When the Internet pipelines in cities like Chattanooga and Kansas City are accelerated to super-fast broadband, the leading-edge technology is expected to generate new business opportunities, but there are no guarantees.
For example, in September 2010, the Chattanooga, TN-based electric power distributor EPB became the first U.S. company to offer 1-gigabit-per-second Internet service. It cost $280 million to build the fiber-optic network, funded by $111 million in federal stimulus money and $169 million raised through bonds.
But two years later, EPB estimates that only nine residents and two businesses pay the $350-per-month charge for the high-speed service, while most subscribe to a 30-megabit-per-second connection (which is still considerably faster than the U.S. average of 6.7 megabits).
"People believe super-fast broadband will have an effect on the economy, but there is simply no proof of that yet," says Raul Katz, director of business strategy research at the Columbia Institute for Tele-Information (CITI) at Columbia University.
Katz says analysis has to be conducted to determine that the installation of ultra-fast broadband has affected the economic growth of Japan, South Korea, and Singapore, as early deploying countries. While slower-speed broadband, such as ADSL-based, cable modem, and 3G, has contributed to economic growth and job creation, Katz says in his report "Impact of Broadband on the Economy," the "evidence of ultra-broadband’s economic effect is fairly qualitative and anecdotal."
However, at Lamp Post Group, a Chattanooga-based venture capital firm, partner Jack Studer has high hopes for what the new fiber service will do for his city eventually.
"Yes, 1-gigabit has been slow for adoption, but that’s pretty normal for new technology," says Studer. "Price may be one of the issues. But it’s also a chicken-and-egg kind of thing. You don’t really need the bandwidth until you have apps that make use of it, but no one is going to build the apps until they have the bandwidth."
That’s not to say that Chattanooga, which rebranded itself "Gig City" in 2010, isn’t working hard to fulfill expectations. This summer the city launched its "GigTank"--a combo startup accelerator, think tank, and contest--and offered $150,000 in prize money for clever ideas to utilize the high-speed network. First prize went to Banyan for its version control and collaboration application for researchers.
Examples of other businesses that intend to take advantage of the city’s super-fast broadband include:
--Claris Networks. It is moving most of its technical infrastructure to Chattanooga because the company estimates the high-speed network will save it significantly on delivering its cloud computing solutions to other markets.
--Global Green Lighting. The company will be in-sourcing the manufacture of its lighting solutions back from China to Chattanooga and projects it may create more than 200 manufacturing jobs in the city over the next five years.
Meanwhile, this month, Google’s new Google Fiber effort is about to flip the switch on its first super-fast broadband products in Kansas City, KS, and Kansas City, MO.
As part of its strategy to eliminate some of the hurdles Chattanooga has experienced, Google is pricing its 1-gigabit Internet option at "an affordable $70 per month which is pretty much the going rate elsewhere for much slower service," says Milo Medin, Google’s VP of access services.
In order to create demand, Google has built a "FiberSpace" retail outlet to allow consumers to try before they buy.
"People don’t necessarily understand what ‘fast’ really means," says Medin. "But when NetFlix says it will take two-and-a-half hours to download a movie and people see it can be done in less than four minutes, all of a sudden 1-gigabit becomes meaningful to them."
As for local businesses, it is not yet clear how Google Fiber intends to support them. Google hasn’t set a date yet for release of its high-speed, small-business product.
"It’s important to note," says a Google spokesperson, "that some businesses have very specific, advanced sets of needs that are very different from what consumers expect from their Internet provider. Currently we don’t have plans to support some of these advanced needs."
Paul Hyman is a science and technology writer based in Great Neck, NY.
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