits.
Community services, counselling – Only 13.5% of service providers currently provide remote counselling services through such means as live video. Another 3.5% are in the process of adoption and 9.3% are planning to adopt. This level of adoption is well below levels in mental health centers where tele-psychiatry is a proven and leading edge adopter of tele-health services (respective adoption levels are: 26.5% currently use; 5.9% in progress; 14.7 planning).
by Doug Adams
We’ve been talking for months in Bandwidth about Awareness not equaling Adoption… and along with it adoption not begetting Utilization. No matter who might ask you to take a leap of faith, they are not the same, and it is our job to push the boulder up the hill and go from awareness to adoption to usage.
Put another way, just because you have broadband does not mean people will use it… and just because people are using broadband does not mean they are fully realizing the socio-economic benefits:
Typically, and for good reason, we are talking about driving business enablers and e-solutions as the utilization the key to delivering benefits and impacts. And while that remains what we focus on at SNG, let’s take a look at the “lighter side” of the Internet to illustrate just how meaningful utilization can be. And we’re not sure you can get much lighter than social networking.
Recent findings show that in the United States, Twitter’s awareness (we’ll use this as a parallel to coverage), adoption, and utilization are very different.
- Awareness: 92% (this even sounds low)
- Adoption: 13% have signed up for account
- Utilization: Only 8% have EVER used it – even a ‘hello’ tweet counts
Looking at what might be considered its big brother, or a brother on steroids, we see that 42% of online Americans last year and a projected 57% this year are actively using Facebook.
I can’t use the classic ‘first to market’ explanation to describe why utilization is higher for one than the other. Otherwise, we’d all be on Friendster or My Space.
For Facebook, adoption is awfully close to usage, with a whopping 70% of users logging on daily. They are closing the gap between adoption and utilization – remember it is our position that adoption is pointless without utilization – by being, in social media circles, compelling.
But what makes something ‘compelling’ or what drives utilization? In Facebook’s case I know that I, for one, feel like if I don’t login that I will miss something. I don’t feel that way with Twitter, and apparently I am not alone.
So back to the world of economic needs and improving quality of life – we’re investing in broadband and e-solutions to drive economic efficiencies and create growth opportunities. These include reaching new markets, developing new business models, creating new relationships with partners and clients.
It is our job to make that feeling of ‘missing out’ a tangible, understandable reason to utilize e-solutions to drive prosperity and growth. Our goal is to ‘personalize’ the return on investment to individual businesses, organizations and households.
SNG’s research, including the DEi scorecard does just that, showing your local businesses what they need to do and the applications they should adapt in order to realize cost efficiencies and increase revenues. This helps make sure that your region does not miss out… on its potential, and on opportunities.
by Michael Curri
“We finally have broadband coverage, so are we done?”
Broadband is critical infrastructure, a means to an end – not the finish line. Neither broadband coverage alone nor adoption is sufficient to achieve your goals and outcomes. Only broadband utilization leads to desired economic and social benefits. What are they? That depends on your priorities…
- Do you want local businesses to be more productive and be able to compete in the global economy? Do you want to keep local jobs?
- Do you want youth to have the opportunity to have high paying local employment?
- Do you want your region to be more resilient to shocks and enhance quality of life?
- Do you want citizens who are more informed and invested in the community?
Priorities differ across regions. But without significant utilization, it is unlikely desired outcomes will be achieved. Drivers and barriers must be identified, understood, and managed. Broadband coverage does not necessarily beget adoption… and adoption does not automatically beget effective utilization.
Leveraging broadband is at the heart of modern economic development. Whether the objective is retaining existing businesses and jobs, business growth, or improving the quality of jobs – e-solutions are critical enablers to drive participation in the digital economy. To realize the benefits of broadband – availability is important, but utilization is critical.
Most regions require planning, strategies, and the promotion of e-solutions utilization to leverage broadband infrastructure. This is a transition and a restructuring process critical to ensure your region can thrive in the global economy while delivering a high quality of life.
By uncovering existing barriers to e-solutions utilization, communities and regions can see whether they are positioned to compete in the digital economy. With these insights, it is possible to understand which e-solutions will have the most immediate and significant impact on the local economy. These insights are critical inputs to where your investment should be directed in bridging gaps and accelerating utilization. Let SNG work with you to develop your path forward along the broadband lifecycle.
by Thibauld Chatel
It is not that often I’ve met someone that is so impressive I’m compelled to tell the world about it. This is the story of just such a person.
Last Fall, SNG partnered with the Norwegian University of Science and Technology (NTNU) of Trondheim, providing support to an e-Solutions Benchmarking project on the hospitality sector of the Hardanger Fjord area in Norway, an area extremely dependent on tourism.
Amongst the respondents was the Hotel Ullensvang, a 300 bed hotel located just between mountain and sea. The hotel’s use of broadband earned them a lofty score of 9 on a 10 point scale on SNG’s Digital Economy index (DEi) for broadband utilization.
In speaking with Geir Midtun, the IT manager of the hotel (yes they have one!), it became clear to me that they understand the very essence of what broadband can be: a powerful means for economic development.
