Submitted by acohill on Sun, 09/09/2007 - 16:39
Yet another muni WiFi project has foundered on the rocks of NoBusinessModel. WiFi vendors don't mind overselling the benefits of free WiFi, because their business model usually involves getting the local government to take all the risk. In some cases, local governments are putting up hundreds of thousands or even millions of dollars for WiFi systems that have yet to prove themselves.
In other cases, the service provider may put up most of the equipment, but gets an exclusive franchise, meaning no competition and no service alternatives. The companies that thought free WiFi could be supported by ads are finding out that that is a tough business to be in.
Waukesha, Wisconsin can be added to the list ever growing list of cities that have had a wireless service provider pull out because there was no money in free WiFi. Chicago, San Francisco, Philadelphia, and Houston have all had to pull back on wireless plans recently. St. Cloud, Florida has been trying to give away free WiFi service to residents with little success; residents have complained that the wireless system is slow and unreliable compared to fee-based copper systems (DSL and cable).
Wireless services have a place in every community. We all want our wireless devices (phones, iPhones, PDAs, etc.) to work wherever we are. But wireless by itself is an incomplete solution. With countries like Japan rapidly building out 100 megabit fiber systems, having only low speed wireless is not going to help a community's economic development future.
Submitted by acohill on Sun, 09/09/2007 - 16:24
This article talks about Japan's investment in broadband networks, including a nationwide fiber deployment with speeds of 100 megabits. The country has a built in advantage because of its small size; short distances between telephone switches and homes means DSL can run faster over existing copper cables--at speeds higher than is possible in most parts of the U.S. But the country regards copper as obsolete and sees DSL as a stopgap measure until fiber connections are ubiquitous.
As the 100 megabit connections become more common, new applications no one ever thought of are being rolled out. One example cited is using the high speed fiber to examine tissue samples remotely. Patients not near pathologists can now get a better diagnosis because the network can transmit very high quality images quickly, enabling doctors at remote facilities to make more accurate examinations.
Submitted by acohill on Mon, 09/03/2007 - 11:26
This article discusses the collapsing WiFi efforts in San Francisco, providing a real world data point that confirms what many of us have been saying for a long time: WiFi alone is not a complete solution for community broadband.
The deal between Earthlink and the city of San Franciso also confirms that there is no free lunch. Earthlink was going to build, own, and operate the free network on behalf of the City. The City part of the deal was to provide Earthlink with easements and access to city-owned light poles and other structures where the WiFi access points would be mounted. An Earthlink official who was asked about the effort said the project, ".... was not providing an acceptable rate of return." Earthlink's other free WiFi projects in Anaheim and Philadelphia are also struggling. The company expected to make money by selling faster wireless connections for a fee and by selling advertising provided by Google.
What we are seeing is that most people, when given a choice between mediocre wireless access and fee-based wireline services (e.g. fiber, DSL, cable), choose wireline services most of the time because the service quality is better.
Remember that this need not and should be an either/or debate: either our community does wireless or it does fiber. Communities need both, and should be planning and investing in properly structured public/private partnerships that really work. In the end, community investments in telecom infrastructure have to be linked to broader community and economic development goals. Few businesses are going to move to a community where the broadband "solution" is wireless only.
Submitted by acohill on Tue, 08/14/2007 - 13:02
Galactic Suites, the space tourism venture, has a Web site with additional information about the space hotel it is building. Space-related businesses are already transforming the New Mexico economy, and states like Virginia and Texas are also beginning to reap benefits. Not every region will find a niche with space-related opportunities, but the success of New Mexico illustrates that boldness and determination pay when it comes to economic development.
Submitted by acohill on Thu, 08/02/2007 - 07:27
There are many articles and commentary on the recent announcement by the Governor of Ohio to create a statewide broadband network. But it is not clear what the impact might actually be. If you read the Executive Order closely, what you see is that Ohio, in many ways, is just starting to catch up to other states.
Most of the statewide initiative simply requires Ohio state agencies to start buying off the statewide network, instead of making their own deals. States like Iowa and Virginia did this many years ago. It also creates a Broadband Council, which other states, like Virginia, have also announced. But statewide task forces rarely have the opportunity or the authority to actually get things done. These groups can make use of the bully pulpit to raise awareness of a problem, but even then, the groups often become captured by political realities.
Because so many states have had operational statewide networks, we have had the opportunity to learn something about them. What typically happens is that the networks have a substantial initial impact by lowering the cost of broadband for schools and state agencies, especially in rural parts of a state that might be otherwise underserved.
