Yesterday the Tennessee Department of Economic and Community Development (TNECD) released a comprehensive report examining broadband supply and demand statewide.

When Tennessee first approached SNG late in 2015, the state was clear that there indeed were issues with sufficient broadband, especially in rural areas and that broadband was a “crucial factor in the economic success of their communities.” Tennessee was looking at answering several questions including:

• What should the state’s definition of broadband be?
• How many Tennesseans do not have access to broadband?
• What is the cost of bringing broadband to Tennesseans that do not have it?
• What are best practices and lessons learned for promulgating broadband from around the country?

This report is significantly different than the “standard” as it examines broadband using a holistic approach to assessing availability and need. It is the first time that both broadband supply and demand have been assessed at a state level.

Offering Allows ISPs to Help Businesses Better Utilize Their High-Bandwidth Service

Nashville, Tennessee – Today at the FTTH Conference & Expo, Strategic Networks Group (SNG) announced a new way for ISPs to increase revenues and retain customers. The Broadband Checkup enables ISPs to distinguish themselves as a partner to local businesses by showing them, through third-party research, how better broadband can grow their business. The Broadband Checkup is an innovative marketing strategy for ISPs to differentiate themselves as well as good PR as the program demonstrates a collaborative partnership and desire to help local businesses grow.

The Broadband Checkup is a cost-effective, low-risk means for ISPs to provide customers with SNG’s popular “Digital Economy index (DEi) Scorecards.” Contained within these scorecards are recommendations and competitive intelligence on Internet applications to be adopted and the accompanying ROI.  The scorecard benchmarks a business’ self-reported Internet use against its peers from SNG’s database of more than 40,000 businesses. By doing so, the DEi scorecard reveals the Internet activities a business’ peers (based on size and industry) are using, along with the average benefits in terms of new revenues and cost savings.

“The Broadband Checkup allows ISPs that are already providing businesses with better speeds exactly how to most effectively use their service,” explained Michael Curri, president and founder of SNG. “Beyond availability, the Broadband Checkup shows businesses what they could and should be doing online to be more competitive and increase their revenues.”

“ISPs who provide their community the Broadband Checkup distinguish themselves as community business partner, not just a vendor,” said Doug Adams, VP Communications. “The offering will create community goodwill, demonstrating partnership, and show that the ISP is invested in the community, its businesses, and helping them grow.”

For more information, visit sngroup.com/isp.

About Strategic Networks Group (SNG)

Focused on economic advancement through broadband utilization, SNG is a group of broadband economists who develop strategies for most effectively leveraging broadband investments. SNG addresses broadband utilization from the individual organization level all the way up to working with more than 10 ten states across the United States. SNG looks to help make the most broad-reaching and transformational impacts that broadband can bring to enable businesses, communities and regions by delivering the data and analysis decision makers need to maximize broadband’s potential. Learn more about SNG at www.sngroup.com.

Strategic Networks Group Surveys Broadband Initiatives in Nationwide Study; Ranks New York State First Overall
from New York State Website

Governor Andrew M. Cuomo today announced that Strategic Networks Group, a world leader in broadband econometrics, ranked New York State number one in the nation for broadband activity and investment. “The 50 States of Broadband” study surveyed broadband investment activities on a state-by-state basis and determined that New York State ranked first overall in availability, adoption, driving meaningful use, growth investment, and regulation.

“The New NY Broadband Program is laying the groundwork for a strong economy by connecting households and businesses in every corner of the state, enabling New York businesses to compete on the world stage,” Governor Cuomo said. “We are proud to be home to the most robust broadband program in the nation and this ranking further emphasizes our role as a leader in next-generation high-speed internet infrastructure.”

SNG conducted its study from February through March 2016 and provided states with an online survey to complete. 48 states participatedand each responder was asked to report on five key dimensions of broadband: availability, adoption, meaningful use, growth investment, and regulation. Responses were used to rank states on these dimensions and develop a composite overall ranking.

“The Broadband Program Office is excited that New York State was selected as the overall leader in broadband capability in the nation,” said Empire State Development Executive Vice President of Broadband and Innovation Jeffrey Nordhaus. “This acknowledgement underlines the Governor’s commitment to broadband, which is the boldest and most ambitious in the nation. While we are proud of the recognition, the BPO continues to be focused on delivering results for New Yorkers and looks forward to the results of the Phase One auction.”

