Outsourcing: The good and the bad

Submitted by acohill on Tue, 12/12/2006 - 09:34

BusinessWeek has an article on outsourcing that has some useful insights in it. The good: Outsourcing does not always save time or money. As many of knew when the outsourcing craze began to heat up, it is a lot of work to manage workers on the other side of the world who are 10 or 12 hours out of sync with your own office hours. In India, where IT outsourcing has helped fuel the economy, rapidly rising salaries and very high turnover (often above 50% a year) is driving U.S. businesses away. Some of that work is coming back to the United States, and there are opportunities in low cost of living rural areas to capitalize--if you have a tech-savvy workforce and affordable broadband.

The bad news is that even though some outsourcing is moving out of India, some jobs are being moved to other low wage countries. What that means for the U.S. is that IT salaries are flat, and are likely to stay flat for some time. But I have maintained that many IT jobs have been priced too high for years--an artifact of the rapid growth in IT in the nineties. Some adjustments are not necessarily bad. But overall, we are in a world economy, like it or not, and your community is competing with other countries, not just the next county or the next state. And no matter how much local leaders may not see that or deny it, it is a fact. Every community in America has to be looking over its shoulder at the world economy now. We aren't in Kansas anymore.

Our Internet tracks can be erased

Submitted by acohill on Tue, 11/07/2006 - 07:53

In a victory for personal privacy, a German court has ruled that if a customer requests it, an Internet Service Provider (ISP) must delete the IP log data that shows what a customer has been doing on the Internet and when. In the U.S., unfortunately, we are headed in the other direction, with the Federal government anxious to make ISPs responsible for retaining such information--forever! It is a huge and costly burden, with little justification, since most of us will never commit a crime that might require such data, and in my opinion, it is intrusive and an invasion of privacy.

Fiber transforms local economies

Submitted by acohill on Thu, 10/26/2006 - 10:01

The magazine Killer App has a must read article on how fiber infrastructure has turned the rust belt economy of Wales (abandoned coal mines and steel mills) into a global powerhouse. The key: a steady investment in fiber over a period of years turned into a magnet for Knowledge Economy businesses looking for a reliable workforce, reasonable cost of living, and affordable broadband.

Oh, and there was one more thing. Wales had excellent electrical power because of the former demands of the steel mills. The region was able to attract large data centers because Wales had an unbeatable one-two punch: world class fiber infrastructure AND reliable electric power.

Finally, Wales has adopted an open access model, meaning they did not try to create a new government monopoly on telecom services. Instead, they are encouraging competition among service providers to ensure a rich variety of services that can meet any business need as well as keeping prices low (because of competition).

This is an article you may want to print out and send to every local elected official and economic developer--especially those that think telecom is somebody else's problem. It is an excellent case study of a region that pulled its economy out of a nose dive and successfully created economic prosperity.

Google told to stop using other people's content

Submitted by acohill on Mon, 10/16/2006 - 07:21

Microsoft's MSN search and news site is trying to avoid Google's fate in Belgium, where a court told the search company to stop filching newspaper articles from the Web sites owned by the newspapers. Google would show the first few paragraphs of an article, and then provide a link to the rest of the article, claiming fair use. But of course, there were ads on the Google page and so Google was benefiting from someone else's copyrighted content. The Belgian courts told the company to cut it out. So Microsoft, which apparently does the same thing, is negotiating with the newspapers over the issue. The obvious solution is to share ad revenue with the papers. Less money for the search sites, but then, they would be doing things fairly and legally, which should not be difficult concepts.

Hybrid phones will become the standard

Submitted by acohill on Tue, 08/29/2006 - 19:11

Swedish-Finnish telecom company TeliaSonera has started selling hybrid phones that will automatically make phone calls via the Internet when in range of a WiFi hotspot, and use the normal cellphone network when not in a hotspot. Some other dual mode phones have been available, but this is the first phone (manufactured by Samsung) that will switch automatically between the two. The firm is targeting in home use first, which is clever, because we make a lot of calls from home. If you have a wireless router in your house, the phone will automatically make VoIP calls, saving money.