“We are located quite remote from most of our clients and most of our suppliers. We have a two hours drive by car to the nearest railway station and a three hours drive to the nearest airport. Using the internet is our way of getting closer to our clients and suppliers, on a daily basis, and broadband makes it fast enough to be useful. Broadband is our connection to the rest of the world. We consider broadband one of the primary reasons we are able to do business the way that we do. A large hotel in a small rural village, remote and “exotic,” but still connected to the world.”
And so for example, broadband enables the hotel to host international seminars on a regular basis, in a place where you can now relax and do business without limits.
But how do they get there? Since broadband was introduced in the area in 2004, it has been an ongoing process of improvement, strongly supported by the hotel owners and managers. Every step they took was based on the remote location of the hotel and that they needed to be connected in order to thrive. As Geir explains, they can make a long, very long list of benefits and cost saving from using broadband and e-solutions.
“Computer systems, booking systems, TV-systems, ventilation and air condition systems etc. can be checked and maintained/serviced by ‘remote control.’ A few years ago, service personnel from Bergen had to make a six hours drive (back and forth) to do a job that perhaps took 15 minutes. Our credit card terminals now use broadband instead of the telephone lines. This enables full integration with the booking- and accounting software. Our sales staff can connect to our server when they are out travelling, to check availability and make bookings online from wherever they are, worldwide. Our accounting services are now taken care of by a company in Stavanger, 170 kilometers away. Thanks to broadband we can stay online with them all day long, without having to think about extra costs.”
Add to the list of benefits broadband brings are:
- Quality of service for hotel patrons
- Online marketing capabilities via Facebook, YouTube, and 360° webcams
- Teleworking availability for patrons
- Online training for staff
- The ability to tele-interview prospective staff additions
- Increased quality of life for staff as they are able to communicate with their families and watch homeland television
The Ullensvang hotel has 50 employees and is thriving in a remote area of Norway because of what they are doing with their broadband. Asked what the Ullensvang Hotel would be like without broadband, the hotel’s managing director, Hans Edmund, Utne explains that the Internet today are just as important to his business as roads were to his predecessor 100 years ago. But this requires champions like Geir Midtun who understood how technology enabled by broadband could enhance and transform the hotel’s business.
By John DeRidder
There is a tension between under-investment without public investment (the “externalities” issue) and public investment “crowding out” private investment (the “level playing field” issue). Taking the latter approach puts national broadband plans and state economic development at risk.
An example of this playing-out is when on April 4th the State Legislature of North Carolina passed Bill H129, subsequently ratified by the State’s Senate, to “level the playing field” across public and private operators of fast broadband networks. In the same month Tennessee shelved legislation that would have allowed its local power utility and state-of-the-art broadband provider EPB to expand its service beyond its current operational area.
The NC curbs on public investment are intended to prevent unfair competition from “predatory” local governments by loading the prices of community networks with a commercial rate of return and the taxes and charges that would apply to a private operator. This “leveling of the playing field” argument sounds reasonable, but it ignores the main reason for public enterprise.
The fundamental reason for public enterprise is that it can make investments taking into account benefits that will not appear on its own books. Put another way, public enterprise can undertake unprofitable investment where there are community benefits (what economists call “positive externalities”) that would make the investment economically and socially desirable.
Few would have a problem with public broadband investment in regional areas where private investment is unprofitable. But, what about urban areas where private broadband networks may fail to recognize local demand? Advocates of public investment point to the Greenlight Community Network in Wilson, NC, which provides “up to” 100Mbps while the local cable company, Time Warner, offers Wilson residents “blazing speeds” of just 15Mbps on its Road Runner plan. H129 blocks the development of new community networks providing faster services than existing operators are willing to offer.
Why is this so? One important reason for restricting speeds is to protect margins on legacy data products sold to business. Incumbents prefer to sell existing data services than provide broadband services where they cannot differentiate so easily between business and residential customers. Contrast that with EPB’s network which is scaled to support 1Gbit/s to anyone – business or residential customer – that needs such speed.
There are no easy answers.
In other countries, an appropriate remedy is service competition enabled by forcing existing operators (not just the new public operators stipulated in H129) to open their networks (i.e. provide wholesale services). Currently, the FCC does not mandate open access for new fiber access networks, let alone existing broadband networks.
For new investments in “under-served” areas, a possible remedy is to provide a capital grant or subsidy to a private operator to make an investment profitable. This could be done through a public tender process. Conditions should also be attached to make the chosen network operator provide open access to enable competing services to be offered over the same network.
A practical and globally tested alternative is public investment in community networks such as Greenlight and EPB.
Our preliminary view is that while the focus of community networks should be “un-served” or “under-served” areas, there is no need to confine them outside city limits. Urban areas can justify some duplication and investments in existing networks are sunk and partly depreciated so they can compete on cost. Without un-fettered investment in community broadband networks, the economic and social benefits for all regions will not be realized.
The Internet Innovation Alliance (IIA) ( www.internetinnovation.org/) released its 10 ways broadband contributes to job creation and serves as a connector of job seekers, employers and employees. Sources for the research include the American Library Association, the Federal Communications Commission, and SNG.
In the spirit of lists, we’ve come up with our own for this month’s issue of Bandwidth. Using SNG’s Digital Economy Analytics Platform (DEAP), containing data from regions across the U.S. and the globe, we present the…
