Technology Futures

This story says the FCC is interested in regulating VoIP [link no longer available].

BPL has the green light from the FCC. The NewsFactor has an article that goes into more detail. I have to agree with the conclusions the author makes--BPL is not likely to be a major factor for rural communities. Like DSL and cable modems, you have to have a critical mass of customers to justify the expense of the equipment.

As many had predicted (including me), the electronic voting systems are likely to be troublesome, if not downright threats to our country itself.

It is almost unbelievable, but some electronic voting systems in Florida failed within the first hours of use. So much for vendor claims of reliability.

British researchers report that they have developed a new nanomaterial that stores hydrogen at low pressure. Hydrogen storage has been a primary obstacle to the development of a practical hydrogen-powered vehicle. To get enough fuel in a tank that will take a car a reasonable distance, until now, very high pressures were required.

The new nanomaterial absorbs hydrogen at high pressure but then stores the same amount of fuel at a lower pressure.

I'm back from the Rural Telecommunications Congress Annual Conference in Spokane. It's the oldest and one of the only conferences focused on rural issues related to telecommunications and broadband.

Despite the availability of several "iPod killer" products from companies like Dell and Sony, the latest marketing data shows the Apple iPod has captured 92% of the portable MP3 music players with hard drives, and 65% of the overall portable player market.

What the iPod has that the other products don't is superb cross-platform music management/player software (iTunes is available for Windows and the Mac) and superb integration with the iTunes Music Store.

Bob Rowe, from the Montana Public Service Commission, is the first speaker in this session.

Rowe says that states have a role in assisting regional deployment of infrastructure and to coordinate facilities permitting.

Local governments have much potential, and can do training, form buying pools, encourage local government investments in infrastructure, and promote egovernment.

The FCC Section 706 Report from September, 2004 notes that the FCC defines broadband as 200 kilobits/second or faster, that the US still lags the rest of the world in broadband deployment, and that the FCC has a mission to encourage "reasonable and timely deployment."

Bill Gillis, from the Center to Bridge the Digital Divide, is the next speaker. Gillis says that we can learn from "innovation businesses."

He says that an innovation business is knowledge intensive, makes extensive use of technology, is creative and flexible with respect o workforce functions, has a global business perspective, and has entrepreneurial management.

Gillis says that states can facilitate exchange of ideas, help the last 30% of residents that do not have broadband service, can help prepare the workforce for the innovation economy, and provide flexible gap capital. Innovation businesses are driving demand for broadband in rural areas.

The final speaker is Al Hammond, from the Santa Clara School of Law and the Alliance for Public Technology.

Hammond says that large parts of rural America lack adequate broadband services, with smaller towns at a real disavantage--only 5% of towns of 10,000 population or less have broadband.

BPL (Broadband over Power Lines) is getting a lot of interest. There are more electric lines to homes and businesses than phone lines, so BPL potentially can be widely deployed. At least 5 companies are manufacturing BPL equipment.

25 million homes have no cable modem or DSL service, and satellite broadband is becoming more affordable, with Wild Blue, a new statellite company, will be offering Internet access for about $50/month. TV programming will also be available, unlike some other satellite broadband systems.

The second speaker is James Baker, from central Pennsylvania, with the Council of Governments--an 11 county area with 300 local government entities of one kind or another. Most communities are under 2500 population, and many are under 1000. Generally a very low density area--20-40 households per square mile as an average.

Broadband services are expanding in the area. However, 98% of Pennsylvania urban areas have some form of broadband, but only 25% of rural areas have some kind of service. Providers view rural areas as not good markets.

The state of Pennsylvania has funded a GIS system that provides service maps for various kinds of services available (i.e. DSL, cable modem, etc). Good tool, but data quality varies, some limitations in granularity of data.

Wireless services were considered for expansion in one county by swapping tower space on an EMS tower with space on a commercially-owned tower in another part of the county. EMS would get better radio coverage, and residents and businesses would get more access and choice in broadband.