The New NY Broadband Program is designed to ensure that every New Yorker has access to high-speed internet by 2018. The Program, along with the Public Service Commission’s order approving the merger of Time Warner Cable and Charter Communications, will significantly increase broadband availability for millions of New Yorkers across the state.

Central components of the Program include:

• New access to broadband at speeds of at least 100 Mbps; 25 Mbps in the most remote areas of the state.
• High priority for areas and projects that most improve broadband Internet access in unserved areas, including libraries and educational opportunity centers.
• Applications will be chosen through a “reverse-auction” process, which will award funding to bidders seeking the lowest state investment.
• Auctions to be held within each Regional Economic Development Council region to ensure statewide allocations of funding.

Broadband is an essential component for creating and sustaining economic opportunity throughout New York State, by connecting businesses with consumers and markets around the globe. While New York’s broadband landscape has seen substantial improvements over the past four years, many households are still unable to fully access it. Visit the Broadband For All website for more information.

About Empire State Development
Empire State Development is New York’s chief economic development agency ( www.esd.ny.gov). The mission of ESD is to promote a vigorous and growing economy, encourage the creation of new job and economic opportunities, increase revenues to the State and its municipalities, and achieve stable and diversified local economies. Through the use of loans, grants, tax credits and other forms of financial assistance, ESD strives to enhance private business investment and growth to spur job creation and support prosperous communities across New York State. ESD is also the primary administrative agency overseeing Governor Cuomo’s Regional Economic Development Councils and the marketing of “I Love NY,” the State’s iconic tourism brand. For more information on Regional Councils and Empire State Development, visit www.nyworks.ny.gov and  www.esd.ny.gov.

There is a misalignment between the broadband industry and developing strategies to meet community needs. The focus on the private sector business case to assess network return on investment has not incentivized community innovation, productivity, and competitiveness. Progress has been made, but the path has been reactive, not proactive. Broadband providers have failed to creatively engage a critical element in the broadband marketplace – the consumer.

Broadband is a transformative technology, disrupting business as usual and fostering new products, processes and services. By examining two vastly different examples of technology (and their visionaries) that are changing our world we can identify a better path for the broadband marketplace to follow. Apple’s Steve Jobs’ often said it was foolish to depend on consumers to tell Apple what it wanted because “A lot of times, people don’t know what they want until you show it to them.” One hundred years earlier Henry Ford explained his mindset, “If I had asked people what they wanted, they would have said faster horses.” Both of these leaders were at the forefront of innovation not by simply reacting, but by proactively crafting products that would change consumers’ lives in ways the consumer had not imagined.

Meanwhile, in the broadband marketplace we are blowing it. Instead of understanding BOTH supply and demand, instead of taking the time to be proactive, broadband ‘planning’ often takes a reactive path that simply addresses availability challenges. A more proactive approach includes consumer demand, now and what it may become. Ford and Jobs based their product design on potential demand, not just current demand. They also took steps to drive demand as many consumers don’t know the potential value of the product or service (the innovation). The gap between current demand and potential demand is the innovation gap.

Planning for broadband demand is more than just availability, historic ‘take rates’ (current demand), and average revenue per user (ARPU) – which is a supplier viewpoint. Broadband demand assessment should be consumer centric, capturing how individual businesses, organizations, and households could use broadband along with how they currently understand the relevance and potential benefits of available Internet applications and Internet connectivity. For example, demand for broadband by businesses is a function of how each individual business understands which Internet applications they could and should be using to be competitive, as well as understanding how each drives new revenues and/or cost savings. Some consumers understand the relevance and benefits of what they can and should be doing online while many do not. Uncovering current and potential demand helps us plan for today, meet the broadband needs of tomorrow, and do so in a manner that is fiscally sound.