But small and medium-sized (that is to say, innovative) broadband providers rarely get these big contracts. Inevitably, the big incumbent providers get the contracts. Once in place, the rates tend to decline only slowly, and so after the first big price reduction, prices tend to stagnate.
But here is the worst problem. From a community perspective, statewide networks are a disaster. Schools, libraries, and state agencies are the anchor tenants of a communitywide or regional open network. Without those government customers paying into the community network, it becomes much more difficult to make a business case for such a project.
So schools and state agencies in a rural region get lower rates, but the rest of the community, including businesses, seldom see any benefit, and in fact, are often worse off. Statewide networks can cripple economic development prospects. There is some language in the Ohio Executive Order about allowing non-government connections, but when state agencies and universities are calling most of the shots for a statewide network, business interests usually don't get appropriate attention. And in fact, over time, rates on the statewide network may be higher than what businesses can do in the private market. We don't really want government bureaucrats negotiating rates and services for businesses, and that is way statewide networks are usually run.
What is the alternative? Get local and regional initiatives started that use the "digital roads" approach, where government's role is limited to building a high performance digital road system, and let customers buy directly from private sector providers, instead of putting state level bureaucrats in charge of prices. States have an important role to play, but as I have said for many years, states should be building inter-community digital roads to connect local and regional efforts, using the same open access, open services model.
Submitted by acohill on Tue, 06/26/2007 - 06:59
It is every economic developer's nightmare. On the front page of today's USA Today (no link online), there is a list of the five states with the slowest broadband in the country. Who wants to be on that list?
In Australia, slow broadband has been recognized as a major economic development issue. Officials there have said that slow broadband hinders the ability of commercial, manufacturing, and agricultural businesses to be fully integrated into international supply chains. In other words, if your businesses don't have the right kind of affordable broadband services available to them, they are going to lose business.
Submitted by acohill on Sat, 06/16/2007 - 09:37
A Mach 10 (ten times the speed of sound) test of a scramjet took place in Australia, where a rocket carried the scramjet into near space, then ignited the scramjet to return to earth. Scramjets are special jet engines that work at very high speeds and at high altitudes, and research has continued on them for decades with mixed success. A successful and reliable scramjet design would allow travel between London and Sydney, Australia in as little as two hours.
Submitted by acohill on Fri, 06/15/2007 - 09:26
According to the latest international study on broadband use, the United States has fallen from 16th to 24th in number of households with broadband (53%). South Korea is the world leader, with more than 90% of homes connected. Japan, Germany, France, and the U.K are all well ahead of the U.S., so we cannot just dismiss South Korea's lead as simply a factor of household density.
Unfortunately, the U.S. also has the most expensive broadband at the lowest speeds. While it is true that the size of the U.S. makes broadband deployment a bigger challenge than in many other countries, the real problem is outdated business models for telecom services. The incumbent providers have stubbornly resisted reforming or changing their business models for telecom, which has led to very slow deployment, and a rather circular red herring argument about broadband.
The argument goes something like this: "There is no money in broadband. So we cannot afford to invest in high performance fiber and wireless systems." The circular part is "we would invest if there was money in broadband, but there is not any so we can't." The red herring part is blaming "broadband" when in fact that has nothing to do with the problem. A correct statement of the problem would be, "Our current business model stinks, so we have no money to invest in better networks."
That would be honest, and would lead naturally to a sensible discussion about changing business models. But there are some local governments that are not waiting. Expect to see new open services networks emerging from local government and regional projects in the next year or two that will have viable business models. These new business models will help create enormous new community and economic development by offering businesses high performance networks with a wide variety of service offerings from many providers, not just one or two.
These open service network projects have the right business model and will transform the local economies that make telecom essential public infrastructure.
Submitted by acohill on Tue, 05/29/2007 - 08:04
The electric utility that provides the power for the Oslo, Norway region (Norway's biggest city) has chosen an open services network architecture. The electric utility will build a single digital road system and let multiple service providers use it to deliver a wide variety of broadband services that will go far beyond the old Manufacturing Economy "triple play" model.
A key advantage of the open services network approach is the financial stability of the business model. The old style triple play caps overall revenue, but the open services network has nearly unlimited revenue potential, with many providers paying use fees, rather than just three.
Design Nine specializes in open services network design. Give us a call if your community would like to see what kind of economic development and revenue benefits an open services network could bring to your region.
