The growth of cities and regions depends largely on access to technology, especially broadband infrastructure. Broadband connectivity plays an increasingly important role in shaping business development in a geographic area. Businesses and economic developers must make important decisions now regarding digital infrastructure for future gain.
Chattanooga, Tennessee, knows this well. EPB, Chattanooga's non-profit electricity provider, recently built a fiberoptic communication system with $111.5 million in stimulus funds that will anchor the city's smart grid. The grid will include one-gigabit Internet service, making it one of the fastest in the world.
The Recovery Act is bringing broadband to other locations that once lacked it. The U.S. Department of Agriculture (USDA) funded Internet access to rural areas through seven programs. Its Rural Utilities Service (RUS) invested $3.5 billion in funding for 297 broadband infrastructure projects, four satellite awards, and 19 technical assistance grants to extend broadband to rural, Native American, and Alaska Native communities across 45 states and one territory. The agency estimates that about 7 million people in remote regions will now have access to high-speed service.
Essential Part of Business
"Every aspect of business today has something to do with networks," says Hunter Newby, CEO of Allied Fiber. From mobile coverage to fiber-based Ethernet transport, businesses of all sizes require speedy digital service to execute many functions. "This is just for the common office building," Newby says. "Just think if there was no wireless coverage in a certain area."
Broadband is an asset to locations and is important not only to technology industries, but to many other sectors that rely on it indirectly.
"While it is obvious for high-bandwidth-demand businesses like data centers and data storage facilities, which require connectivity directly to the core in order to generate revenue, it is true also for various other businesses, for example, companies that send online catalogs, educational institutions that use e-learning, and many others," says Irit Gillath, vice president of product line management for Telco Systems. "Online sales play a major part of the income for many businesses, and reliable broadband becomes an essential part of the business."
Gillath also notes that areas that have improved their broadband infra structure attract new businesses that grow the local economy.
That was the case for Kellogg's, the iconic food company with headquarters in Battle Creek, Michigan. The city and its economic development group, Battle Creek Unlimited, saw the need for improved connectivity and broadband and took action. In 2002, it built a robust underground conduit system to carry fiberoptic strands that connect downtown Battle Creek with the Fort Custer Industrial Park.
CTS Telecom, a local service provider, claimed 30 dedicated fiberoptic strands for its own use. It acquired six dedicated strands and a portion of the bandwidth for public education, nonprofit, and other governmental uses. The private sector uses the remaining bandwidth. As a result, existing businesses have expanded and the city has created an environment that attracts new business prospects.
Gillath has seen investments such as Battle Creek's pay off for communities. "Companies like Microsoft, Yahoo!, and Ask Jeeves selected Grant and Mason Counties in Washington State for their core business. Broadband offerings in these areas have also attracted other companies," he says. Among the relocations and expansions, Louisville Slugger and Sims moved to Mason County, Washington; Colgate Palmolive moved to Morristown, Tennessee; and Cooper Tire expanded in Auburn, Indiana. While none are telecom companies, broadband accessibility was a deciding factor in those location decisions.
"Broadband and telecommunications have become as important for businesses as the air that we breathe," says Johan Terve, vice president of marketing for Aptilo Networks. "A large portion of the municipalities we work with initiate wireless broadband projects specifically to encourage business development in their area. The Fortune 500 companies we work with to enable Guest Internet Access also understand that broadband and telecommunication accessibility is no longer a should-have but a must-have to remain competitive."
For location selection and development, infrastructure used to refer to roads, airports, and utilities. But Terve has seen broadband become a more prominent factor in company relocations. "The accessibility of broadband and telecommunications has become one of the top three priorities together with accessibility of competent people and customers when selecting a site," he says.
Return on Investment
While broadband is important, it is expensive. "The investment is significant to build and maintain a viable network to offer the level of reliable broadband connections consumer demand," says Judith Langholz of Iowa Network Services (INS), a consortium of 150 Iowa independent communications providers. "Traditionally in Iowa, it hasn't been the municipalities that invest in the required infrastructure. It has been the independent telephone companies deploying fiber-to-the-home and offering state of the art services to residential and business consumers."