Without understanding demand, current and potential, we are painting ourselves into a corner where the only acceptable outcome is building fiber, everywhere. For most communities, that’s just not financially feasible and possibly not even necessary. Furthermore, only addressing broadband availability does not address gaps in innovation and competitiveness. Every community is unique and the plans that guide them forward need to be tailored to their specific challenges and potential, both on an infrastructure and human level. Not only do we need to maximize community benefits with what is available now, but also what will be needed going forward to thrive in a digital economy. The current broadband planning paradigm needs to change.

SNG is taking our own steps to do just that. From working at local, regional, and federal levels we have developed both quantitative and qualitative measures of the actual and potential impacts from using broadband. These measures provide the data to inform smarter investments and help set priorities which are critical for broadband planning that increases local economic competitiveness and quality of life.

SNG is helping our clients effectively drive availability, social outcomes, and economic development through broadband with this holistic approach. We are forging partnerships to expand our broadband data collection and use this information to deliver broadband plans that are customized, comprehensive and strategic in addressing both supply and demand. We have already delivered on this approach with the State of Tennessee, measuring both supply and demand statewide to uncover innovation gaps and opportunities to drive economic development through broadband (see the Tennessee Report). Our approach enables communities to develop customized and realistic broadband development plans.

As the number of applications and services delivered over the Internet grows a holistic approach ensures that planners and leaders understand existing gaps, barriers to adoption, and best practice strategies to build potential demand and capture the full benefits from broadband investments.

Broadband infrastructure and the capacity to use it are critical to innovation, economic competitiveness and community development at every level. Communities large and small, rural and urban need a holistic strategic approach to grow business and support a high quality of life.

To learn more about how taking a holistic approach to broadband planning can help your community, contact SNG.

As part of extensive community outreach within Tennessee to drive participation in our utilization study, a media blitz shed light on the issues within the state. Channel 10 news highlights interviews with citizens who detail their challenges with their current Internet connectivity. In this video, watch for one citizen’s colorful description of the “slow circle of death” as they wait for connectivity.

In a world moving increasingly to gigabit Internet there is no doubt that, everything else being equal, faster speeds are better, but at what point does speed make a difference? How much of a measurable economic development difference does faster deliver? For communities and regions looking to make their own business case, this detail is critical.

SNG’s research reveals that speed is indeed important, but that upload speeds (more so than download) have a greater impact on actual meaningful use and utilization amongst small and medium enterprises (SMEs). These businesses that make up 90% of all businesses have the most to gain from broadband utilization. With that, it is alarming that SNG research reveals:

• The economic benefits from broadband are severely limited unless you have at least 4 Mbps upload speeds.
• Over 70% of small businesses (fewer than 50 employees) have less than 4 Mbps upload speed [1], creating a barrier for these organizations.

This is a major inhibitor to economic growth through broadband as SNG’s research shows that higher utilization of the Internet for online business activities brings higher revenues. SNG measures utilization using our own Digital Economy index (DEi), a normalized, weighted index of 17 potential online activities (eSolutions) covering a wide range of typical business functions. A DEi score of 10 means that all eSolutions are used, with a score of zero meaning that none are used. The average DEi score for SMEs is 6.6 (out of 10).

SMEs fully utilizing the Internet – a DEi score in the top range – generate 20% more of their total revenues from their online activities compared SMEs with an average DEi score. In a nutshell, the more – and more effectively – you use broadband, the more financial benefits there are to be realized by businesses. Higher utilization by SMEs increases direct revenues (and cost savings), which means greater and faster business growth, more jobs, and flow through impacts to the local economy.

Why is 4 Mbps upload speed a critical point?

Comparing DEi scores (utilization) with upload speeds we see a high correlation with high utilization when upload speeds are above 4 Mbps. Below 4 Mpbs the utilization drops off significantly.

This effect is even more pronounced when broken down by the major broadband technologies in use today:

• The vast majority (71%) of fiber users have 4 Mbps of higher upload speed.
• Cable users experience a broad range of upload speeds, with only 42% above 4 Mbps.
• Over 92% of DSL SME users have less than 4 Mbps upload speed putting most DSL SMEs below the high impact zone.

Considering that about one-third of SMEs use DSL, one-third use cable, and only 8% use fiber [2], a significant portion of SMEs are constrained by lower DSL or cable speeds.

What does this mean for communities?

