How Broadband Transforms Local Economies

a basic explanation of broadband technology, how it creates wealth, and how it gives some places a competitive advantage over others

BY DR. GREG LAUDEMAN

Executive Officer and Founder, Eduity, LLC
Senior Consultant, Magellan Advisors, LLC

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What is broadband and why should you care? 

Broadband is simply high-speed internet access. Rather than a single thing, broadband is a set of services and technologies that emerged in the late 1990s, grew into an essential service for most people, and continues to evolve. You should care about broadband if you want to live and work in the 21st century because your success depends on it.

Broadband basics

Broadband carries information, measured in bits, to and from devices—computers, smartphones, and most anything else—into the internet, which is essentially a bunch of computers interconnected via the Internet Protocol. The minimum speed for a service to be officially considered broadband, according to the Federal Communications Commission, is 25 megabits (100,000 bits) per second (Mbps) from the internet to a connected device, and 3 Mbps from the device to the internet. 

The internet is not a specific thing, and there are many ways to connect to it; therefore, the actual rate of information moving back and forth from a device can vary greatly. For example, your smartphone can connect to the internet via cellular data (“4G”) or Wi-Fi, each of which must be connected to “backhaul” into the internet. While Wi-Fi is generally faster than cell data, neither are “broadband” per se. 

Broadband can be provided over Wi-Fi, but Wi-Fi is usually used to connect a device to broadband indirectly. Cellular data does not qualify as broadband but can be faster than some nominally broadband services. Actual speed depends on the number of “hops” between the device and the core internet, the raw capacity and utilization of intermediate connections between those hops, and the service itself (some services arbitrarily slow down for non-technical reasons like, “you need to pay us more”).

Generally, fiber-optic based broadband provides the fastest speeds. Indeed, the information carrying capacity of an optical fiber is conceptually unlimited. Practically speaking, fiber broadband provides “gig” service (1 gigabit (1,000,000 bits) per second, or Gbps), although the speed can be much faster (or slower). The carrying capacity is determined by the gear on the ends of the fibers, and by providers’ policies, but is theoretically unlimited. Fiber networks must be carefully structured to get the greatest capacity for the most users. Once in place fiber networks are very “future proof” and support other types of connections.

Broadband can also be delivered by coaxial cable, which is the “cable” in cable TV, digital subscriber line (DSL) over twisted pair telephone wire, and a variety of wireless, including cellular, satellite, and Wi-Fi. Cable and DSL, even more so, have limited capacity because they run over copper wire. Wireless speeds are based on the amount of radio spectrum and how they use it. Wireless is evolving quickly while cable and DSL are basically mature. All of these types of broadband use fiber for backhaul.

Because telephone wires were deployed to practically all places, DSL is most widely available, although it doesn’t reach everywhere due to distance limitations. It is also slower and not really broadband. Cable was mostly deployed to developed areas, and fiber is currently limited to relatively few, typically more affluent and urban areas.  Wireless often fills in the gaps, particularly in more rural areas, with satellite as the “last resort” because its performance limitations. Basically, where you live determines how much speed you get: The more rural your location, the slower and more expensive your service will be.

The Thrive region has a pastiche of broadband. Some cities, including Chattanooga, Dalton, and Scottsboro were leaders in municipal broadband, and have fiber-based services widely available. A few communities in the region, such as Trenton, have independent telephone companies that have aggressively invested in fiber broadband, including into their most rural areas. Several electric co-ops in the Thrive region—Sequatchee Valley EMC, for example—are deploying fiber networks for broadband. Effectively all communities have cable broadband at least within their populated areas. DSL extends into less densely populated and more rural areas but there are numerous pockets around our region that can only get internet access via satellite. It remains to be seen how and where the alphabet soup of new wireless broadband technologies—5G, CBRS, DSRC, LTE, mmWave, White Space, etc.—get deployed.

Broadband is economic power

Enough of the technical stuff. Why is broadband important? Broadband is important because it moves a lot of information very fast to whoever, wherever. That information can take almost any form: a picture, text, video, sound, dates, and times. Broadband is also important because it transforms local economies: how and what we produce and consume. People and enterprises in places with better, faster broadband can produce valuable goods and services better and faster than people and enterprises in places with slow or no broadband. Broadband gives places a competitive advantage over places that don’t have it.

Here’s how that works. The value of goods and services—how much people will pay minus the costs—depends on their benefits. Benefits for people come in the form of autonomy, belonging, and competence, all of which translate into money. All three of these things involve getting, using, and sharing information, i.e., communication. Good information eliminates uncertainty, enabling actions that generate results and valued outcomes. 

