Bringing Internet connections up to speed
In the world of high-speed Internet connections, all cities are not equal. Some densely populated metropolitan areas have telecommunications companies competing for the right to install a broadband infrastructure. In other areas, businesses and residents are logging on to the Internet at finger-tapping speed using dial-up methods.
Municipalities from rural cities to large metropolitan areas are recognizing that the road to the information superhighway is becoming as important as concrete roads and bridges. As a result, local governments are seeking to enhance phone wires and cable modems to attract big businesses that can have a significant economic impact on their communities.
Before the Internet became the lifeblood of industry, most users were satisfied to get online via a phone jack. But now, dial-up connections using conventional copper telephone lines are too slow at a paltry 53 kilobytes per second. Enter broadband, which requires cable with a broader bandwidth and transmits at speeds about 1.5 millibytes (MB) per second.
Broadband is divided into two basic categories: cable modem and digital subscriber line (DSL) technology. Many users also subscribe to T1 and T3 phone connections that offer download speeds of 1.2 MB per second.
Cable modem uses broad-bandwidth cable, a significant improvement over the old coaxial cable originally used for cable television. The biggest player in cable modem service is AT&T, which last year purchased TeleCommunications, Englewood, Colo., and is in the process of acquiring regulatory approval for its purchase of Atlanta-based MediaOne.
The benefit of cable modem is its speed. But the downside is that it must be built from scratch, by laying new cable. In addition, the actual transmission speed may vary during periods of peak demand.
DSL technology, on the other hand, uses existing telephone lines enhanced with splitter devices, which must be installed at regular intervals along the telephone wire system. DSL service is divided into two categories: asymmetrical digital subscriber line (ADSL) and symmetrical digital subscriber line (SDSL).
ADSL, so-called because its send speed is slower than its download speed, is attractive to home users who primarily need it to download information from the Web. Businesses are more likely to use SDSL because they need to send information quickly.
For DSL connections, the biggest players are regional telephone companies and competitive local exchange carriers (CLECs). The telephone companies are gradually retrofitting their networks by installing the splitting stations. (T1 and T3 connections also are available from the telephone companies.)
As do all Internet access technologies, broadband presents two concerns: security and speed. While DSL and cable modems are equally fast, concern arises in cable systems because the connection, which is always “on,” can be used to hack into the system, according to Tim Stansbury, research analyst at TeleChoice, a Tulsa, Okla.-based consulting firm. Also, cables are shared, which varies their transmission rate. “If you’re the only person on, you cruise,” Stansbury says. “But at 6:00, when everyone comes home and checks e-mail, your speed significantly goes down.”
However, cable providers may have an advantage over DSL providers when luring customers, simply because they already have systems in place, Stansbury notes. “If you’re a customer and you have a cable modem and DSL [later] comes to your neighborhood, the likelihood you’re going to change, unless you’re really dissatisfied with the cable, is very slim,” he says.
Even if consumers decide to switch from cable to DSL, they may have a long wait. The telephone companies have been slow to roll out DSL technology, Stansbury says.
“The problem is that we started later than the cable modem folks,” says John Goldman, communications manager at BellSouth, who blames the lag on DSL rollout on the company’s need to ensure that its telephone service was not affected. “We’re a little more reluctant to start new things until they’re tested. The telephone system is a national asset, but cable TV is entertainment. We’ve had a commitment to universal service — that is everybody would have telephone service, and it would be available all the time.”
It is important for municipal governments to get in the broadband game if they want to remain competitive and provide high-quality services. Vendors have converged on the big, economically vibrant cities first — places where the market is “built in.”
“We’ve had several companies recently that have put us through the hoops as far as figuring out what telecommunications are available here,” says Tony Crumbley, vice president of research at the Charlotte Chamber, which handles economic development for Charlotte, N.C.
Communications and the ability to use the Internet for business are important in Charlotte, the second-largest banking center in the nation behind New York. Both First Union and Bank of America are headquartered there, and that ready market of businesses has made Charlotte attractive to the telecommunications industry, including Time Warner, New York, and ICG Communications, Englewood, Colo, which have installed broadband technology in the city.
