A report from the Gigabit Highway Conference in Austin TX hosted by the FTTH Council…

Some very interesting presentations at this conference earlier this week.  Here are some highlights…

Federal news

  • The FCC USF fund rules are still in development.  With the new chairman, previous decision and priorities may change, including the rules for competitive bidding.  Speaker Tom Cohen suggests that communities and providers need to be ready to jump if the incumbent ILECs reject the funding as offered, though these same companies can compete in the bidding process as well.
  • Mary Campanola of the RUS Telecom program talked about the increased flexibility of the Community Connect fund – you can now draw the lines to the service area.  Currently, you are ineligible if you receive 3 Mb broadband which the feds come out to verify.  The new service must be at least 5 Mb with the current rules.  15% cash match is required.

Patricia Shorter of federal EDA in Commerce and her colleague talked about how EDA can fund fiber infrastructure development and pointed to the Economic Development Districts (MN RDC’s plus the West Central Initiative) as the gateway to those funds – job creation and retention are important in these projects.  They have funds for strategy development and implementation.  Depending on demographic and economic indicators, grant funds range from 50% to 80%.  It seems like these dollars might be used for funding lateral fiber runs off of middle mile networks.  Key phrases – Collaborative Regional Innovation, public-private partnerships, global competitiveness, economic distress and underserved communities.

A panel that included US Ignite, CISCO and a game developer has very interesting conversation around the sustainable business model for broadband development.  The US Ignite speaker talked about why health and education are such important drivers of broadband – a limited number of experts to whom many people want to connect.  The question on this was whether this would drive revenue to the providers adequate to fund network development.  The CISCO speaker talked about video and mobile as two drivers of innovation and that residential style applications are now driving development of business applications, gaming as an example.  With the game developer, the elimination of latency was noted as equal or more important than bandwidth availability.  High quality applications will drive them from niche to mainstream.  In justifying Gigabit networks, they will now do the same things, but faster.  In the future, there will be new things.

There was also a panel of expanding Gb providers.  One provider in Mississippi, C Spire, was planning to expand their business and wanted to check community interest so they published an RFP.  52 communities submitted responses with nine finalists selected.  They noted that their expected payback for business networks was two- three years, with longer paybacks on residential investments.  While residential ARPU (average revenue per unit) is $105 for residential, the business ARPU was two – three times that.

I facilitated a panel with Sharon Strover of the University of Texas-Austin, Doug Sicker of University of Colorado-Boulder and John Horrigan, a noted broadband researcher.

Sharon talked about the her research which points to increased broadband adoption as a driver of economic activity.  There is a clear difference between similar counties that are either above 60% adoption versus below 40% adoption.  The higher adoption counties had greater economic growth as measured in income and employment and attracted more “creative class” residents.

Doug Sicker supervised graduate student research that shows that a fiber connection adds between $3,000 and $7,000 in value to a home using three communities in New York as a study area.  He suggested that communities get their realtors to start listing fiber optics as an asset on the MLS listing page.

John Horrigan talked about digital readiness, which is a more flexible indicator the digital literacy as it can be used to measure a more complete range of knowledge rather than just being able to log on to a computer, send and email and surf the web.    His studies show that only 20% are making full use of technology.

It was a fun conference.  An entertaining highlight was watching representatives of Google and ATT engage in word play over their soon to be competing services in Austin, deployment plans, pole attachment battles, marketing plans, etc.

Finally, I want to say that you can see that the boom in knowledge work is on in Austin.  Similar to Minneapolis, there was lots of construction, live music, restaurants and bicycles.  While waiting for my coffee at a local shop, the server acknowledged my Surly Beer shirt and said that he had just moved from Minneapolis within the past 90 days.  The next customer in line had just moved from New York City.  Both looked to be in their 20’s.  My Minneapolis friend moved there just to see what was happening there; the New Yorker had moved for a job in the tech industry. There is definite competition for the talent of the future.  I also met an entrepreneur who is planning to open three to four new, for-profit engineering schools in what he sees as tech hubs.  Palo Alto, Austin, Brooklyn and Columbus.  We have our work cut out here in MN!