January 2011: Broadband Stimulus, on Both Sides of the Pond


An Innovative State of the Union Address Points to the Importance of Broadband

by Doug Adams

Every year in late January, whether “my guy” is President or not, I sit down to watch the “State of the Union Address.” Typically it is marked by partisan politics and divisiveness, characterized by a laundry list of initiatives – covering everything from domestic issues to foreign affairs.

This year, Americans were told, would be different.  The speech would be about the economy and jobs… and how we’re going to get back on track.  And for the most part – minus a pared down laundry list – that’s what we heard Tuesday night.  And before I am accused of being partisan or an Obama lackey… I voted for the other guy.

So putting politics aside, let’s focus on what we heard about the Internet, Broadband, and what it could… or should mean to our future – be it citizens of the U.S., Europe, Australia, etc. Regardless of where we all fall in the political spectrum – the address resonates with what SNG has been touting – broadband means jobs, broadband means innovation – and it was nice to hear about this on such a big stage.

Tuesday night was not the first time President Obama spoke of the United States reaching another “Sputnik moment,” but it was the most forceful use of the analogy he has used, and to the largest audience.  The President sees the parallel between 2011 and the “Space Race” of the sixties – when the Soviet Union’s innovative satellite challenged the U.S. to get involved or be left behind. Innovation, John F. Kennedy believed, would be the key to America’s prosperity.

Today’s space race, put quite simply, is Broadband connectivity – availability and speed – and utilization of e-solutions.  As President Obama opined, “The world has changed…. The rules have changed…. Today, just about any company can set up shop, hire workers, and sell their products wherever there’s an Internet connection.”

While what I am hearing is a bit of a “duh” moment… it really piques my interest when he backs this up saying:  We need to out-innovate, out-educate, and out-build the rest of the world.  Okay… so he has my attention… here is a President that realizes it is the 21st century.  He seems to understand that innovation is what made the United States the largest, most powerful economy in the world… and here’s the important part – that the key to innovation, and jobs… and prosperity is Broadband. 

Not groundbreaking… but refreshing, and encouraging.  And backing his words, Obama promises to lead initiatives that result in “research and development we haven’t seen since the height of the Space Race,” promising government investment in biomedical research, information technology, and clean energy technology – all of which he sees as creating countless new jobs.

So, no matter what side of the aisle you are on, if you are a proponent of broadband – it is wonderful to have the issue raised on such a big stage – and hopefully further advanced, even beyond initial stimulus funding.

SNG believes – and has proven through work in multiple regions across the globe – that broadband and Internet connectivity does in fact create jobs.  Not necessarily jobs that we can see today – but it provides a platform for innovation and growth.  As President Obama explained Tuesday, we didn’t know that the Internet would create an economic revolution.  We may not know where the jobs of tomorrow will come from – but we know what they will require, a robust, far-reaching Broadband Infrastructure.  Obama wants to encourage innovation because he believes that, “In America, innovation doesn’t just change our lives. It is how we make our living.”

Read the entire address: http://www.politico.com/news/stories/0111/48181.html#ixzz1C9tadI00


Broadband Stimulus… No, Not THAT Stimulus… in Europe   

By Joanna Taylor

In 2009, the European Commission found that:
Broadband is of strategic importance because of its ability to accelerate the contribution of information and communication technologies to growth and innovation in all sectors of the economy and to social and territorial cohesion. 

Nearly two years and hundreds of million dollars later in US Stimulus funding – not to mention the NBN in Australia –  what have the Europeans been doing?  The answer is establishing stimulus packages which have a European twist.

Back in that same year of 2009, realizing that communication providers were not going to be able to fund broadband networks that would reach all 495 million inhabitants spread over 27 countries, the European Union Commission placed a little more 1 billion Euros into the European Agricultural Fund for Rural Development (EAFRD). Concurrently, the Commission publicly encouraged member states to support broadband developments as a key enabler for economic growth and rural sustainability.

Here is where the catch comes… there is always a catch, right?  The Commission also had (and continues to have) a keen interest in seeing market competition as a force to maximize the economic welfare of its citizens. The question the Commission wrestles with  is whether subsidies made to one player in a market are likely to have a negative  effect on competition for the provision of services in that market, which would be to the detriment of those same citizens.

The conundrum was clear.

The solution lay in a series of guidelines under the snappy title of “Community Guidelines for the application of State aid rules in relation to rapid deployment of broadband networks.”  These set out a series of criteria that any publicly supported roll out of broadband, that is any stimulus package, must meet before public funds can be used.

The guidelines require the member state of the European Union to demonstrate that:

(a) the use of public funds will result in a higher level of broadband coverage and penetration, or at a faster rate, than would occur without that aid, and
(b) that the positive effects of this aid outweigh its negative effects in terms of distortion of competition

In January 2011 the Commission announced that it has approved a record amount of public aid for broadband development in, among others areas, Catalonia, Finland and Bavaria. This involved the use of over €1.8 billion of public funds for broadband development to support economic recovery, inclusive growth and the long term competitiveness of the EU and will potentially generate up to €3.5 billion of investments in the sector. Of those projects Germany accounted for 6, Italy 4, the UK, 3, Spain 3, while Sweden, Finland, Austria and Estonia each had one.

Approved State aid for broadband per year in the EU

Commission Vice-President in charge of competition policy Joaquín Almunia commented: “Smart investments into high and very high speed broadband infrastructures are crucial to create jobs, increase economic performance and to unlock the competitive potential of the EU in the long term. The Commission is committed to help EU countries to accelerate private and public investments in this sector.”

So – in a rather different manner – Europeans get their own version of broadband stimulus.

A few articles from 2010 we want to make sure you have seen. 

It’s Not Adoption… Utilization is the Key  

By Michael Curri

A few weeks ago I was on a phone call discussing broadband adoption and it struck me how ‘adoption’ meant two different things between the client and myself. I was taking one of our clients through the Broadband Lifecycle. I got to step 5, “Promote awareness and adoption” and paused.  Awareness and adoption… good for alliteration, bad for accuracy.  I blame marketing.

What’s critical in step 5 is not merely adoption; it is utilization, making sure that not only are people and organizations connected, but using broadband and e-solutions.  I can give you a car and if it sits in your driveway, you may have adopted the car… but unless you drive it somewhere, it is of no use.

When network operators and service providers talk about broadband adoption, they are talking about how many customers have signed-up for the broadband service. That is fundamental to their business and where they need to focus.

However, just because a business or an organization has a high-speed connection to the Internet does not mean they know how to fully benefit from it. Not only can they get their emails and surf the Web more quickly, but they can access and serve new markets, change their business and operational models by going online, etc. which have the most significant impacts on operations to increase revenues, decrease or avoid costs, make day-to-day operations easier, etc. It’s about the Internet-enabled applications, or as we call them – e-solutions – that drive benefits.

Utilization is the key – being aware of what is possible, what makes sense for that business or organization, and then having the capacity and skills to implement and start using e-solutions.
At SNG, we no longer talk about ‘broadband adoption’ – we talk about broadband utilization because we do not want to confuse a business, organization, or household simply being connected to broadband as compared what they doing with that high-speed connection.

It is necessary to have broadband, but that alone is not sufficient if you want to realize its promised benefits. Impacts are realized from utilization and I’ll expand on that next week with some case examples and hard numbers on new revenues, cost savings, new jobs, etc.

And the next time you see step 5 in SNG’ Broadband Lifecycle, you’ll notice that SNG helps “Promote awareness & drive utilization.”

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