Now it is up to Charlotte officials to get the word out to businesses. In December 1999, economic developers in Charlotte put together a 30-page marketing piece to tout the area’s sophisticated technology, including the many options available for high-speed Internet connections such as cable modem, ADSL, SDSL, and T1 and T3 lines.
“Two companies in one week inquired about retrofitting warehouses for Internet servers,” Crumbley says. Crumbley is pleased that, in addition to being a financial center, Charlotte may become a hub for companies looking to house their website-hosting equipment.
Getting in the game
While urban business centers like Charlotte have broadband vendors knocking at their doors, smaller cities are still waiting for the technology. Anxious for the benefits, they are taking matters into their own hands.
For example, Thomasville, a rural city in South Georgia, decided to build its own broadband system — with a $10 million price tag — for use by local schools and businesses. In doing so, the city faced backlash from Georgia cable companies that did not want to count the city as a competitor.
The Georgia cable companies lobbied the state to restrict the ability of cities to get into the cable business. However, state legislation in 1999 permitted Georgia cities to do so, with some restrictions, such as requiring public hearings and specific accounting procedures.
“This is a case where the economies of scale bar the telecommunication companies [from investing] in the infrastructure,” says Randy Clements, manager of external affairs at the Georgia Municipal Association, Atlanta, which represents 533 city governments. “If the cities don’t take it upon themselves to [build infrastructure] then no one will,” he adds. “And if they cannot compete, they become Third World economies.”
Like Thomasville, Tacoma, Wash., wanted to have the same high-speed operations as nearby urban communities. “We wanted to be leading edge,” says Karen Jones, economic development marketing coordinator for Tacoma. “We knew that telecommunications was a way to grow businesses in town.”
So, starting last year, Tacoma laid 670 miles of broadband cable, much of it underground. Known as the Click! Network, it is an operating section of Tacoma Power, a municipally owned broadband telecommunications network. Tacoma Power has several applications for its network, which began cable television service in 1997 and high-speed Internet connections in 1999.
While the city has not yet recovered its costs, the broadband service has intangible benefits, Jones says. For example, the publicly owned cable network allows up to six Internet service providers (ISP), while most privately owned cable networks are set up to allow just one ISP.
“We’re finding a rapid growth in high-technology businesses due to this ease of access,” Jones notes. More importantly, the city has been able to retain established businesses, such as Frank Russell Co., a finance company, and Total Renal Care, a business that has a billing station for dialysis services. High-speed Internet access was crucial for both companies, Jones explains.
Tacoma was in a unique situation to build its own network, at a cost of $100 million, according to Diane Lachel, Tacoma Power government and community relations manager. Tacoma Power found itself with a $60 million surplus from wholesale sales of electricity, and reinvestment was mandated by its state charter. Investing in a broadband network seemed the right thing to do. “At the time the utility began its research of the current telecommunications infrastructure, there were two primary wireline providers — a phone company and a cable company,” Lachel says. “Both had infrastructures that were old and antiquated, and they had no plan in the foreseeable future to upgrade.”
And, like Tacoma, many cities will be upgrading to DSL soon to allow customers to obtain the highest Internet connection speed available. BellSouth plans to install 7 million DSL lines across nine states by the end of the year, according to Goldman.
Whether cities and counties build their own Internet infrastructure or wait for private firms to take the lead, the Internet is not going to go away. In fact, users are relying more and more on the Internet for everything from finance to inventory control. As that reliance grows, municipal leaders are realizing that, whatever the size of their communities, broadband technology is vital to economic health.
The good news is that most large metropolitan markets are saturated by high-speed Internet alternatives, which means telecommunications companies are now poised to invest in the smaller markets. And, whether it is DSL technology on the telephone lines or cable modem from cable companies, economic developers agree that the more options a city has, the better.
Judy Potwora is an Atlanta-based freelance writer.