Many businesses realize a return on investment from broadband. But implementing and managing broadband requires creativity.
"Fiber to the home can get very expensive," Newby says. "Middle-mile fiber can get expensive, but is manageable as long as there is a long-haul fiber network nearby to connect to that is open, neutral, and reasonably priced. Anyone that just wants broadband for the sake of having it and has no real plan or knowledge of what they are doing will undoubtedly run over budget, build nothing of true value, and fail."
One of Terve's customers avoided such expenses through careful planning. In Taipei, Taiwan, the city unveiled more than 5,000 Wi-Fi access points over a mesh network across most of the city. "While the investment in hardware in this case was of course inevitable, the city saved money by selecting a pre-integrated service management system, which reduced costs on the system integration," Terve says.
Another customer, the Canton of Fribourg in Switzerland, approached cost-cutting differently. Rather than build a large Wi-Fi mesh network, it deployed multiple Guest Internet Access zones at strategic locations throughout the Canton, each providing a tailored user experience for residents and municipal workers. A centralized service management platform tied the system together.
Networks may be deployed in different ways according to needs, according to Gillath. Different approaches require varying levels of municipal involvement. "In the first model, the municipality deploys a fiber network offering open access to various providers," Gillath says. This model is common in rural or low-population density areas where the incumbent exchange carrier offers insufficient services.
"While this requires the highest capital investment, municipalities have good chances to be awarded with a grant or loan from RUS or the National Telecommunications and Information Administration (NTIA) to help fund such an effort," Gillath says. "As seen by past successes, the attractiveness of the area for businesses enhances the local economy and increases tax income for the city due to the new businesses and new jobs created."
In another model, a commercial service provider works with the municipality to deploy broadband connectivity. While the risk and the capital expense to the municipality is reduced, competition and its control over the service is somewhat lessened.
Looking forward, broadband accessibility will only become more critical to business.
"With the evolution of how consumers receive interactive content, on demand movies, games, and more, direct access to a fast, secure, high-capacity broadband connection is required," Langholz says.
The growing population of mobile users will fuel demand for better broadband. "Today, the average mobile broadband connection generates 1.3 gigabytes of traffic per month," Gillath says. "By 2014, the average mobile broadband connection will generate seven gigabytes of traffic per month. During the past decade, business wireless infrastructure has been developed mostly to support business applications such as voice, e-mail, ordering, and tracking. It was largely independent from Internet and Intranet access." But with the advent of smart phones that have broadband connectivity and Internet access, almost every business function can be done remotely.
As a result, Gillath says, many industries will move from fixed-location work environments to a dispersed mobile world. Businesses that do not recognize this trend will lose market competitiveness.
"In the past there were only stationary computers demanding broadband, then some of them got mobile in the form of laptops," Terve says. "Still, bandwidth availability was manageable, as there were not too many users and most used low-bandwidth applications, such as ordinary browsing and e-mail. Over the past few years, the demand for broadband has exploded in the new iPhone era, where all types of devices are connected to the Internet and users expect a high-speed experience everywhere, at any time."
This trend follows the proliferation of devices that are now becoming IP-enabled, including televisions, cameras, power meters, and gaming consoles.
"We see that for mobile 3G data operators, controlling available bandwidth has become a headache," Terve says. "This has led to a growing demand for 3G data offloading solutions, where the users are automatically transferred to a less expensive connection when in range."
Since producing broadband cellular networks is costly, mobile providers will turn to Wi-Fi to complement service. They have already begun to build Wi-Fi networks in locations with a high number of mobile broadband users, such as university campuses and shopping malls.
"Broadband accessibility will continue to be important," Langholz says. "Wireless solutions cannot stand up to the speed, quality of service, capacity, or reliability of data offered from a broadband connection."