April 8, 2009 2:25 AM

Broadband Map? Makes Me Want to Take a Nap . . . Instead, Let's Make It a Treasure Map!

It's been said that, "[a] movie scene depicting Chuck Norris losing a fight with Bruce Lee was the product of history's most expensive visual effect. When adjusted for inflation, the effect cost more than the Gross National Product of Paraguay."  If this is true, and I'm not saying it isn't, history's second most expensive visual effect might be the $350 million broadband map that the NTIA is charged with creating under the ARRA See p. 14.  In all the discussions of how to spend the broadband stimulus money, very little attention has been devoted to what is potentially "history's second most expensive visual effect."  I'm not saying the broadband map is destined to earn this title, but the NTIA and the FCC owe the broadband map some thoughtful, up-front attention--even before money starts to be distributed--in order to maximize the broadband stimulus grants.  However, it's easy for me to say the map deserves some serious attention, but the real question here is how do you make a map produce $350 million in value to American taxpayers?

If that map can be used to channel investment--both public and private--and, thereby create efficient investment, then that map will probably stimulate even more investment, and the "juice" might be worth the $350 million "squeeze".  Let me explain.  In hindsight, we can say that the Telecommunications Act of 1996--which eliminated legal barriers to competitive entry into the local exchange markets, and provided the Bell Operating Companies with a path to entry into the long distance market--definitely stimulated all kinds of private investment.  But the investment had a crazed, "Oklahoma Land Rush"  quality to it that rendered almost all of the new investment to be inefficient, over-investment, creating the telecom bubble that burst so dramatically between 2000 and 2002.  In 1996, there was no doubt that the Telecom Act was going to create more innovation and more competition in all parts of the telecommunications industry.  Additional demand could be anticipated, so it was only rational that additional infrastructure, equipment, and service providers would be necessary to serve this expected demand.  The big unknowns were: how much additional demand?  Where in the network?  For what types of equipment and services?  No one knew that the inefficient investment resulting from not knowing the answers to these questions would produce what some have estimated to be over $1 trillion in wasted, lost, investment.

So investors already have a "once bitten, twice shy" attitude when it comes to telecom infrastructure investment.  Given the largest economic downturn in many decades, recent experience is likely to push investment money further away from broadband infrastructure.  Yet, President Obama considers increased broadband infrastructure investment and increased broadband adoption to be a cornerstone of his economic recovery plan--critical to improvements in the quality of education and health care available to Americans.  This is exactly why the broadband map, if done right, can go from "history's second most expensive visual effect" (if taken too lightly) to history's most value-producing visual effect.  Given that broadband investment is an essential part of the President's recovery plan, the broadband map must become a "treasure map" for private capital.  What do I mean by "treasure map?"

Well, just as water seeks its own level, fiber transport will emerge to seek pockets of bandwidth demand.  These "pockets" of demand can be compared to oil wells, with fiber transport (to Internet backbones) being analogous to pipelines.  Unlike oil deposits, though, bandwidth-demand deposits can be created, and they can be created simply through informed cooperation.  In other words, if consumers and producers are aware of their bandwidth demand, that demand can be rationally aggregated, and aggregated in a way that causes private investment to meet that aggregated demand.

The basic principle I'm describing is hardly novel; it's the theory behind an already-proven business plan.  For example, the author of the BearOnBusiness blog--Dan Caruso--is the CEO of a company called Zayo Bandwidth.  Part of Zayo's network--the Minnesota part--was originally developed as a remote tandem provider (Onvoy Communications).  Onvoy deployed fiber to multiple pockets of rural Minnesota demand, aggregated by multiple independent LECs and wireless providers.  Onvoy's fiber network picked up traffic from these demand pockets and looped it back to a convenient aggregation point in St. Paul so that Qwest, and all the major Internet backbones, could efficiently interconnect with these "pockets" of rural bandwidth demand.

Thus, a transparent, forward-looking broadband map--where rural communities could see, and plan, their aggregation points so that end-user demand and wholesale demand (cable, ILEC, satellite, and wireless) could be aggregated in a geographically proximate manner--would allow consumers to make themselves more attractive to would-be fiber transport providers.  This principle--of showing projected demand and promoting/facilitating cooperative planning of aggregation points--could help provide privately-funded, competitively-priced "middle mile" transport in rural areas, and promote special access competition in "underserved" urban areas.  Why?  Because even an inaccurate demand forecast can promote efficient private investment--by initiating a dialogue between aggregated demand (wholesale and retail) and private supply.  Once buyers and sellers start talking, contract terms can be written to adjust prices and terms as bandwidth develops (or fails to develop) as projected.

Investors (like our friends at Columbia Capital) are still willing to invest in competitive backhaul solutions--both wireline (like Zayo) and wireless, like Telecom Transport Management, a very-recently launched firm, headed by my old CompTel buddy Lynn Refer who has tons of wholesale experience.  I mentioned Columbia, because they are extremely savvy telecom, wireless, tech, and Internet investors, and they are an investor in both Zayo and TTM).  In short, the NTIA and the FCC have an awesome opportunity to get maximum leverage from taxpayer dollars to advance the President's plan.  As the title notes, a "map" isn't sexy, but it is well worth the agencies' time and investment in brainpower to get the map up and running as quickly as possible.

Jonathan -
Mapping is a hot topic today and is something we have been doing at RidgeviewTel for years. We map the demand, then build networks where the demand actually is. Being true rural broadband activists, we've put our some technology out there for anyone needing affordable broadband options to get mapped and be heard at: www.weneedbroadband.com or by calling 866-922-WNBB (9622). I hope the conversations start among those that can help - buyers, sellers, public, private, large and small - bring affordable options to those that need it and want it.

Michelle Heim
RidgeviewTel

Michelle Heim | April 8, 2009 2:28 PM | Reply

I'm a new reader of this blog, referred from David Ruskin's blog. I used to own an ISP and I've made many attempts to get a fiber or broadband map of PA. I've worked through economic dev agencies and elected officials and the answer always comes back that this information is proprietary and not available to the public. (Or a overpaid consultant develops a very vague map for an econ dev agency.) I'm not even sure that the PUC has the info in a coherent format. So how are the feds going to come up with this map? And will it be made public?

Laura Megill | May 22, 2009 1:25 PM | Reply

Laura,

Thanks for commenting. The project won't be easy, but $350 million allows for a lot of intensive research. The best way to do a map of existing broadband facilities, including cable, would be to promise the carriers (both wholesale and retail carriers) anonymity (I know that's not what you're looking for), and then fill in where existing wireline, and high speed fixed wireless, facilities exist. The government should be able to get most of the relevant information from the largest nationwide and rural wireline and wireless retail providers. These carriers know the wholesale vendors they use, and they know the data transfer speeds they offer their retail customers. Creating a map that includes expected demand would be the hardest part, but I also think good record keeping/follow-up on grant recipient projects, and periodic carrier surveys (on 4G wireless) could achieve this goal. Finally, I would expect this map to be made public--it will be created with public funds, and will be worthless to users (like businesses considering places to locate facilities/jobs), and providers (considering where to build) if it is not made public.

Jonathan Lee replied to comment from Laura Megill | May 22, 2009 9:01 PM | Reply

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