Devices like this illustrate the need to design communitywide broadband networks that offer BOTH fiber and wireless connectivity. We are going to want and need both, and communities should plan and design for both.

Slow broadband is getting cheaper

Submitted by acohill on Thu, 08/10/2006 - 11:46

Here is a very short article about the falling price of DSL service in the U.S. Usually, when prices fall, it is a possible indicator that people are not buying enough of whatever is for sale, or that they supplier has "too much" of something. In the case of DSL, both is probably true. The phone companies have been investing heavily in upgrading their local phone systems to handle DSL, but with limited success, apparently, or they would not be cutting prices.

Part of the problem is that the cable companies beat them to the punch several years ago. The cable companies got an early start not because they really believed the Internet thing was going to catch on, but because digital cable systems let them sell a lot more TV. It really did not cost much (relatively) to build systems that could also deliver Internet service. So a majority of broadband users in the U.S. have cable modem service rather than DSL. And it is often difficult to get your computer working with a new ISP, so most people tend to want to avoid switching unless there is a really compelling reason. And a $4.27 price differential is not enough, it seems, to get people to switch from cable to DSL.

Anedotally, almost everywhere I visit in the U.S., people tell me that cable modem service is faster, more reliable, and tends to have better service than DSL provided by the phone companies.

But the sad news is in the last paragraph of the article. While many communities are happy just to any broadband Internet service delivered over slow, last century copper systems, broadband prices in Japan also continue to drop. Service providers there are offering 100 megabit fiber service for $25.90 a month--less than we are paying for copper broadband 100-200 times slower.

Lightpaths are coming to Ireland

Submitted by acohill on Wed, 08/09/2006 - 12:18

Ireland's research and higher education network, HEAnet, is getting configurable lightpaths. What are configurable lightpaths? It means that ordinary network users can configure a single wavelength of light on a fiber network from their computer or server to another computer or server on the same network (the computers could be hundreds or thousands of miles apart). A single lightpath can provide many gigabits of bandwidth with very little network delay, because the photons have a single path (lightpath) through the network. Much of the pioneering work was done in Canada and in Chicago, and a similar project has been underway in North America, called Starlight. Starlight already has fiber across the Atlantic and Pacific, and more schools, universities, and research labs are joining the effort.

This new kind of network system (it is entirely compatible with the Internet) is starting the same way the original Internet started, with schools and universities. It is already moving out into industry, with companies like Cisco developing off the shelf equipment to implement lightpath networks.

Lightpaths are one more reason for communities to start investing in fiber, now. Old-fashioned copper cable modem, telephone, and DSL networks don't support lightpaths and never will. Do you want your schools and businesses to be left behind?

French get broadband two thousand times faster than the U.S.

Submitted by acohill on Wed, 07/26/2006 - 09:58

Prepare to be depressed. French Telecom has just announced that it is rolling out fiber service in major cities with download speeds of 2.5 Gigabits/second and upload speeds of 1.2 Gigabits/second. The cost? Seventy Euros, or about $85 US.

Meanwhile, in the U.S., the heads of the major telecoms are patting us on the head and telling us we don't need superhighways to our homes, that DSL sidwalks are just fine. A typical DSL connection in the U.S. is about two thousand times slower than the Gigabit service being rolled out in France.

This article is in French, but you can see the speeds discussed in the second paragraph.

Apple vs. Dell-to outsource or not to outsource

Submitted by acohill on Mon, 06/05/2006 - 08:03

In an interesting tale of two companies, Apple has dumped its experiment in offshoring telephone support to India after just one month. Meanwhile, Dell is rapidly expanding its offshore tech support. What's going on? Apple, while not perfect, consistently gets high ratings from consumers for support. Dell, on the other hand, has been receiving a steady stream of criticism lately for poor customer support.

