August 2010: Broadband Stimulus… and Hanging Down Under, Waiting for Broadband
What, Exactly, are We Stimulating?
I was asked the other day for my perspective – as I currently live in Europe but am from North America – what I thought of the United States Broadband Stimulus initiative to-date.
On the surface – I am of course thrilled that the U.S. is recognizing the importance of broadband to remain competitive in today’s economic environment. As we so often say, broadband is the platform for innovation, competiveness and progress in the 21st century. Without this as a foundation, modern societies cannot compete in terms of economic opportunities – or quality of life.
So investing in broadband is a great thing – it creates jobs and opportunities… so far I have not exactly broken new ground with this article.
But beyond our “gut feeling” and pointing to other areas of the world where broadband has meant the difference between stagnation and prosperity – how do we really know how effective stimulus is… and will be? Are we simply checking a box that says “get more folks broadband” or are we taking a measured approach to make sure all the benefits of broadband are realized?
Just recently the National Telecommunications and Information Administration announced that it would be evaluating the economic and social impacts of the Broadband Technology Opportunities Program (BTOP). This is important, but just what they’re going to be able to measure remains unclear – as data on impacts will largely depend on what will be provided by each individual initiative, region, program administrator, etc.
With a disparate set of metrics for each project, it becomes difficult to combine data, compare results, or truly know the impact of the Recovery Act’s broadband initiatives.
Let’s be clear on my position – the investment currently underway as part of the stimulus package is truly one of the most significant, and encouraging steps towards the United States building a robust “platform” for innovation – an infrastructure that will change lives and deliver progress not unlike railroad and interstate investments have in the past. But with the benefit of past experience in this field, we all can learn a thing or two about broadband investment, and the right way to go through the process.
Research should be used… not just for validation… but for stronger decisions and strategies. Missing in the application process was the ability for applicants to conduct significant research. With a NOFA (Notice of Fund Availability) coming out weeks before due-dates, made it logistically impossible for regions to gather the intelligence they needed to develop the most effective “ask” – based on identified gaps and prioritized needs. And whenever you administer a study/survey – ask yourself, why are we doing this? Am I just validating what we already did? Validation is nice, but it is passive information. Research should include an “active” component – data that guides better decisions and strategies.
“WHY do I want the money… who wants to know? Each region should be required to have specific goals and outcomes in mind – tied to economic development. Yes it is hard to measure the impacts, but only through precise feedback from a region’s residents and businesses can you have the biggest impact.Let’s not forget that broadband stimulus is part of larger stimulus package designed to create jobs and advance our economy. Each project needs metrics in place to measure the ongoing impact on a region’s economy.
Measure twice… Don’t cut corners. In order to truly understand the impact and potential for further investment, it is imperative that each region takes a measure of where it is before investment, and what those investments produce. Here is where validation comes into play – by doing a “before” and then an “after” study, you are not only able to prove the efficacy of the original investment; you’re able to clearly see where additional investment and/or course correction is required.
Apples and apples… not oranges. Each region should have guidelines for measurement – making results comparable. Just by introducing consistency, regions can learn from each others’ successes – and avoid their failures.
It takes a village. Involving regions citizens and businesses from day one engages them and makes adoption and innovative, transformational solutions much more likely to occur. It is an opportunity missed to not show citizens from day one how broadband (and better broadband) will transform their lives.
It’s the economy, stupid. So a little more than a year after Round One’s application deadline… where are we with broadband stimulus? The easy answer is that we believe that the investment is good and will create opportunities throughout the U.S. But questions will always remain with this as they do any broadband initiative – how much have we achieved… and have we achieved all that we can for the investment we made? Without proper tracking and measurement, it will never be clear how much benefits were realized from the investment, or how to build upon each.
Australia’s broadband future hangs in the balance
With election results still trickling in over a week past election day, it is still unclear which party – the Liberals or incumbent Labor will emerge in power. The months and weeks leading up to the election were fascinating on many levels – but for our purposes, let’s just focus on one very significant issue – the National Broadband Network (NBN).
Hotly contested, the proposed plan by the Labor party for a $43 billion National Broadband Network (NBN) would provide 100 megabits per second broadband access to approximately 93 percent of the population. Currently Australia has – for the most part – slow and expensive Internet service. In conjunction, the plan calls for a boost in broadband investment for businesses with hopes that it would directly support economic growth during the rollout.
The other side of the aisle, the challenging Liberal party wants to scrap the plan in favour of a $6.3 billion, privately run alternative.
All eyes in the broadband industry are waiting to see which side – and with them their broadband plan – would win out. Well we’re still waiting as the parliament remains hung while each side hope to sway Independents over to their side.
While we wait, let’s look at the issues:
- What is the $43 billion based on and is that an appropriate level?
- Who should build it? – and operate it?
- What return on investment can Australia expect from its broadband investment – be $43 or $6 billion?
- Will broadband investment result in a platform for innovation, competitiveness and growth that could propel
- Australia into a hotbed of technology and development?
These are important questions and no matter the party affiliation, taxpayers should be told how their money will be used – and what benefits and outcomes to expect.
Unfortunately, there has not been much discussion on the two most important aspects of this debate: how individual businesses, organizations and households would use the new broadband capacity – and what the economic or social impacts will be. Without that understanding there is no meaningful economic case, let alone business case, for investing in such a network. We refer to the economic case as many of the economic and social benefits are ‘off-balance sheet’ to the telcos.
