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Blair Levin: From the Early Adopter's Dilemma to the Game of Gigs - Building the Information Rich Commons (Gigabit City Summit)
This document summarizes Blair Levin's presentation on building an "information rich commons" through ubiquitous broadband access. Levin discusses how economic value is shifting from physical goods to information, and that assets critical for future progress will include abundant bandwidth networks, smart sensor networks, and a digitally ready population/government. He outlines a vision of an "information rich city" enabled by gigabit fiber and wireless networks, the Internet of Things, open data, and universal broadband access. Levin predicts that in 5 years there will be two types of cities - those with cable vs copper, and those with cable vs fiber networks, and shares early data showing benefits of high-speed broadband for housing values, economic attractiveness, and
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Blair Levin: From the Early Adopter's Dilemma to the Game of Gigs - Building the Information Rich Commons (Gigabit City Summit)
- 1. From the EarlyAdopter’s Dilemma to the Game of Gigs: Building the Information Rich Commons Blair Levin Brookings Institute Metropolitan Policy Project Kansas City – Gigabit City Summit January 13, 2014
- 2. The Arc ofHistory
- 3.
- 4. A Commons inOur Time
- 5. What assets wouldbe critical for economic and social progress in the decades ahead? Known • Water? • Electrical? Unknown • Distribution Center? • Airport? • Technology Focused University? City Thinking in 1914
- 6. The Future Economic valuecreation, which for several millennium was based on the manipulation and distribution of physical objects, increasingly will be based on manipulating, transporting, and analyzing bits of information.
- 7. What assets willbe critical for economic and social progress in the decades ahead? Known • Ubiquitous, affordable and abundant bandwidth networks • Device, Sensor and M2M networks that provide actionable intelligence • A digitally ready population and digitally ready city government City Thinking in 2014
- 8. The Information Rich Commons Bandwidth • Never aconstraint to innovation, economic growth, social progress Tools • Ubiquitous, cheap, smart sensors providing actionable intelligence People • A digital ready population • A digital ready city government
- 9. The Information Rich Commons Networks • Gigabit Fiber •Muni Wi-Fi Devices • The Internet of Things • Open Data • Big Data People • Universal Affordable Access • Digital Readiness • Responsive Government
- 11. The Information Rich City Networks • GigabitFiber • Muni Wi-Fi Devices • The Internet of Things • Open Data • Big Data People • Universal affordable access • Digital Readiness • Responsive Government Today’s Focus
- 12. Prediction: In Five YearsThere Will be Two Kinds of Cities Cites with Cable v. Copper Cities with Cable v. Fiber
- 13. Prediction: In Five YearsThere Will be Two Kinds of Cities Cites with Cable v. Copper Cities with Cable v. Fiber Housing
- 14. Early Data: IncreasesHousing Values The Impact of High-speed Broadband Availability on Real Estate Values: Evidence from United States Property Markets By Molnar, Savage & Sicker University of Colorado, August 15, 2013
- 15. Prediction: In Five YearsThere Will be Two Kinds of Cities Cites with Cable v. Copper Cities with Cable v. Fiber Economic Attractiveness
- 16. Early Data: IncreasesAttractiveness as Business Location
- 17. Prediction: In Five YearsThere Will be Two Kinds of Cities Cites with Cable v. Copper Cities with Cable v. Fiber GDP Growth
- 18. Early Data: IncreasesGDP “Our study suggests that communities where gigabit broadband was widely available enjoyed higher GDP, relative to similar communities where gigabit broadband was not widely available. The 14 communities with widely available gigabit broadband that we studied enjoyed over $1 billion in additional GDP when gigabit broadband became widely available, relative to communities where gigabit broadband was not widely available.”
- 19. The Early Adopter’sDilemma: No Map of Path to the New World
- 20. Two Questions What Networkswill Market Forces, Left Alone, Produce? What Have Municipal Efforts To Date Produced?
- 21. Topics for Today WhatNetworks will Market Forces, Left Alone, Produce? What Have Municipal Efforts To Date Produced?