I attribute the difference to finances. Apple is extremely profitable, and seems to have figured out that taking good care of customers pays off over the long term. Dell, on the other hand, is on the ropes financially and appears to be trying to save its way out of a money hole. In my experience, cost-cutting at the expense of highly visible parts of the company like customer service never works out well. Dell's slide will likely continue.

Personally, I have rarely had a good experience with offshore customer support. I've observed two chronic problems. First, the heavy accents, even with someone who might speak English as a first language, often makes conversations quite difficult. And second, offshore staff seem to be often stuck following a script when trying to figure out what the customer wants. If the problem doesn't match the script, they can't adapt. I find that less so with American-based customer support (though not always).

Do it yourself fiber

Submitted by acohill on Wed, 05/03/2006 - 06:32

Skip Skinner, the forward-thinking administrator of Wise County, Virginia, suggested do it yourself fiber to me three years ago. I've proposed it to many other groups since then, and everyone thought I was crazy.

So I was gratified to hear from Matt Wenger of Packetfront about a wildly sucessful do it yourself fiber project at the Digital Cities conference last week. A rural community in Sweden got potential broadband customers to dig a trench across their own property and install conduit (cheap plastic pipe) to the rural road, where the fiber was then blown in using compressed gas.

It worked extremely well. The effort was started and led by a single determined community member who observed, correctly, that most rural folks have or have easy access to tractors, plows, and trenching equipment, and know how to use it.

A major cost of installing fiber in rural communities is getting the fiber from the paved road up to the house, which in this Swedish community was as much as 3/4 of a mile from the road. By sharing costs across a large number of users, the cost of getting the fiber installed was greatly reduced, and the primary focus of the effort was centered on just getting the fiber down the main back roads--a much simpler problem than dealing with the logistics of installing duct to every household.

The local credit union also pitched in by agreeing to add the average $600/household cost of duct and parts to the property owner's mortgage, which increased the take rate for fiber by 25% to 40%. The credit union realized that fiber infrastructure increased the property value by several times the cost of the materials, and worked with their customers to develop a simple, streamlined process for providing the funds. A U.S. study last year showed fiber to the home adds $7,000 to $14,000 of value to a home.

The combination of shared investment, self help installation, and new forms of financing minimized the capital risk on this project and got state of the art fiber into a rural community.

So my question today is this: Are the Swedes smarter than the rural residents of the U.S.? Why not do this in your rural community? We are talking about digging shallow holes in the ground and dropping plastic pipe in the hole, then covering the hole up with dirt. I'm pretty sure we can handle that.

How does $15/month broadband sound?

Submitted by acohill on Thu, 04/27/2006 - 09:27

While at the Digital Cities conference in Reston, Virginia earlier this week, I was able to get some detailed information about Vasteras, Sweden, where they have implemented the kind of open service provider communitywide broadband I advocate for communities in this country. Vasteras is a medium-sized city of about 80,000 people. In past eighteen months, they have run fiber to 7000 homes, 23,000 apartments, and 2000 businesses.

The system is run as a completely open access network--any qualified service provider may offer services over the network, and they have eighty-six (86) service providers. There are several options for Internet access, starting at a full 3 megabit (symmetric--3 meg up and 3 meg down--not offered by any cable or DSL provider in the U.S.) for $15/month. You can get a full, symmetric 100 megabit service for $45/month (about what most of us pay for 1-2 megabit cable or DSL service).

The open access system uses a single community infrastructure that offers freedom of choice for subscribers (pick from 86 different services), increased competition, and much lower costs because service providers can sell services at lower prices because the cost of the infrastructure is shared across the entire community.

Robert Kjellberg, the Managing Director of the effort, said the system has created many new work at home opportunities, helped improve the delivery of local government services, provided new opportunities for distance learning, and that local schools have been able to make much greater use of the Internet for teaching. He said that every K12 student now has their own online portfolio of school projects.

The take rate for the network has been 50% among homeowners and 50% among businesses, and demand has been very strong. They continue to hook up new customers on a weekly basis.