Support and urgency for high-speed and high quality broadband connectivity gets lost without this critical information on utilization and quantified impacts – information that should be part of any due diligence. For example, if looking at a certain hospital – are they using remote diagnostics, electronic patient records, etc. – and should they be if they don’t? For businesses, if their utilization of e-solutions and Internet-enabled business practices is not at par with their global competition … what share of business can they expect to win in a globally competitive economy?
The community return on investment (Community ROI) needs to be understood because it is the only way that governments can justify using public monies to build broadband networks.
Explanation of current versus future demand for broadband is based on the utilization of e-solutions. When investing, you need to identify and understand the gaps between how e-solutions are currently being used versus how e-solutions can and should be used to maximize economic and social benefits. It is business 101 – you identify the need, you understand your customers and then you build your product or service to address the needs of the customers you want to target. This approach is taken when building the hardware that makes-up broadband networks, but this approach seems to be put aside when those broadband networks are being designed and planned.
Just like roads, high quality broadband networks enable economic activity and social services whose benefits far exceed the initial investment. SNG is a world leader in conducting such impact assessments of broadband and our work which has been quoted in the US’s Recovery Act that finds that for every dollar invested in broadband, there is a tenfold return on that investment to the community.
Whichever party forms the majority, they need to approach high speed broadband network investments focused on the demand-side (current and future) with the understanding that they are building infrastructure that serves all sectors of a modern economy. To realize these productivity and competitiveness benefits, Australia needs to act decisively and quickly. The opportunity cost of broadband infrastructure being hostage to politics will be borne by the Australian people.
The continuing adventures of smart grids
In last month’s bandwidth, we discussed ‘smart grids’ and the fact that driving adoption requires awareness and a persuasive message. SNG’s recent studies show that the number of business owners and homeowners even aware of a smart grid falls under 5% of the population. This is a public relations and marketing problem for utilities and those promoting smart grids.
Further results (as part of an e-Solutions Benchmarking study conducted by SNG) reveal that consumers, for the most part, are not willing to use the Internet to manage energy consumption in their homes and businesses. This is in spite of the fact that engaging this technology would bring financial and environmental gains (e.g. energy independence, global warming and emergency resilience issues – see Wikipedia on smartgrids).
It points to just how big the job ahead is for providers of energy to convince consumers of the value of smart grid technology. Deployment needs to be embraced and not mandated (see last month’s article on how to drive adoption among different audiences).
Beyond willingness to allow the local utility control of HVAC and major appliances in the home and business (of which less than 5% of consumers and small business are open to) – there is a major challenge to educate the public. “Demand Control,” “Demand Response,” and “Time-of-Use” rate structures currently being trialed are all concepts that need to be explained with something more compelling than a slip of paper stuck in a monthly bill.
Demand control, the ability to reduce energy consumption during peak periods, is one way utilities can avoid construction of new generating facilities, relying instead on the eventual development of renewable sources. For instance, employing demand control on a smart grid could eliminate $3.5 billion on a new energy plant.
With new smart meters installed, utilities have the ability to increase or decrease the per-unit energy cost dependent upon available supply and demand.
The problem – and biggest challenge of smart grids – is that they are dependent on electric firms serving as center of control and allocating energy needs between those who are served first, who can be dialed back, and – worst case – who needs to be temporarily shut down.
So we’re back to how to drive adoption of smart meters… the carrot or the stick? Smart meters being installed worldwide have the ability to send messages to individual Home Energy Management Systems, indicating rising demand and/or rising energy costs which will in turn causes consumers to modify behavior to better align with available power supply. (i.e. Raising or lowering a thermostat, delaying washing/drying dishes and laundry, etc. until the price subsides).
Broadband connectivity is the backbone of the smart grid because it enables us to manage our energy consumption from anywhere. The key for every home and business worldwide is to understand what is now possible and to take control of energy consumption. Whether the connection is fiber, cellular, WiFi, WiMAX or satellite, communities with universal access offer residents and businesses an opportunity to the energy consumed from anywhere in the world with the potential for real bottom-line savings.While local electric utilities go through the process of investigating smart grid investments and how end-users will be connected to the smart grid, SNG is helping communities adopt this critical e-solution.
Through our e-Solutions Benchmarking (eSB) studies, smart grids are one of the e-solutions SNG investigates to understand who is using broadband most effectively today so we can learn from them, and who is using it the least so we can raise their awareness and incentivize them.
As always, thank you for your continued support. If you have any questions or feedback, please don’t hesitate to get in touch!
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Archives by Date
- Press release – Joint White Paper on Options to Bridge Broadband Gaps in Unserved and Underserved Areas
- Broadband funding is coming – but when and with what conditions? Can we wait for it?
- It’s Time for Private investment in Community Digital Infrastructure
- Unserved, underserved, or future ready – do your businesses and households have the broadband they need?
- Choice for Localities – wait for broadband, or invest in your digital future
- Do you need a “survey” or another “study” for your broadband initiative?
- Where do we put our efforts to get connected with broadband?
- Broadband and Household Income
- Telework and Accessing the Workplace
- SNG’s analysis featured in ISE Magazine
Over the last five years, job creation enabled by the Internet has doubled.