The value of whatever you produce and sell depends on the quality of your information, which degrades quickly. The same goes for the value of whatever you consume. A concert ticket with the wrong time on it, for example, is worthless. In fact, it has negative value because missing your flight or show can create other costs. Information quality depends on the number of sources to ensure it is adequate and correct. Too much information can be a problem as it must be processed into usable knowledge. Sorting, filtering, and context make information meaningful.

Broadband delivers lots of information from many sources, and it provides means for processing that information into something useful. Software applications that make life easier, more fulfilling, and safer use a lot of bandwidth. Consumers can find producers easier, and producers can create and deliver products and services much more efficiently and flexibly. Online product/service delivery replaces a lot of manual labor with software but it also creates new, higher-paying and more relationship- and skill-intensive jobs. Digital Content Manager, System Administrator, and Web Developer are a few examples of the jobs directly tied to broadband. 

Consider just a few applications. We can now purchase practically any consumer good online and have it delivered most anywhere within days. Patients can have their conditions checked and consult a specialist without leaving their homes. Work assignments can be delivered to the closest person—possibly not even an employee—on-demand. Devices, tools, and entire systems can be flexibly configured and controlled to respond to individual needs and preferences. Processes can be securely tracked by anyone from anywhere, whether it’s a pizza delivery or a police raid. Many of the things we take for granted with broadband were practically impossible only a few decades ago.

All of the applications run over broadband and all of the technologies behind it were developed somewhere. The ones that are successful—generate a lot of wealth—are used in other places, by other people, to do things and make money. People, institutions, and enterprises in places without broadband are and will be left out. Those places where people, institutions, and enterprises use broadband the most will generate the most wealth, and they will be the coolest, healthiest, and safest places, too. 

Critical issues for getting and using broadband

A core issue with broadband, as with so many things, is who owns the assets. Private companies currently own most broadband assets. This is great as long as there is competition that results in great prices and service. Unfortunately, options are limited, much of the infrastructure is outdated, and companies have used their market position to block competitors while investing little themselves. These companies suck huge amounts of capital out of local economies to drive shareholder value. 

Local governments and public institutions, which are funded by taxpayers, typically pay hundreds of thousands or millions of dollars a year for connectivity. Some places are directly investing local public capital to not only eliminate recurring costs but to provide for much more abundant, fast, and flexible connectivity. There are even numerous ways in which consumers can basically provide their own connectivity, especially when large enterprises and institutions participate. 

As technological options and requirements increase, the options for broadband and the potential benefits will also increase. Technology leadership and talent are the keys to getting the greatest value from broadband. Individual consumers or even institutions and large enterprises can’t do this. Broadband impacts entire regions. Broadband transforms local economies as it activates and enables capable people to do amazing things. Figuring out how to get better broadband is the first step, but it just lays the foundation. It is continuous improvement in connectivity, empowering as many people as possible, and better use of the technology that really transforms economies.

What this all means for the Thrive region

If the Thrive region hopes to have widespread development, with growth in population centers reflected in rural areas, minimizing traffic congestion and protecting our natural assets, we need broadband everywhere. Given the region’s economic structure and geography, the particular type(s) of broadband available will differ across the region, and it will require substantial private AND public investment. 

If we want to compete as a region and carve out a unique niche in the global economy, our local public services must be fully digitized. As discussed above, this enables them to be more efficient and effective, serving the people better and more economically. This not only accommodates tech-savvy people, it enables local institutions to reach disadvantaged and rural populations, and positions the public sector as an “anchor tenant” for broadband investment.

The workforce must follow suit. Broadband provides easier, less costly, and more flexible access to jobs but also shifts (and increases) skill requirements. Luckily, the technology also makes it easier to develop new skills and get educated. Of course, people can’t use broadband to build skills and get higher-paying jobs if they don’t have it, which goes back to my first point about what this means to the region: We can’t leave anyone out.

Our region is very strongly positioned for broadband-based development and growth, due in large part to the leadership of local electric utilities and independent telcos. But this means everyone else has to step-up. If you aren’t using broadband to somehow transform your personal economy, you are missing out. You’re also holding everyone else back! The bottom line is that broadband can be a power tool for sustainable economic growth but, as with any power tool, it has to be used well and wisely for maximum impact. 

 
 

 
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Dr. Greg Laudeman is a leader in innovative, talent and technology-based economic development strategy, research, and implementation. Greg has worked with communities around the country to get and use technology for business and workforce growth. He is currently working with Magellan Advisors, LLC, a leading broadband and Smart City/Smart Utility consultancy. Greg’s startup company, Eduity, is transforming workforce with a free, easy-to-use tool for employers to inventory their jobs. Greg has a doctorate in Learning and Leadership at the University of Tennessee at Chattanooga, master degrees in Public Policy from Georgia Tech and Telecommunications from Michigan State, and a bachelor degree in Mass Communication from UTC. He’s a long-time Chattanooga resident active in the local outdoor recreation and music scenes.