Murphy's Law kicked in...the six inch square antenna which was to be put on the county tower would require a $5000 engineering study to make sure it would not add significant wind loading to the 200' tower. No one would pay for the study, so the project got slowed down while a variety of funding sources were pursued. The ARC came to the rescue, but the $5000 grant application required almost the same amount of paperwork as a $150,000 grant.

After the engineering studies were done, it was discovered that the county did have legal control of the tower, and that has required additional effort. Testing by the service provider has shown that nearly the entire anticipated service area will be covered.

In the meantime, the government fiber project is using wireless to expand coverage beyond the ends of the fiber. Some nonprofits are getting service.

Issues include legal problems--one person, the county lawyer, has the power to stop these projects dead in their tracks. If the cable company expands service, the wireless provider may feel it is not worth it to continue expansion--it becomes very important for government to be able to move quickly to help private businesses.

Dave Nelson is the first speaker, from Chelan County, WA. The PUDs in the state can provide wholesale broadband (not retail). Chelan decided to do a PON (Passive Optical Network) pilot project.

The project turned out well--high take rate, costs were close to estimates, and technology worked well. This led to a broader build out.

Take rates for the optical service is between 25% and 50%. By 2003 fiber had been placed by more than 3000 homes, and dial tone services were added to the network. In 2004, an additional 5000 drops are being added. Cable TV services are being studied--primarily a policy and administrative issue, not a technology issue.

By 2008, goal is to have 75% of county with fiber, or about 30,000 homes and businesses. This is an open access network with 12 ISPs offering access on the network. One provider offers fully E911 compliant telephone service. Television should be available in 2004; content and franchise issues have made this more difficult. Alcatel's B-PON system is being used.

The cable companies have been offered access to deliver programming, but so far, they have not been interested. Service providers pay the PUD for each port (Ethernet, phone line, etc) for which they deliver a service. PUD operates on a nonprofit basis. DSL and cable modem service is available in most areas of the county.

Take rates are ahead of projections. The PUD maintains the right of way and fiber distribution. The biggest problem is not being able to build out fast enough--"a million phone calls a day" about when fiber is getting past someone's house. The PUD had to design a real time Web site that shows construction progress on a daily basis to help ease the phone calls.

Wireless has been provided in some areas where it was going to be some time before fiber arrived. Customers have actually cried (true) when the fiber arrived, they were so happy. The PUD has a good relationship with the service providers (12!).

BPL pilot is also underway; there are some distance/repeater issues.

I'm at the Rural Telecommunications Congress 8th Annual Conference.

Dr. Tony Wilhelm is the Director of TOP (Technologies Opportunities Program) at the Department of Commerce.

Wilhelm is emphasizing the need to tie technology investments to identified community needs. TOP does not fund infrastructure, it funds applications that use infrastructure to improve communities.

Demand for broadband is outstripping available funds. Demand exists because every facet of communities--first responders, businesses, citizens, local government--have a need for broadband.

Small businesses are using virtual business incubators, some funded by TOP, to help these businesses expand into international markets.

TOP priorities include economic development. Special emphasis this year is on broadband wireless technologies. Wireless projects are growing very rapidly. The third priority is to support faith-based initiatives. Some faith-based projects have included entrepreneurship development, sustainable economic development, and business ecommerce training.

TOP looks for projects that use technology creatively to help communities prosper. A major stumbling block for rural communities is lack of affordable broadband service. The Sevier River project in Utah has dramatically increased available water by providing more timely information to water managers. TOP looks for "infomation" projects that don't just automate (replacing people with technology). Infomation projects go beyond automation to provide leaders and decisionmakers with better tools to manage information and to solve problems.

Technology investments have created about half the productivity gains in the U.S. in recent years.

