May 2011 “Bandwidth” – Utilization, News from NC and Norway, and new SNG Offerings

Making the Most of Your Broadband Investment

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.


A Broadband Champion

by Thibaud 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.


Public Versus Private Investment in Broadband

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.


Quick Bytes

Jumpstart your Broadband Initiatives with New Offerings from SNG
SNG’s Market Demand Snapshot is a quick way to get initial “demand-side” information. With a project that runs from 1-3 weeks, start-to-finish, SNG can help obtain initial “topline” feedback among your audiences – be it an industry, specific geography, etc. This quantitative study is not meant to be an all-encompassing study – but rather good, solid, directional research to help guide your initial investment decisions. Contact Doug Adams for more information on how our Market Demand Snapshot provides research for the right decisions for your region.

Get to Work with SNG’s Strategic Planning Workshop
Getting everyone in your region ‘on the same page’ and focused on critical success factors like supporting demand, leveraging broadband as an economic development engine, and developing e-solutions can be an overwhelming task. That shouldn’t mean we skip over the step… it is possible, and SNG can help.

SNG leads workshops across the globe – a strategic planning process bringing key stakeholder groups together, uncovering needs and goals, and arriving at a shared agreement on how to move forward. Contact Michael Curri as we can get these workshops going in short order, and affordably, allowing you to get on track towards a successful broadband initiative.

Dallas Replay
Conference sessions from last month’s Broadband Properties Summit in Dallas are now available online. Click for video library.

Our own Michael Curri participated in “What is Economic Development?” while Jane Patterson (our partner with e-NC) was a key contributor in the “What Federal, State, and Local Government and the Private Sector Are Doing and Planning” session.

Congratulations to our very own Thibaud Chatel and his new bride Audrey as they were wed this past weekend. Pictured are Thibaud (left) and Michael Curri (right).

Thibaud was overheard to be saying… “If we organize everyone over there, we can get step one of the Broadband Lifecycle going in no time.”


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