Well-Connected Locations | telecom, WiMAX, Telecommunication Industry Association, VoIP, TMT Trends 2007

There's no question that telecom's hot - in fact, some even say it's overheating.

The Telecommunication Industry Association's (TIA) 2007 Market Review and Forecast shows that broadband demand is driving the fastest telecom growth since 2000. Last year the U.S. telecommunications market grew by 9.3 percent to $923 billion in revenue, with carriers scrambling to invest in new fiberoptic lines, Internet protocol (IP) technology, and wireless infrastructure to provide high-speed voice, data, and video services.

"Consumers are thirsty for broadband and carriers are rushing to meet the demand," says TIA President Grant Seiffert. "Technologies like voice-over-Internet protocol (VoIP) and broadband video, as well as new mobile data services, are sparking new growth in the telecommunications industry. As a result, carriers are offering more competitive all-in-one bundled packages and consumers are seeing lower prices and more services."

According to TMT Trends 2007, published by Deloitte Consulting's Technology, Media, and Telecommunications (TMT) Group, the Internet could actually be approaching its capacity - a situation caused by skyrocketing demand, record growth of data and video transmission, and lack of investment in new infrastructure. Deloitte Consulting warns that bottlenecks may start appearing in key sections of the Internet - especially the connections between continents:

"With broadband connectivity," note the authors, "individual service providers (ISPs) are struggling to keep up with demand. The rapid rise in consumer bandwidth consumption may threaten their ability to deliver a consistent quality of service. North American ISPs may experience such high levels of traffic that all services - from search to streaming video - could slow down noticeably."

VoIP
The major trend driving the business communications market is increased demand for VoIP and wireless voice and data transmission. Voice-over-Internet protocol, or VoIP, is broadband-based phone technology that TIA predicts will comprise 34 percent of all U.S. residential landlines by 2010. More businesses are also switching to VoIP - by 2009 VoIP will be more abundant than traditional enterprise systems.

The reason VoIP (also called IP telephony or IP technology) is so popular is that it "essentially turns voice into a software application that can reside on any IP network," says Dan Littmann, a principal in Deloitte Consulting's Technology, Media, and Telecommunications Group. "Features and functionality such as unified mailboxes, the ability to check voice mail on the Internet, and self-provisioning of new lines can be added at a fraction of the time and expense, compared to legacy systems."

VoIP allows the sound of your voice entering the telephone to be turned into a digital stream of ones and zeros, which is then reassembled back "into voice" when it's received at the other end. "A business can integrate its phones and its computers with VoIP," says Gia McNutt, CEO of SOS, a California-based consulting firm that specializes in voice and data solutions. "A variety of applications can all be run on a single system. All that's needed to start is an IP-based telephone and high-speed Internet access."

According to McNutt, 75 percent of large companies in the United States have already switched to VoIP. In addition, InfoNetics Research predicts that 50 percent of smaller organizations will be using VoIP by 2010. "If you already have an up-to-date data network, it may cost very little to upgrade to VoIP," adds McNutt. "Even if you don't, upgrading can pay for itself in a matter of months through costs saving alone."

Wireless
VoIP applications, as innovative as they are, just don't grab attention the way wireless does. Wireless is sizzling, fueled by our insatiable demand for immediate information (and our willingness to pay for it). TIA estimates that by 2010, 87 percent of all Internet connections will be over broadband technology. A report by ON World suggests the North American market for municipal wireless broadband could reach $10 billion by 2011.

"Wireless networks allow businesses to access their people and information regardless of location and device, such as laptop, mobile phone, or PDA," says Littmann. "Wireless data is gaining adoption as wireless carriers roll out 3G (third-generation) networks and companies are increasingly working to enable a mobile work force. Coverage and bandwidth limitations will exist for the short term, but not enough to dissuade companies from subsidizing their employees' use of 3G networks."

Wireless providers are competing to win lucrative contracts to put together citywide wireless networks, including Wi-Fi and WiMAX. San Francisco is working with Google and EarthLink to cover the city in wireless. Philadelphia, Chicago, Atlanta, and Houston all have large-scale wireless initiatives planned or under way. Corpus Christi just completed an 18.5-square-mile mesh network for its 293,000 residents, which took three years to build.

After passing legislation in 2006 that deregulated telecommunications, Indiana is seeing a big jump in telecommunications investment. For example, AT&T is constructing a $4.6 million broadband technical support center in Indianapolis to support its expansion of broadband into more rural parts of the state. Suffolk and Nassau counties in New York are contemplating the viability of county-wide wireless networks - if successful, these will be among the largest wireless networks in the country and cost hundreds of millions of dollars to complete.

"The latest strategy for cities to attract new businesses is called Muni-WiFi," says Littmann. "Many cities are attempting to deploy Wi-Fi mesh networks across their entire city limits, effectively creating a broadband hot spot over the entire city. Despite some of the hype, these networks are not likely to provide the bandwidth and reliability necessary to create an attractive business offer. The in-building coverage will be limited and capacity and performance constraints will limit the utility of Muni-WiFi networks for most major business applications."

This is causing some cities to look to newer technologies such as WiMAX to achieve better service. WiMAX (World Interoperability for Microwave Access) is expected to enable true broadband speeds over wireless networks at an affordable cost.