Submitted by acohill on Wed, 05/23/2007 - 08:55
Compared to other major industrialized countries, the U.S. "enjoys" some of the world's slowest broadband. Even worse, when you factor in price, we pay more and get less than countries like Japan, South Korea, France, Canada, and Sweden. Over the past decade, the U.S. has gone from being the world leader in broadband to 16th in the world.
Communities and regions waiting for the Federal government to solve this problem are going to fall farther and farther behind economically. To be fair, it is important to remember that places like South Korea and Japan are not much bigger than some regional trading areas in the U.S. (that is, 2-4 rural counties in size). Are we really going to settle for an economic development slogan of "Our region...broadband almost as good as some tiny countries from overseas?"
The good news is that the technology and systems needed to take high performance fiber and wireless connections everywhere in a region (every single home and business that wants service) are mature, affordable, and available off the shelf. It is time to just roll up our sleeves and get the job done.
Submitted by acohill on Thu, 05/10/2007 - 08:42
The state of California has put together an extensive plan to review every voting system in use in the state. The work will use several groups of indepedent scientists with excellent credentials who will review both electronic voting systems and other, older voting systems, including paper-based balloting.
The state is serious about this; the plan includes the use of independent "red teams" that will work independently to try to break into the electronic systems. This is not likely to be very difficult, since you can go right to YouTube and watch a short video on how to break into some systems.
The tragedy here is that this kind of analysis and review should have been done before California spent a half billion tax dollars buying untested voting equipment. State and local officials in California and in every other state ignored the pleas of computer scientists and technology experts across the country and blindly wasted billions buying flawed equipment. Most of it will end up being replaced.
The good news: at least the problem is getting fixed before a massive vote fraud creats a constitutional crisis in a major election. Let's hope every state addresses this issue promptly.
Submitted by acohill on Thu, 05/03/2007 - 09:12
This article notes that the number of cellphone calls has declined in the UK for the first time ever, suggesting that the "newbie" period for cellphones is over. Since 1993, I have been able to observe the "newbie" phenomenon firsthand as new systems and technology are embraced by the public, and in fact, it is a well known process that is often ignored, strangely enough, by many in the IT business, who want to believe in endless growth and by extension, endless profits.
It never works that way, and the dot-com bubble was fueled by large numbers of new Internet users and a naive belief that there was a never ending supply of new users. Of course, there was not, and we all know how things turned out. Companies that had built vacuous business plans based on fantasy-based market growth collapsed.
It is good news that cellphone use is starting to level off. Most people that need or want cellphones have them, they work in most places, and the number of cell towers will start to level off. The article notes that text messaging is still picking up as many find that a useful alternative to the phone--less obtrusive and more immediate than leaving a voicemail.
It also means that the etiquette of using cellphones appropriately will start to solidify. With a decreasing number of new users who don't know the rules, we have a better chance of actually using cellphones more sensibly over time.
Submitted by acohill on Mon, 04/30/2007 - 10:02
India has announced an ambitious plan to provide free wireless broadband throughout the country.
It is not at all clear that "free broadband" is sustainable. The longstanding problems with free services (in any market, not just broadband) include market distortion and low quality service.
Market distortion occurs because "free" services suggest to users of the service that supply is inexhaustible, and so users use as much as possible. Not everyone thinks this way, but a small number of users who hog bandwidth can consume all available supply.
This leads to low quality of service, in part because there is no pricing feedback to users (see above), and in part because the lack of revenue makes it difficult to expand capacity as demand increases.
In fact, fees alone do not guarantee a sustainable business model. In the U.S. and most other markets, the current broadband business model is upside down. Service providers enjoy maximized profits when customers, paying a fixed fee for Internet access, don't use the service at all. Service providers make the least profit if customers
like the service and use it a lot.
From an economic perspective, charging a fixed fee no matter how much bandwidth a customers uses is exactly the same as giving the service away for free. Neither one provides the funds necessary to expand capacity, increase service areas, pay for proper maintenance and upkeep, and add new services.
A solution is to move to a service oriented architecture (a different network architecture AND a different business model) that conveys a clearer relationship between supply and demand to customers. Customers pay for services, rather than buying a bucket of bandwidth. Service fees are based on the real cost of providing the service, thus providing information to customers about supply and demand. This can be done easily with both wired and wireless networks.
If the Indian government is going to build a digital road system and let private companies use the road system to sell services in return for a share of revenue, the system could work very well.