- 22. In the Summerof 2009, the National Broadband Plan Team asked CITI to provide a report on all publicly announced broadband deployments for the years ahead
- 23. The Data wasDeadly
- 24. For the FirstTime Since the Beginning of the Commercial Internet there was no National Carrier with Plans to Deploy a Better Network than the Current Best Available Network
- 25. Report suggested, andexperience confirmed, current market forces would not drive deployment of world leading wireline networks in the U.S. 25
- 26. For 85% ofthe Country, Cable had the Faster Network and the Cheapest Upgrade Path
- 27. The Future LookedLike a Cable v. Copper Competition that would be Premised on Allocating Scare Bandwidth Instead of Building on Technological Advances to Deploy Abundant Bandwidth
- 28. Cable v. Copper BusinessModel: Allocating Scarce Bandwidth Consequence for Innovation: Buffering drives desire for higher priced tiers; therefore upgrades follow innovation Core Proposition: Harvesting from Past Investment Cable v. Fiber Business Model: Deploying Abundant Bandwidth Consequence for Innovation: Scales to higher levels of video (4k, 8k), thereby upgrades enable innovation of higher performance knowledge exchange. Core Proposition: Future Proof How do we move from here to here?
- 29. The Prisoners’ Dilemma AWay to Understand the Challenge
- 30. The Prisoners’ Dilemma ThePrisoners Are Both Better Off if They Trust Each Other Not to Confess
- 31. The Prisoners’ Dilemma ThePrisoners Are Both Better Off if They Trust Each Other Not to Confess The Cops’ Mission is to cause a “Defection”
- 32. The Prisoners’ Dilemma Substitutethe Idea of Investing in Next Generation Deployments for Confessing and Harvesting Sunk Costs for Staying Quiet
- 33. The Prisoners’ Dilemma Cableand Telcos Are Both Better Off if They Trust Each Other Not to Deploy NG Networks
- 34. The Regulator’s Dilemma Howto Cause a Defection?
- 35. Topics for Today WhatNetworks will Market Forces, Left Alone, Produce? What Have Municipal Efforts To Date Produced?
- 36. Three Different Drivers SupplySide Driven (Google Fiber v. Incumbents) Demand Side Driven (Gig.U, etc.) Small Cities (Federal Money, Market Structure Driven)
- 37. C + O> (1-r)R + SB + (-CL) C – Capital Expenditures O– Operating Expenditures r – Risk R- Revenues SB- System Benefits (Benefits that drive increased revenues outside the communities where the new or incremental investments are made.) CL- Losses due to competition Currently, the private investment equation usually looks like this: 37 Current Math: Returns Do Not Justify the Investment Costs Benefits
- 38. C + O< (1-r)R + SB + (-CL) But how do we do that? The path forward: change the math 38
- 39. Reduce CapEx, OpEx, risk UseExisting Assets More Effectively Reduce CapEx, OpEx, risk Regulatory Flexibility and Efficiency Reduce risk and raise revenues Aggregate Demand Key Strategies 39
- 40. • Build toDemand Model • Access to ROWs, Facilities • Reduce Regulatory Time Reduce Cap Ex • Access Payments • Reduce Ongoing Regulatory Costs • Utilize Existing Billing Platforms Reduce Op Ex • Build to Demand • Standardize Functions Across Areas, Vendors Reduce Risk • Demand Aggregation • Marketing Platform • New Services Increase Revenues • Distributed Innovation • Seeding Long-Term Growth Increase Ecosystem Benefits Tactics within existing powers of communities 40
- 41. Google Starts SpreadingInformation Commissioned by Google Published 2013
- 44. Winston-Salem* Augusta Dallas Fort Lauderdale Greensboro Jacksonville Houston Miami Oakland Chicago* Austin Kansas City Raleigh-Durham* Charlotte Nashville Atlanta* SanAntonio San Jose Provo Seattle* Denver Sioux Falls Spokane Tucson* Columbia Phoenix* Las Vegas Omaha The Unfolding “Game of Gigs” (as of August 5, 2014) *Gig.U Community **Note: Cox plans to eventually build a gigabit throughout its footprint, but is starting with these cities. ***Category not comprehensive Independent Projects*** Cleveland* San Francisco Chattanooga Leverett Longmont Wilson Urbana-Champaign* Gainesville* Burlington Bristol Chanute Blacksburg* St. Louis San Diego Los Angeles Salt Lake City Portland Jefferson City Colorado Springs Albuquerque* Minneapolis - St. Paul Orlando **
- 45. But what aboutthose communities who are not on Google’s Map?