Speed alone will not drive utilization and impacts, but minimum upload speeds are a key enabler, empowering SMEs to take full advantage of broadband. Obviously the trend towards more fiber will help address this speed requirement. It is also important that when offering higher speeds with any technology that the service pricing is affordable compared to the lower speed alternatives.

A lot of resources have gone into broadband mapping, but to get a true read you need to do your own market research into which businesses in your area have access to 4 Mbps upload speeds and their Internet use – this may involve asking them to actually run the sped test in a survey. Identify the gaps in sufficient upload speed and make these a priority for investment in both infrastructure and broadband training so that local businesses are using the Internet applications they need to be competitive and grow.

If you are in a rural area you know that broadband is critical to keep your businesses and citizens thriving but it also is inevitably more costly to ensure availability to 4 Mbps upload speed. In the US for example, it’s unfortunate that the Connect America Funds are only requiring 10/1 Mbps fixed broadband which neither meets SNG’s recommended 4 Mbps upload nor the FCC’s new requirements of 25 down and 3 up.

For all businesses to have the opportunity to effectively participate in an economy that is increasingly online, 4Mbps is a critical minimum level of service. Some businesses will need more, however those businesses that do not have access to 4Mbps will be at a competitive disadvantage.

Next month we will cover some considerations for where you should look for funding and what your priorities to get started.

[1] Source – Strategic Networks Group, Inc. – Data collected from businesses across seven states since 2012.
[2] The remainder of about 26% use other technologies (T1, fixed or mobile wireless, satellite, etc.).

Not so long ago taking college courses online seemed like a far-fetched idea. Today, formal and informal online learning is the norm for students across the globe It’s not so different in the business world as just-in-time learning opportunities become more and more available. Despite available learning opportunities, it can be tough for entrepreneurs to “keep up” with trends and business knowledge. This is troubling when approximately 90% of all American businesses are classified as “small businesses” and they are often stretched too thin to understand how to leverage Internet applications. Counting on the Internet to magically create innovation and growth (build it and they will come) is a strategy proven to fall short time and time again. 

It is an unfortunate fact that many of the small businesses that stand to gain the most from enhanced utilization of Internet applications use it at a lower rate and are less likely to take advantage of training than those already leveraging the benefits of broadband. So how do we lead businesses to understand what they need to do online?  A critical component is to cater to businesses’ stated method of learning preferences:

The classic classroom training session is the least appealing method of learning amongst businesses. This is consistent with the fact that “lack of time” is cited by SMEs as the biggest barrier to learning more about Internet applications. The more popular, learn-on-your-own-time method using online materials fits within the very nature of entrepreneurship, allowing business owners/managers to access materials when they need to, often during off business hours.

The challenge for communities and their economic development agencies is to both provide training in a myriad of ways and to also make the benefits of spending time with the training apparent and meaningful. Explain broadband’s benefits using the following learning methods to grow your local economy:

• Easy-to-use and understand online reference information and guides that focus on the business value of Internet applications.
• Webinars with experts and influencers on well-focused topics.
• A network of tech advisors who can assist businesses in sorting through their information needs and identifying needed sources of expertise.

Together, each of the learning methods above will help drive results. Compelling and accessible information delivered by influencers and case studies can motivate entrepreneurs. Tech evangelists and trainers can provide the hands-on guidance needed to help small businesses make the transition to more fully connected operations. Proactive post-training with motivated businesses will capitalize on their desire to grow their business, and with it your local economy.

When it comes to meaningful use of Internet applications that drive business growth, many small-medium enterprises (SMEs) are falling behind. They are challenged to do what they should and could be doing online to grow their business. There are a number of reasons for this including a lack of time, skills, knowledge and resources to effectively to determine what, why, and how they should do more online.

This is critical as effective business use of the Internet and its applications promotes local competitiveness and growth, especially with small-medium enterprises. Community leaders with an interest in truly harnessing the power of broadband and its applications to foster innovation and growth need to help businesses overcome these barriers to better leverage broadband’s potential.

SNG’s extensive research across North America reveals that higher business utilization of the Internet has a direct and positive impact on business financials – revenues, cost savings, and earnings. In short, driving broadband utilization has a positive impact on local economies, creating more (and better) jobs, opening opportunities for innovation, and aiding in business attraction and retention.

