Technology Futures

If you are an economic developer and have not been paying much attention to the "old" utility service we call electricity, you may want to continue reading. A Samsung chip plant had a power outage that lasted only one day, but cost the company $43 million dollars in discarded product and lost revenue.

These days, I am in more and more communities that are beginning to look at redundancy not just in terms of data cables, but also in terms of electric service. Businesses are now keenly interested in business parks that offer dual electric feeds coming from different parts of the local electric grid. If power from one substation is lost for some reason, the power coming in from a different substation can keep businesses going.

There are many articles and commentary on the recent announcement by the Governor of Ohio to create a statewide broadband network. But it is not clear what the impact might actually be. If you read the Executive Order closely, what you see is that Ohio, in many ways, is just starting to catch up to other states.

Most of the statewide initiative simply requires Ohio state agencies to start buying off the statewide network, instead of making their own deals. States like Iowa and Virginia did this many years ago. It also creates a Broadband Council, which other states, like Virginia, have also announced. But statewide task forces rarely have the opportunity or the authority to actually get things done. These groups can make use of the bully pulpit to raise awareness of a problem, but even then, the groups often become captured by political realities.

Because so many states have had operational statewide networks, we have had the opportunity to learn something about them. What typically happens is that the networks have a substantial initial impact by lowering the cost of broadband for schools and state agencies, especially in rural parts of a state that might be otherwise underserved.

But small and medium-sized (that is to say, innovative) broadband providers rarely get these big contracts. Inevitably, the big incumbent providers get the contracts. Once in place, the rates tend to decline only slowly, and so after the first big price reduction, prices tend to stagnate.

But here is the worst problem. From a community perspective, statewide networks are a disaster. Schools, libraries, and state agencies are the anchor tenants of a communitywide or regional open network. Without those government customers paying into the community network, it becomes much more difficult to make a business case for such a project.

So schools and state agencies in a rural region get lower rates, but the rest of the community, including businesses, seldom see any benefit, and in fact, are often worse off. Statewide networks can cripple economic development prospects. There is some language in the Ohio Executive Order about allowing non-government connections, but when state agencies and universities are calling most of the shots for a statewide network, business interests usually don't get appropriate attention. And in fact, over time, rates on the statewide network may be higher than what businesses can do in the private market. We don't really want government bureaucrats negotiating rates and services for businesses, and that is way statewide networks are usually run.

What is the alternative? Get local and regional initiatives started that use the "digital roads" approach, where government's role is limited to building a high performance digital road system, and let customers buy directly from private sector providers, instead of putting state level bureaucrats in charge of prices. States have an important role to play, but as I have said for many years, states should be building inter-community digital roads to connect local and regional efforts, using the same open access, open services model.

Senator Ted "the Internet is made of tubes" Stevenson is at it again, calling for "universal" filtering of the Internet to protect us all from pornography. The Internet pornography problem is a serious one, and deserves serious attention, but Senator Stevens is not making a serious proposal.

First, the Federal government has no business filtering and checking everything we look at; it is as if the government planned to put an agent on our doorstep and insisted on looking at every book, magazine, and letter that we tried to carry in the house, and had the power to arbitrarily remove any item without explanation, including the pictures of your one year old niece in the bathtub that your sister in law sent in the mail (it would classified as child pornography).

Second, Senator Stevens reveals that his understanding of the Internet has not evolved much past the "tubes" analogy. There is no one central location for the "Internet." It is everywhere and nowhere. It does not stop at national boundaries. U.S. laws have no effect on servers and content providers in other countries. Stevens' proposal smacks of political grandstanding ("...it's for the children") at a time when there are much more serious issues that beg for attention.

Those of us who have been on cable or satellite connections for our TV service for many years can easily forget that a lot of people still watch TV the old-fashioned way, from signals coming through the air from a nearby TV tower. In just about a year and half, all those TVs will stop working because Congress has mandated a switch to digital TV. The old TVs will need a converter box that is able to pick up the new digital over the air signals.

Nationwide, it adds up to tens of millions of viewers. In the end, it is time to make the switch. The change will free up radio frequency spectrum that can be used for improved public safety communications systems, and other portions of the spectrum will be able to provide broadband services at much longer distances than systems can provide now (at relatively low bandwidth). The new data services will provide better coverage for mobile devices and fewer towers will be needed.