Service providers have been very enthusiastic, and Telia, one of the incumbent providers, sells Internet access over the network for half the price that they charge for DSL in other communities. Kjellberg emphasized that the city does not sell any services and does not compete with the private sector--all services offered over the network come from private sector providers. The service providers pay a small portion of their revenue to the city, which is used to finance debt, expansion, and operations.

Here are some links to the project. Note that as of this day, a Swedish kronor (SEK) is worth about 13 cents USD, so you can take the Swedish service prices and divide by 7.4 to get the equivalent in US dollars.

Vasteras has won numerous awards for its network and has attracted worldwide attention because it has world class broadband at affordable prices. How about your community? Instead of just one or two highly restrictive and expensive broadband offerings, would it not be better to have homes and businesses choosing from 17 plans starting at $16/month?

South Korea commits $830 million to broadband

Submitted by acohill on Mon, 04/10/2006 - 09:02

South Korea continues to be far more visionary than the United States when thinking about broadband and how it should be used. The city of Seoul, South Korea's largest city, has committed $830 million to the u-Seoul project. The 'u' stands for 'ubiquitious.'

The money will be used for a variety of projects, including high speed connections to all schools, government offices, and health facilities; high speed broadband for entertainment, culture, and sports facilities; and for public transportation and environmental monitoring.

While the Koreans are putting substantial investments into technology that will transform their economy, we are still debating whether broadband should be 200 kilobits/second (the FCC definition) or if we should jump things up to the 1-2 megabits/second favored by the telephone and cable companies (which is about 1% of South Korea's broadband target).

Toronto announces wireless blanket

Submitted by acohill on Tue, 03/07/2006 - 10:43

I am not a big fan of me-too municipal wireless projects. Wireless technology remains in flux, with new equipment and systems coming online constantly. Interference and bandwidth issues have to be considered very carefully when designing these systems. And you have to know how you are going to pay for the network management and maintenance.

In other words, a community should not be planning a big wireless initiative just because "that's what they are doing in Philadelphia."

The city of Toronto has just announced a big wireless project, and they have an interesting approach to making the system pay for itself--VoIP.

The city wants to create competition for the cellular companies, and wireless VoIP could be just the thing. From a technical perspective, VoIP is clearly superior (think BetaMax). But wireless VoIP phones are not very appealing because they only work where there is a hotspot. And we want our phones to work everywhere.

So the cellular companies have an inferior voice/data combo (voice and EVDO data service) that works with an infrastructure already in place (think VHS). Wireless VoIP phones won't catch on unless they work, but how do build out the infrastructure when you don't have enough customers to pay the bills?

It's a classic chicken and egg problem.

But if local government steps in and helps with the infrastructure part, everybody wins. Suddenly, lots of people can use VoIP phones throughout the city, and competition drives voice prices down.

What would be great is if the city of Toronto allows multiple service providers to sell VoIP over the city network--that creates a win-win situation that creates jobs and opportunities in the private sector while those service providers pay small fees based on income to the city, which pays for the investment and maintenance.

PCNA Conference 2006: Cohill keynote

Submitted by acohill on Sat, 02/25/2006 - 10:41

Here is my presentation from the morning keynote. Thanks for your interest. You can find more handouts and documents in the Library. If you are interested in the plastic microduct I passed around at the meeting, you can get more information about Emtelle FibreFlow here.

You can also visit the home page of Technology Futures for regular updates and technology news and what it means for communities.

PCNA Conference 2006: First impressions

Submitted by acohill on Fri, 02/24/2006 - 17:09

I'm at the Pacific Community Network Association Annual Conference in Vancouver, British Columbia. I gave the opening keynote this morning. I am really impressed with the energy and enthusiasm for broadband here. Folks up here understand better than many U.S. communities that broadband--affordable broadband--is essential to their communites. The province of British Columbia has hundreds of local community technology projects--active, vibrant efforts that are providing access, training, and services to hundreds of thousands of people in rural communities.

I'll be posting more over the next couple of days. Stay tuned.