This does not mean that the majority of SMEs do not understand the correspondence to utilization and growth. In fact, the smaller the business is. SNG research shows these businesses unclear on benefits while having barriers to adoption that are by no means insurmountable. Reasons for NOT moving forward include:

• Time and effort required to develop expertise
• Lack of internal resource with necessary skills
• Too much information – not enough time to research
• Lack of local external support resources
• Affordability of local external support resources
• Higher priorities to focus on

Lack of adequate speed further hinders full utilization, but bigger barriers exist. Many SMEs lack understanding on HOW to overcome barriers including privacy, security, and cost.

Economic development professionals have a compelling opportunity to confront this situation with activities to help businesses learn, fill the knowledge gap, and better understand just how much is to gain from a relatively low investment of time. Whether you deploy SNG’s solution, the Small Business Growth Program, or develop your own, make sure your efforts include the following steps:

• Create awareness of the opportunities and their potential importance to each business.
• Provide easy to access and easily digestible information to enlighten businesses on what is possible and reduce the fear of the unknown.
• Facilitate access to experts and others who can coach businesses through a process that provides a clear path to realizing these opportunities.

Communities across the nation are investing millions of dollars to upgrade their broadband but if they neglect to ensure that local businesses understand and have what it takes to use the transformative power of broadband, their returns on their investment will fall short. Deliberate targeted effort to driving full use of the power of broadband will fulfill the potential and maximize economic benefits.

Thoughts from Harvard’s Strategic Innovation Summit

Last month I presented at the Strategic Innovation Summit: Enabling Economies for the Future held at Harvard University. The summit proved to be extremely worthwhile as discussions with my fellow presenters and attendees left me with a new and deeper perspective on innovation and how we should nurture it.

My main takeaway was this: innovation is a process. It requires scaling and ‘democratizing’ new technologies and new ways of doing business. To accomplish this community leaders need to continuously communicate and share a vision for effective use of technology with their citizens and businesses. The process of driving adoption and effective use of broadband in a community or region is the process of innovation.

More and more communities recognize broadband as a platform for innovation. They realize how important broadband is for economic development, but they are taking a ‘build it and they will come’ approach. This has proven to be a difficult and ineffective not only as a model for sustainable networks, but more importantly in realizing the economic and social benefits from citizens and businesses effectively using broadband networks.

SNG has witnessed firsthand the challenges of fostering innovation through our work with a dozen American states. A large problem rests with how broadband is presented and that ‘speed’ is assumed to be the magic ingredient that creates innovation. SNG has found that the process of engaging people in any community or region is actually the biggest challenge because the majority of people (approximately 80%) need to understand the benefits of technology and how it can help them before they adopt – they are technology pragmatists. Getting these pragmatists to change their behaviors will require more than promoting a feature like gigabit speed and waiting for growth to happen. These pragmatists need to understand the anticipated benefits and the actual return from their technology investments (in time and money).

Communities need to develop and implement processes to move businesses to an understanding and comfort level where they are ready, able, and excited to take action. And what is “action?” Incorporating broadband and its accompanying Internet applications have the power to transform and grow businesses.

Broadband can be your community’s platform for innovation, but availability is merely the first step. Your community must find a way to foster innovation through effective broadband utilization. This requires dedicated and ongoing communication of challenges, potential solutions, and vision about how broadband will transform their lives. This is innovation. Local resources must support and continuously communicate the benefits of broadband initiatives across stakeholder groups to foster innovation.

To borrow from a fellow presenter at the summit, “technology does not cause change – it enables, facilitates, and accelerates changes we already aspire to.” Communities that communicate their vision and mobilize stakeholders will create opportunities and success. This includes keeping and growing existing businesses, as well as attracting new businesses.

SNG has a program that helps numerous communities foster innovation among small businesses, where innovation lives in growing regions. Almost 90% of businesses in the US have less than 20 employees and do not have the technology staff or advisors to guide them through this process. Find a way to help these businesses innovate and your community will reap the rewards.

Download white paper from event, “Enabling Economies for the Future” >>