Providing a free 2 megabit connection but no services is very similar to the way roads are managed--governments build roads but allow businesses and customers to use those roads for entirely private business transactions.
Submitted by acohill on Thu, 04/19/2007 - 08:53
The tragedy here in Blacksburg earlier this week highlights the dark side and the bright side of technology and the Internet, and is a useful reminder that technology is neither good nor bad--how people use it--for good or for evil--determines its value at any point in time.
Part of the dark side is the intense and almost suffocating media coverage, which began while events were still unfolding. Just a few years ago, this would have been a largely local event for at least a day or two, but with satellite and Internet technology, news organizations were covering this before it was even over. There is something surreal sitting in your office listening to the sirens wailing almost continuously as they carry the wounded to local hospitals--and watching live news reports via the computer and Internet. I could have walked over the scene, taken pictures, and uploaded them to this site or to others, and indeed, others did exactly that.
The phrase "too much information" comes to mind in this context. The NBC videos provided by the killer are more than we need to know, and may likely spawn copycats, just as the killer himself was obviously influenced by a dark Korean film of murder and mayhem. The constant repetition of the phrase "country's worst massacre" will likely encourage the next deranged individual to try even harder to surpass the Blacksburg death toll.
On the blogs, there are already countless thousands of articles, mostly playing Monday morning quarterback about what should or should not have happened. At some point, it all becomes noise.
The bright side is that this very same technology, used in precisely the same ways, has enabled an outpouring of kindness and compassion. Email, blogs, and Web sites are being used to help the families of the victims, to organize counseling and support, to reach out to those suffering from the effects, to encourage prayer, and to just send a few words of comfort.
We have a mighty tool in our hands, and how we use it is a measure of who we are and what we stand for.
Submitted by acohill on Tue, 04/17/2007 - 07:50
Unfortunately, the horrific murders here in Blacksburg yesterday highlighted yet again the technical superiority of the Internet during emergencies. For most of the day, it was difficult to make a phone call on a landline or cellphone, with most calls being greeted with "All circuites are busy." But the local public and private Internet networks kept chugging away, providing students and parents a way to connect. Instant messaging also proved important, and the Internet is used as a gateway between different cellphone messaging services.
Rescue personnel, first responders, hospitals, and health officials were using a pre-planned emergency management Web site to help manage the heavy casualties. No one local hospital was able to handle all of the serious gun shot wounds, and four hospitals in the Blacksburg and Roanoke areas were providing assistance and coordinating activities via the Internet.
Public safety and disaster management is a key use of Internet technology for local government. A robust, high capacity, community-managed broadband network can be an engine for economic development and an important tool for public safety.
Submitted by acohill on Fri, 02/23/2007 - 11:05
Last night, I got to see what I think may be one of the best high school technology programs in the country. Mike Kaylor, a teacher at Blacksburg High School, convinced the school to convert the old high school woodworking shop into a multimedia design space, set up for professional digital photography, digital movie making, 3D modeling, online game design, and movie special effects. Kaylor's classes are mobbed--student demand is three times higher than the capacity of his classes. His students are already working in high paying jobs in the movie and entertainment industry. And hundreds more are leaving his courses with a solid understanding of digital technology that will help them be successful no matter what career path they choose--business, government, or the nonprofit sector.
The sad truth is that most of our kids have a grasp of technology that is about as deep as a layer of tissue paper. Being able to text message and find a song quickly on an iPod does not prepare our youth for the work world, and too many adults, who tend to feel a bit inadequate, assume incorrectly that facility with email, the Web, and iPods somehow is enough.
Every high school in America ought to have a program like Kaylor's, and it should have the same vision as Kaylor's. When Kaylor wanted movie special effects software, he did not settle for low budget programs. Instead, he insisted on getting the same software that is used in the major studios to produce the special effects in movies like The Lord of the Rings. So Blacksburg kids in Kaylor's class are leaving with a solid foundation in digital media and the skills and training in demand by potential employers.
Not all of these kids will end up working in Hollywood. Some of them will settle down right here in the New River Valley, and the businesses in the area will benefit from having an ever expanding pool of job candidates with the right stuff.
Economic developers: How about your community? Worried about having a pool of workers ready for Knowledge Economy jobs? How about skipping the next shell building project and starting the kind of multimedia program that Mike Kaylor has at Blacksburg High School? From an economic development perspective, there are few other things that would be more interesting to a high tech business looking at your area for relocation.