Successful TOP projects typically include:

• Organizational capacity and leadership
• Robust partnerships
• Sustainability after the funding ends

Best predictor of success is an organization's ability to integrate new ideas and concepts--organizational maturity, not size. Leadership, leadership, leadership--solid principles and clear goals, good use of talented people, solid values clearly articulated with a willingness to take risks.

I am at the Roanoke Airport, on the way to the Rural Telecommunications Congress Annual Conference in Spokane. I have a Delta flight to Cinncinati, then switch to Northwest for the rest of the trip.

The U.S. Dept. of Labor has announced they are going to revise the way they count jobs. In the past, the emphasis was on the Payroll Survey. In this survey, employers are called and asked how many employees they have. Payroll jobs have been shrinking, hence a lot of political heat and smoke about whether the economy is improving or not. But Labor has also been doing what's called the Household Survey, in which households are polled about who is working in the household. Job counts based on the Household Survey have been increasing rather dramatically, but the government has not really factored those jobs into the "jobs" number that typically gets published and discussed widely.

If you have a self-employed husband and wife, both fully "employed" in their own businesses, those jobs never show up on the Payroll Survey. They would on the Household Survey.

This is an important issue for communities trying to measure the impact of new and diversified economic development efforts, like investments in getting affordable broadband and small business training and development. If economic developers are being rewarded for increases in payroll jobs, the community is losing out big time--that's not where the growth is.

Not only that, a factory floor payroll job is not necessarily equal to a self-employed job. A prosperous microenterprise owner with a gross business income of $150,000/year and take home "pay" of half that has a much larger impact on the economic health of the community than a $12/hour full time hourly worker, and it's probably much more than just a simple 3x factor. One economic developer I talked to thought that the impact of a single self-employed professional in the community might be worth as much as ten shop floor jobs, because of the indirect effect. Self-employed professionals are spending some of their business income on local businesses--attorneys, accountants, copy services, and other professionals in the community, lifting all of them.

The papers have been full of stories this week about the suspension of eRate payments to schools and libraries. The FCC suspended the program because of chronic abuses by some recipients of the payments. That aside, let me point out some structural shortcomings of the effort.

• Any time some companies have to become the tax collector for the Federal government and others don't, you've created a structural and competitive inequity. Erate does exactly that.
• Erate really keeps phone bills higher than they would be otherwise, and essentially increases costs for everyone. It would be interesting to do an analysis of what a typical community pays into eRate and actually gets back in eRate payments. What if it turns out most communities pay more in than they get back? Now, one can make an argument that needy communities get more help than they would otherwise. But see my next point.
• Erate payments disaggregate the ability of the community to pool their broadband demand and negotiate lower prices. Erate takes broadband anchor tenants out of the buying pool, thereby forcing other nonprofits and businesses in the community to pay more than they would otherwise. Again, what we need are some studies that look at how much broadband is being purchased by a community in total and the potential cost savings that could be gained by communitywide broadband aggregation (note: this is an activity that should be part of a technology master plan).
• The higher cost of broadband due to disaggregation puts businesses in the community at an economic disadvantage, and affects local tax payments and the ability of those companies to grow and expand job opportunities.
• Erate delays the inevitable, which is what do the eRate institutions do when eRate goes away? Erate will go away because it is a tax on legacy phone service. Legacy phone service is dead, dead, dead. I can have a voice conversation today without using ANY kind of phone company--I don't even need a VoIP service if my calling party has compatible software.

It's hard to feel very sorry for USAir and the company's financial problems. Yesterday, I saw yet another example of IT stupidity. I got to Charlotte and wanted to catch an earlier flight. The Roanoke flight that was leaving was nearly full, so I had to stand and watch the poor gate agent laboriously hand key every boarding pass into the computer. Fifty boarding passes, each one requiring several keystrokes. And virtually every boarding pass had a bar code on it.

I keep hearing a lot of scepticism over my reporting on the emerging Space Economy. This article on the accomplishment of SpaceShipOne and future plans helps illuminate the growing potential.

