Technology Futures

Wales has apparently been following what Nigeria has been doing with broadband--using post offices as anchor tenants to bring "big broadband" connections into small towns.

New Mexico's rise to dominance of the space industry in the U.S. may become the fodder of economic development case studies for decades. The State of New Mexico just announced that it has signed a twenty year lease of facilities at Spaceport America with Virgin Galactic. Virgin Galactic says it intends to locate its world headquarters at the facility, bringing with it jobs and tourism.

New Mexico started down this path years ago, when the whole idea of spaceports seemed a bit kooky. But it has been a textbook example of setting a bold vision, funding it properly, and sticking with it until results begin to pay off. Many communities and regions have great ideas, but fail in execution by not funding them properly and/or not staying with them long enough to see the impact.

Virginia is another state with big plans for a commercial spaceport. The Eastern Shore of Virginia has been working with NASA for sometime to convert the obscure Wallops Island rocket launching facility into a mixed use spaceport that supports both government and commercial operations. Not surprisingly, broadband is playing a key role, and NASA and the two counties on the lower Delmarva Peninsula have formed the Eastern Shore of Virginia Broadband Authority, which is about to break ground on a major fiber backbone to support spaceport operations. The Broadband Authority is also beginning work on a community broadband fiber to the home network in the very rural area because the influx of knowledge workers, scientists, and engineers need business class broadband services at home.

2008 will likely be remembered as the year of the tipping point for newspapers. A new study by the Pew Foundation indicates that more people now get their news from the Internet than from newspapers, a sharp increase over 2007. 59% of young people (under 30) use the Internet as their main source of news and information, a figure that has doubled in the past year.

This has important implications for communities and community leaders, who are often more comfortable communicating via press releases and TV news conferences. Younger voters, literally, are not tuning in to traditional news sources. Unless communities find ways to connect with younger citizens regularly and consistently using newer information channels, community decision-making will become more and more difficult.

I have long advocated a revenue share model for community broadband, in which a single community-owned digital infrastructure is made available to private sector providers to deliver services like voice, video, and Internet access to customers. Service providers would pay a share of their revenue to the network to cover the cost of build out and maintenance.

Critics of this approach argue that it is too "risky," and "unproven," although it has worked successfully for years in other countries.

We have a data point that hints that this can work. Apple has used exactly this approach for marketing software for the popular iPhone, and the results have been nothing short of astounding.

Apple made and continues to make a huge investment in the basic infrastructure needed to market and deliver applications to individual iPhones--the iPhone App Store. Software developers can place their software in the store for free, and pay nothing until they make sales. They pay Apple 30% of their revenue, so an application selling for a dollar means Apple gets thirty cents to cover the cost of hosting that application in the App Store.

This approach is exactly the same as an open services broadband network:

• A single owner/manager creates a fully integrated, high performance infrastructure and makes it available to any provider that meets minimum standards. This aggregates a very large marketplace of potential customers.
• Providers have a very low cost of entry into this aggregated marketplace, which preserves business capital and allows companies to spend more on innovative products and services.
• The low cost of market entry attracts business start ups and levels the playing field, with no "big company" advantage and extensive competition as the market matures.
• Extensive competition keeps prices low, a major benefit for customers.
• Extensive competition also encourages innovation, because highly differentiated products or services can support higher prices.
• A single infrastructure owner/manager provides a level of quality and performance beyond the capacity of any individual company to deliver.

The key concept is shared infrastructure. For both broadband networks and the software marketplace, everyone wins, including service providers and software developers, because costs are lower across the board. In the case of the iPhone marketplace, it is much less expensive for a start up developer to place a product in the Apple App Store than to design and fund a stand alone marketing effort. In the case of broadband, it is much less expensive for a service provider to deliver services like Internet access over a shared network, despite increased competition, because the costs are so much lower than building a private (non-shared) network and because the marketplace of potential customers is much larger.