Submitted by acohill on Mon, 02/05/2007 - 09:50
With traffic choking the major metropolitan areas of the country, I think that some smaller cities like Roanoke, Virginia and Scranton, Pennsylvania are poised for growth, if they can adequately address a range of quality of life issues. These smaller cities may have a rush hour, but it usually measured in minutes, not hours, and because they are located outside major urban corridors, it is possible to have a nice house in the woods a few miles from town and still drive to work in fifteen or twenty minutes.
But no one is going to move to those places only because of a shorter commute. There has to be enough activity to attract both entrepreneurs and young people. Entrepreneurs want to talk to savvy and well-informed economic developers, they want inexpensive, downtown office space for their start ups, they want good places to eat, and they want great coffee shops. Young twenty-something workers want good shopping, lots of social activities, and some night life.
Northeastern Pennsylvania, home to Scranton, Wilkes-Barre, and dozens of smaller communities, is poised for growth. The Wall Street West initiative will bring massive bandwidth into the region to attract larger financial firms, and Scranton's investments in sports arenas and recreational activities (how about skiing ten minutes from downtown?) will help attract and retain workers.
Roanoke, Virginia, nestled in the foothills of the Blue Ridge mountains, has convenient access to some of the best hiking, biking, and whitewater sports on the east coast, with a dizzying array of recreational options. The City's leadership has embarked on a wide variety of initiatives to attract younger workers, including a newly revamped Web site. This week, the City is also announcing a new initiative called MyRetailRoanoke.com, which is designed to help retailers easily learn about the Roanoke area market.
Lively and attractive small cities are also important to nearby rural towns. Not everyone wants to live "in town," and a vibrant small city an hour or two from a rural community enhances the value of that small town as well. Regional collaboration on marketing, recreational activities, and economic development can pay big benefits.
Submitted by acohill on Fri, 01/26/2007 - 09:14
Broadband is not the only fuel of the Knowledge Economy. Rural leaders often discount the importance of having good places to eat in smaller towns. Microbusinesses and entrepreneurial start ups do a lot of business over breakfast and lunch, and one of the key quality of life factors that drive relocation decisions for enterpreneurs is the right kinds of restaurants--along with good coffee. Small town restaurants don't have to be fancy, but they have to be clean and comfortable, with excellent food and great service. Those are easily achievable goals, but small town restaurant owners may need coaching to bring their food, service, and decor up to the standards needed to attract Knowledge Economy business people. One small town that has the right kind of place is Quechee, Vermont, which has The Farmer's Diner. The Farmer's Diner has great food in a friendly, casual atmosphere, but the establishment also serves up locally grown food whenever possible--leveraging the interest in fresh and organic food, while providing a local sales opportunity for nearby farmers-a nice synergy.
Submitted by acohill on Thu, 01/25/2007 - 09:23
For the second year in a row, no American city made the list of the world's "Intelligent Cities," which is compiled by the Intelligent Community Forum. This highlights the longstanding regulatory and leadership problems we have in the U.S. when it comes to telecom. Some state and Federal regulators and legislators still think re-monopolizing the telecom industry (well under way with the re-forming of AT&T) is the answer to the country's long term economic development challenges. Other elected officials just keep hoping that the problem will go away, even though each passing year makes the businesses in their regions less and less competitive globally.
Submitted by acohill on Thu, 01/18/2007 - 07:35
Verizon wants to be deregulated in Virginia for phone service. The company asserts that there is ample competition and that the company should no longer be forced to charge set prices for certain services.
What struck me was the note in the article that the company submitted 2,400 pages of "documentation" to prove its case. If the situation is as obvious as the company asserts, why so much paper? The article leaves some questions unresolved. For example, some phone users get service from a third party like AT&T but that service comes in over Verizon lines. My guess is that in its request, Verizon is counting AT&T as a competitor, but if deregulation occurs, Verizon could raise the rates on its wholesale access to the point that it is no longer profitable for companies like AT&T to do business. This is exactly what happened when price controls were lifted for DSL; across the country, virtually all the third party DSL providers, who had really created the market when the phone companies avoided it, went out of business, leaving the field to the incumbents.
Should Verizon be unleashed? It is likely to be a painful pill in the short term, but partial regulation (of some companies and not others) creates market irregularities that keep communities chained to old technology. In the long term, the best answer is open service provider networks that let any company use the community's digital roads to sell goods and services (and no, the government won't be competing with the private sector). Verizon, among others, could use those community digital roads to keep existing customers and to attract new ones. And prices would go down across the board.
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