Technology Futures

Here is yet another article proclaiming that the Internet will run out of bandwidth in two years. This article is not all that different than articles I read in 1997, 1999, 2001, 2003, and 2005. I would have to check, but I bet many of them were written around this time of year--the holiday season. Vendors save new product announcements for after the New Year, local projects slow down, and for the next six weeks or so, there is not a lot of technology news. So the writers whip out a calculator, do a little arithmetic, and proclaim that that the Internet "could" run out of bandwidth. And my dog "could" grow wings and fly.

As demand increases, companies that are making money from providing backbone connectivity have more to spend on upgrades because business keeps increasing. The good news is that fiber remains a safe bet; want to increase the capacity of your fiber network by a factor of 10? Just replace the equipment on the ends of your current network. Try that with roads, water systems, or sewer. You can't increase the capacity of roads by replacing the traffic lights, and you can't increase the capacity of a water or sewer system by replacing the pumps. But it is an easy upgrade on a fiber network.

This article suggests that the iPod may be the new TV and radio. The writer talks about how she is regularly downloading radio and TV programs to her iPod and watching them on her train ride home every afternoon from the office.

In Apple's last round of largely unnoticed iPod upgrades, one of the things it did was change the size of the iPod nano display to a widescreen format and added the ability of the tiny music player to play back video. This change makes the tiny nano much more versatile, and gives it the ability to behave much like a portable DVR (digital video recorder). While it can't record directly from a TV, it is quick and easy to grab free and fee-based TV and video programs from the iTunes Store and watch them later.

Unlike other content strategies that require either a single purpose device (like the Slacker Portable) or a never-ending subscription fee, the combination of the iPod and the iTunes store puts the user in complete control.

Both houses of Congress have passed the Community Broadband Act of 2007. The bill fixes a defect in the 1996 Telecom act that says "any entity" may offer telecom services. The meaning of "any" was challenged repeatedly in state level lawsuits, and some misguided state legislatures went even farther and made it illegal for local governments to start telecom service offerings.

In general, I think it is better for communities to invest in "digital road systems" and let the private sector use those digital roads to sell telecom services directly to customers. This creates a public/private partnership that does not put local government in direct competition with the private sector. But communities should still have the option of offering retail telecom services if they think that is the best way to proceed. In some areas, that may be required for certain services, like TV programming, because of market size.

I spent a good part of the day with a group of economic developers in a major northeastern state. We had some businesspeople in the meeting as well, and listened as two business owners described their frustration with the lack of connectivity outside of major metropolitan areas. In one case, the business owner had moved his staff and business headquarters from the New York metro area to a small city with a lower cost of living and great recreational opportunities near by (relocation based on quality of life issues, not water and sewer availability). The other business was moving many of its operations centers into rural areas for much the same reason.

But both had broadband horror stories. One business, located in a downtown area, said they needed a fiber connection to service provider facilities a block away, but thought that the city permitting process might take as much as a year. The other business, which had moved from the New York area, had to leave their data servers there because they could not get redundant data connections to an appropriate facility in the more rural small city.

Both stories illustrate the shift in economic development. The old real estate truism about the three most important issues for a business ("Location, location, location") has changed to "Location, location, connectivity." There is a growing trend among medium and large businesses, after 9/11 and Katrina, to decentralize operations and to have multiple data centers to ensure that the business can keep running after a local emergency. Communities that have the right connectivity options and good quality of life will have lots of opportunities.