• Virgin Galactic, a division of Virgin Airlines, has already contracted with Scaled Composites, the company that built SpaceShipOne, to build five more five-seat versions for commercial use.
• Initial flights will continue from Mojave, California, a rural community that used to be in the middle of rural nowhere, but is now the first commercial spaceport in the world. However, Virgin Galactic has already indicated spaceports will be added as needed in other parts of the world.
• An annual X Prize competition has already been announced that will create incentives for additional companies to get into the spaceship business. New Mexico, which used to be in the middle of rural nowhere, has had its eye on space for years, and X Prize competitions will be held at the New Mexico spaceport--that translates directly into increased cash flow into the state.
• Oklahoma has formed a Space Industry Development Authority and is building a spaceport.

If you are inclined to think there are more pressing problems on earth than getting tourists into space, you are both right and wrong. This is not some pie in the sky program for rich tourists--this is the beginning of the greatest economic boom in human history.

Remember the personal computer and the Internet? Those two little innovations touched off the second biggest economic boom in human history, but what enabled those two developments was the integrated circuit.

Guess where the IC (integrated circuit) came from? The sixties era space program. Anyone involved in economic development who thinks going to the moon was a waste of money needs to go back to the history books--not to study science, but economics. The moon was a bargain, because the money spent by the government to get reliable IC circuitry for the Apollo spacecraft was paid back many times over by the resulting IT boom that started in the late seventies and ended around 2001.

Earthlink faces the same problem AOL is already struggling with--a shrinking market for dial access to the Internet. Earthlink has been staying in the black by slashing customer support and by providing barebones access, as opposed to AOL's tedious, ad-laden interface.

In the Telecomm Cities mailing list, Barry Drogin wrote:

The ugly thing here is that in the short term, these [WiFi] deployments will work,
just like shared-media Ethernet networks worked well in the 1980's. But at
some point, user density gets so high that the protocols break down. They
spend more time recovering from errors than they do transmitting good data.
For Ethernet, switches saved the day. But for wireless, that won't work.

CNet has a must read article on the digital divide. The divide the online news site discusses is the one between "digital natives" and "digital immigrants."

Digital natives are those 25 and younger, who have grown up immersed in the Internet, computers, and technology. Digital immigrants are the older group, especially 40 and above, who have had to "cross over" to the new digital world from the old, paper-based world.

Bert Rutan's SpaceShipOne won the $10 million X Prize by sending a ship into suborbital space twice in two weeks. The second of two successful flights took place today, and Mojave, California will likely become a historical milestone alongside Kitty Hawk, North Carolina.

An op-ed piece in the NY Times (registration required) provides another data point to show that outsourcing jobs to other countries is not the national crisis the mainstream media has tried to make it.

The author provides data that shows the U.S., as other studies have suggested, is actually showing net gains from outsourcing. That is, outsourcing low pay, low skills jobs creates other business opportunities that more than offset the direct job loss.

As the author notes, this data is not a great comfort to a region that has lost those jobs. Factory floor workers who have had their jobs outsourced need training and help to be able to compete for the higher wage, higher skill jobs that are being created.

For rural communities, it's another indicator that business as usual just won't work. The Old Economy jobs being lost cannot be replaced by more aggressive industrial recruitment, better brochures, or a new logo--all things I've seen promoted as "proof" of a revitalized local economic development program.

What does work? Here are some things that are important in the Knowledge Economy:

• Recognition and acceptance that most new jobs are likely to be created by businesses already in your community. Action step: Diversify your economic development program into three parts: continue industrial recruitment (30% of resources), but add education, training, and support of existing local businesses (40% of resources), and create an entrepreneurship development program to create new, local businesses (30% of resources).
• Tightly couple technology council, chamber of commerce, and economic development efforts. In some communities, all three entities are working in stovepipe efforts with little or no cooperation and are often competing with each other for the same community support and resources. Local leaders should withold funds if these groups do not work together on substantive projects.