Upcoming broadband conferences

Submitted by acohill on Wed, 02/22/2006 - 14:32

Benedict College, in Columbia, South Carolina, is hosting a Technology Summit that is focused on how broadband and technology can improve and enhance life in urban neighborhoods and rural small communities. I'll be giving the opening keynote talk next Tuesday.

Out in Vancouver, British Columbia, a broad consortium of public groups, government, and businesses are hosting the 2006 Summit on Community Technology. Canada has committed substantial sums to improving broadband access in rural communities, and a hot topic at the meeting will be how to make best use of those funds. I'll be delivering the opening keynote at that meeting as well.

Northern Ireland has 100% broadband coverage

Submitted by acohill on Tue, 01/17/2006 - 08:56

Northern Ireland is the first country in Europe to have 100% availability of broadband (typically DSL) to every home and business. Government investments helped get the job done.

But the real measure is impact. The CEO of the MJM Group, a highly specialized joinery firm in the country, had this to say:

"It would have been impossible to have achieved our export growth without broadband internet access which came to Rathfriland in 2004..."

A small northern Ireland company is expanding internationally because of broadband. What could firms in your area do with affordable broadband?

Nuclear power warms up

Submitted by acohill on Mon, 01/09/2006 - 10:23

This report says that Europe is starting to invest again in nuclear power [link no longer available]. Like the U.S., most of Europe stopped building nuclear power plants after the 1970s Three Mile Island disaster.

If you look strictly at deaths directly attributable to nuclear power and compare them to deaths from coal power, coal loses every time. There are mining disasters regularly, with the latest tragedy right here in Appalachia.

Nuclear's biggest problem was that during the sixties and seventies, every nuclear power plant designed was a one-off...that is, a custom design. It's like building cars by hand--expensive and increases the risk of problems. What we need is just one or two standard nuclear power plant designs that are well understood. Training and safety systems would be standardized, it would much easier to evaluate and test components, and the cost of off the shelf power plants would be much lower.

Nuclear power plants have virtually no emissions, do not generate acid rain or carbon dioxide, and don't require transporting large amounts of fuel (coal, oil, natural gas) across great distances. France generates 80% of its electricity from nuclear power, and has done so safely for more than twenty years. The U.S. needs to take another look at nuclear.

Denmark nurtures microbusinesses

Submitted by acohill on Fri, 12/02/2005 - 11:29

Here is a report from Denmark about how one group is trying to nurture and promote the growth of microbusinesses. Stick with the article to the end, and you will find a useful list of activities and projects that would apply in any community or region. Does your economic development game plan include these kinds of activities?

Amsterdam gets it on community fiber

Submitted by acohill on Mon, 11/07/2005 - 12:08

EuroTelcoBlog has a story on Amsterdam's community fiber initiative.

The Dutch city has committed to running fiber to every home and business, and is starting with 40,000 homes, or about 10% of the city. So over the next seven to ten years, everyone in the city will have access to community-managed fiber and a wide variety of private sector services--in other words, competition and choice. This citation from the city-issued report shows how serious the city leaders are:

"This enables our city to compete with other European cities. The fiber network delivers to Amsterdam an innovative and freely accessible infrastructure, suitable to support growth in demand for the next 30 years or more. In this way we ensure a wide open marketplace for innovative service-providers and economic growth, as well as a fast track for the smarter and cheaper delivery of care, education and other public services."

The project is particularly interesting because of its organizational component. A stock corporation has been formed (something I've argued for for years), and the city holds one third of the stock, local housing corporations hold one third (probably the equivalent of our HUD-style housing efforts), and private investors hold one third. It is a public private partnership, and telcos and other telecom players could invest in and profit from the shared infrastructure. The private sector ownwership componenent neatly sidesteps the "unfair competition" issue tossed around so casually in the U.S.

For American towns, cities, and regions, this is the competition. And there is another message here as well. There is a lot of DSL in Europe, and Amsterdam has said, with this initiative, "We don't think DSL is good enough."

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