- 46. GIG.U FALL 2014STATUS CHART University Community State Method Status Virginia Tech Blacksburg VA PPP Downtown Gig Zone Michigan State East Lansing MI PPP Local ISP Offering U of Florida Gainesville FL Local Utility Innovation Zone Network Built U of Louisville Louisville KY RFP 3 New Entrants Building Gig Networks U of Kentucky Lexington KY RFP Pending Texas A&M College Station TX RFP Incumbent upgrade to Gig U of NC Chapel Hill NC NCNGN Deal with T, Negotiating with GF NC State U Raleigh NC NCNGN Deal with T, Negotiating with GF Duke U Durham NC NCNGN Deal with T, Negotiating with GF Wake U Wake-Forest NC NCNGN Deal with T ASU Phoenix AZ GF Negotiating with GF Georgia Tech Atlanta GA GF Negotiating with GF U of Chicago Chicago IL Legal Reform Telco Upgrading Network U of CT Storrs, New Haven, others CT State RFP RFP in Process U of Missouri Columbia MO RFP Developing RFP U of Montana Missoula MT Study Study Complete; developing response U of New Mexico Albuquerque NM RFP Developing RFP U of Ill Cham/Urbana IL RFP Local ISP Developing Network Case Western Shaker Heights OH PPP Pilot Project U of WV Morganton WV PPP Spectrum Based Pilot Operational U of Washington Seattle WA Legal Reform Telco Upgrading Network U of Maine Orono ME PPP In Discussions, Spin Off Projects
- 47. Zone • Cleveland • BetaBlock • Blacksburg • Gigabit WiFi Zone • Morgantown • Transit Areas Using White Spaces
- 48. Zone (Cleveland, Blacksburg and Morgantown) District •Gainesville • Innovation District in Partnership with University, Utility, and Real Estate Developers
- 49. Zone (Cleveland, Blacksburg and Morgantown) District(Gainesville) Neighborhoods and City • Lansing • Community Strategies • Louisville • RFP with Three Providers • Champaign- Urbana • RFP with Single Provider
- 50. Zone (Cleveland, Blacksburg and Morgantown) District(Gainesville) Neighborhoods and City (Lansing, Louisville, and Champaign-Urbana) Region • North Carolina NGN • Joint RFP with Six Communities and Four Universities
- 51. Zone (Cleveland, Blacksburg and Morgantown) District(Gainesville) Neighborhoods and City (Lansing, Louisville, and Champaign-Urbana) Region (North Carolina NGN) State • Connecticut • RFI Organized by Major Cities in which All Communities are Invited to Participate
- 52. Zone (Cleveland, Blacksburg and Morgantown) District(Gainesville) Neighborhoods and City (Lansing, Louisville, and Champaign-Urbana) Region (North Carolina NGN) State (Connecticut)
- 53. Key Question forCity Officials Are the Networks Serving Your Community Today Sufficient for Ten Years from Now?
- 54. Three Key Insights 1.Everything that happens in your city ten years from now will be enhanced or degraded depending on the quality of the networks. 2. Many things you are doing today or will do in the next few years will affect the quality of the networks you have ten years from now. 3. Broadband is bought as a community. While Individuals think they make a choice, the choice is predetermined by choices the community makes.
- 57. 86% of the experts believethere will be “new, unique and compelling technology applications that capitalize on significant increases in bandwidth in the United States by 2025.”
- 58. Bottom Line Cities with Cablev. Fiber Cities with Cable v. Copper
- 59.