"WiMAX is the technology of choice for the future of mobile applications because of its promise to deliver very high bandwidth over distance wirelessly," says Joe Franell, director of information technology for the City of Ashland in Oregon. To date, WiMAX is the only wireless standard that can deliver the broadband speeds needed to make citywide connectivity a reality for both fixed and mobile applications.

Telecom and Site Selection
Telecommunications infrastructure is gaining importance as a site selection factor. With the increasing impact of globalization on companies of all sizes, communities with top-notch telecommunications have a definite advantage.

"Companies making major investments in facilities increasingly want to centrally deliver key network, telephone, video, wireless, and ongoing technical support services," adds McNutt. Reliable, high-bandwidth connection is also essential for telecommuting, which is a growing trend in the business world.

"Companies want choices," emphasizes Joe McCourt, vice president of marketing and business development for DukeNet Communications in Charlotte, North Carolina. "They understand that the most important assets they have are their customers and their data. Real-time access to this information from across the hall - or across the globe - is a critical component of doing business. Many companies today can employ data-based solutions across multiple providers for added levels of resiliency. Cities that have a competitive infrastructure quickly rise to the top as places to set up a regional or headquarters presence."

Another big factor is having several telecom players competing for services. Competition is good for business by keeping technology advancing and costs down. "Recent trends point to a formalization of relationships between companies and wireless providers," says Littmann. "This formalization takes the form of business pay and reimbursement plans. Flat rate wireless pricing is taking over - stand-alone long distance is disappearing."

But companies must still have a secure, fiber-rich telecommunications framework. "Corporations today want and need options, and are concerned about reliability as well as scalability," says McCourt. Vendor diversity also plays into most business continuity/disaster recovery planning strategies."

Even if the infrastructure is lacking, most ISPs will accommodate the network needs of large enterprise businesses. "They will make custom fiber runs to the businesses on an individual-case basis," says Littmann. "However, it will cost considerably more to bring fiber to a location that they aren't currently serving. Moreover, companies can typically negotiate better deals if they exist in the proximity of two major carriers' fiber runs."

Some Examples
Orlando has one of the strongest technology markets in the country - thanks in part to its outstanding broadband connectivity and digital infrastructure, including pervasive, fully redundant, self-healing fiberoptic systems. Orlando also has two incumbent local exchange carriers; the competition results in a high level of capital investment in systems and infrastructure.

"Three of the top four growth occupations through 2011 in Metro Orlando will be IT-related," says Jennifer Wakefield, public relations director for the Metro Orlando Economic Development Commission. "Our strength in telecom is attracting companies like Convergys, Fiserv, Lockheed Martin, Oracle, Kirchman, and Symantec." And it's not just the big guns coming to town - the number of small businesses in Orlando has grown at an annual rate of 34 percent from 1998 to 2003.

Seattle has long been known as a major telecommunications center, especially for wireless. "Our telecom infrastructure has been critical to the growth of this city," says Tom Flavin, president and CEO of enterpriseSeattle. "In the past Seattle was a market for natural resource-based industries, but today our economy is driven by knowledge-based companies. Microsoft added 4,000 employees last year and will add 2,000 in 2007 and 2,000 in 2008. Google and Expedia are also here. Seattle attracts high-tech companies because of its outstanding telecommunications infrastructure."

"Seattle has also been the number-one retail market for three years in a row," adds Jeff Marcell, executive vice president and chief operating officer for enterpriseSeattle. "We wouldn't have that ranking if we didn't have outstanding growth, and we wouldn't have that growth without our IT capabilities. The ripple effect is very strong."

Once known as the steel capital of the nation, Bethlehem, Pennsylvania, has cut the cord to both its wired networks and the past. The Southside Bethlehem Keystone Innovation Zone has developed a 2.5-square-mile broadband wireless network to bring Wi-Fi access to a crucial group of people - emerging business leaders. Ben Franklin Technology Partners spearheaded the development of the network, which is now fully operational.

"This Wi-Fi network complements the Ben Franklin Business incubator and the Bethlehem Technology Centers as an important support amenity to early-stage technology firms," says Chad Paul, CEO of the Ben Franklin Technology Partners of Northeastern Pennsylvania. "Through the network, the Southside Bethlehem KIZ enables entrepreneurs to remain connected during their companies' critical early stages."

Even before the network was up and running, one of Ben Franklin's companies began creating products for the zone and beyond. With a $25,000 investment, hField Technologies developed the Wi-Fire Hi-Gain Wi-Fi Adapter to extend the range and increase the connection speed of laptop and PC users. The company received FCC certification for its product on August 31, 2006, and began selling it the next day.

As a final example, Portland (ranked as the fifteenth most-wired city in the country) just launched the first phase of its free, citywide wireless coverage (the second phase that will expand the network is currently being developed). By the time the project is finished in 2008, wireless will cover about 95 percent of the city.

"As companies demand faster and cheaper mobile access for their operations," notes Logan Kleier, project manager for Portland's Bureau of Technology Services, "cities that have a high-speed mobile communications infrastructure will be better positioned to attract and maintain companies."

Keeping pace with the needs of the business community, and building public/private partnerships to invest in the necessary infrastructure, are high priorities for cities that want to create a dynamic business climate.