Friday, Jun. 17, 2011

Cities Rush into High Speed Internet

Last year, when Google announced it wanted to build and test-drive a new hyper-speed fiber optic network in a U.S. community, more than 1,000 cities applied. Municipal officials from everywhere offered everything from tax abatements to free advertising. Topeka, Kansas briefly changed its name, officially, to "Google." In March, Google chose Topeka's neighbor, Kansas City, Kansas to be the home of its new super-fast voice, video and data system. But the competition for Google's attention underscored an important fact: Cities around the country have come to view high-speed access to the Internet as infrastructure that's as critical to their future as interstate highways were in the past.

Last year, Chattanooga's city-owned utility began offering an ultra-high-speed Internet service of up to one gigabyte a second, or 200 times faster than the average broadband speed in America. City officials say building the service, which was funded in part by federal stimulus dollars, is a component of an economic plan that they hope will bring jobs. Denver, too, has pushed to boost high-speed access across its metro. City officials there say broadband capabilities give them the leverage to pitch companies about relocating parts of their operations — say, human resources, accounting or customer service — to Denver instead of going the long-shot, entire-company route. "It has made us much more competitive with other markets, and that led to a lot of tech growth," says economist Richard L. Wobbekind of the University of Colorado in Boulder, Colo.

The numbers tied to broadband's economic impact are just beginning to be tallied up. Broadband-related enterprises alone contribute $900 billion a year to the U.S. GDP. And that doesn't count all the business that other businesses do on the web. Annual technology investment in the U.S., which is linked to broadband in one way or another, jumped from nearly $350 billion in 2003 to more than $500 billion in 2010, according to the Advanced Communications Law & Policy Institute. Broadband capital investment rose 4.2% in 2010 to $66 billion, up from $63 billion in 2009, according to a new data series compiled by US Telecom and the Yankee Group. The study, which also examined overall spending for the past 15 years, found that broadband providers invested more than $1 trillion on networks from 1996 through 2010, averaging more than $65 billion a year in the last eight years.

More important than the actual spending, though, is the fact that technology companies usually attract a highly educated and entrepreneurial workforce, which can lead to new start-ups and more jobs. High-speed Internet access could be a first step in attracting those workers. "High-speed Internet access gives people the ability to work from home and to work with people all over the world," says Wobbekind. "That's important when it comes to working conditions and lifestyle choices, especially for the type of sophisticated people drawn to technology."

Indeed, President Obama has said that boosting Internet speeds around the country is important to increasing the U.S.'s global competitiveness. The U.S., at 4 megabits per second, currently ranks 15th in the world in terms of average Internet download speeds.

Google's Kansas City network is expected to provide Internet access of about one gigabyte a second, similar to Chattanooga. At that speed, you can download a high-definition full-length movie in less than five minutes. It is estimated that the project will cost Google from $30,000 to $150,000 per mile to build, according to telecom executives who have constructed similar systems for other companies. Google so far hasn't said how many miles of fiber-optic cable it plans to put down. But Kansas City is 125 square miles, so the project won't be cheap.

In order to lure Google, Kansas City officials promised to fast track building permits for the project. Another selling point was that Kansas City already has underground conduits that could immediately host miles of high-capacity fiber-optic cable. Additionally, the Kansas City, Kansas, part of the Kansas City, Missouri, metro area is relatively small, with 150,000 residents.

Of course, even as cities ramp up their spending on Internet infrastructure, it's not clear the strategy will bring in jobs. Already the euphoria of being named Google's high-speed choice is fading. Google has no plans to hire a permanent workforce in Kansas City, and if a data center is needed for the project, it is likely to be located elsewhere. What's more, Google plans to expand the new network to Kansas City, Missouri, potentially diminishing the boost Kansas City, Kansas, will get from the project.

Nonetheless, KCK officials believe the Google initiative will help shed the city's dreary, abandoned-factory image by sending out one crisp message: We're open for business. "Broadband is fundamental to our future for our schools, our health-care system, for businesses of all sizes, for entrepreneurs," says mayor Joe Reardon. "We're hoping that broadband will do for Kansas City what Interstate-70 and I-35 did for the region."