E-commerce infrastructure study behind schedule

Audit looks at broadband in rural areas
As business and governmental organizations in southeastern Wisconsin work together to study availability of high-speed Internet connections, broadband connectivity providers are questioning the usefulness of the effort.
On their end, community economic development officials working with ISPs to collect data have encountered some reticence on the part of connectivity providers to come forward with all the data. Those and myriad other complications mean the audit, which was to be completed this summer, is into extra innings. Planners pushed back that deadline until October — and now hope to have a final report in hand by the end of the year.
Racine Area Manufacturers and Commerce (RAMAC), Kenosha Area Business Alliance (KABA) and Walworth County are working together jointly with the Southeastern Wisconsin Regional Planning Commission (SEWRPC) on the study, with assistance from Ecom-Ohio, an arm of the Ohio Supercomputer group. Ecom-Ohio has also held talks this spring with the Metropolitan Milwaukee Association of Commerce. Milwaukee’s Department of City Development (CDC) is engaging in a similar technology mapping project.
Ohio government officials and private industry leaders spent more than half a million dollars over three years developing an e-commerce plan for their state. The program, which is intended to keep Ohio ahead of the e-commerce curve and aid shopify dropshipping stores, received $450,000 from the State of Ohio, and is now in its second year.
The effort in Racine, Kenosha and Walworth counties is costing only $50,000, plus about a third of the 18-month salary of a project coordinator provided under the grant by the US Department of Labor.
The total grant — which encompasses the technology audit as well as several other workforce development-related initiatives, totals $750,000, and consists of funds left over under the United Stated Department of Labor Job Training Partnership Act — funds that were stranded when that program was replaced by the Workforce Investment Act.
Critics of the effort are saying that it is based on misinformation, and a poor understanding of how Internet connectivity works and what it takes to get broadband service to an area.
Proponents — including a representative of Ecom-Ohio — said the studies make good business sense and that the studies can be used to gain government subsidy of connectivity for rural and other under-served areas.
Pari Sabety, Ecom-Ohio director of technology policy, said the audit will “help the community benchmark where it has gaps and where in fact it may have hidden assets it might not otherwise know it had. Cleveland discovered it had far more connectivity than they thought it did. It became a marketable asset for the downtown folks and has helped attract some back-office operations.”
According to Sabety, the audit may reveal opportunities for businesses and communities to pool resources and obtain a level of connectivity previously out of reach.
“These audits help one reach out to groups in the community who need connectivity and may not be aware,” Sabety said. “If the Chamber can provide health care, there is no reason they could not aggregate connectivity. We are now working on putting together numbers on business cases for rural areas. My sense is that in rural areas, given the dispersion of population, many people are within a mile or two of a central office or a large cellular tower where you could put an antenna or microwave and provide some broadband. But the first step is to assess where you are — where broadband exists today.”
Sabety points to a situation in Ohio — a situation she said rural Wisconsin communities would do well to avoid.
“I think urban areas are well-endowed with connectivity,” Sabety said. “But here in Ohio, there is a wholesale distribution center in a rural community — and they were committed to staying in that local community. They wanted to invest in improved e-commerce software — but were told by their bankers that their town was not e-commerce ready. They would not finance them unless they moved to Columbus. That is what we are trying to avoid.”
In some cases, government funding might be necessary to make broadband connections available in rural areas – such as those west of I-94 in Racine and Kenosha counties.
“Those incentives could come from state government, federal government or from local communities banding together — as they have to develop angel capital funds,” Sabety said. “There are many, many different patterns. A lot of this is very new. We have to be very creative in the way we are approaching stuff.”
Chicken and egg
Parties generally agree that having good information on where various broadband services are and are not available is not a bad thing. But telecom and connectivity providers have opinions different from those of economic development professionals on whether existing development should drive availability or whether the availability of high-speed connections can drive development.
The two groups are also not on the same page on whether the study will really address much more than the availability of DSL lines — an entry-level service which provides a stable connection to the Internet that is as much as 50% faster than a standard dial-up modem connection.
Economic development personnel involved in the mapping projects say the mapping effort will help drive economic development — allowing planners to steer development toward areas that offer broadband access to the Web and identifying areas that need greater connectivity resources.
“There are three pieces of our infrastructure study,” RAMAC President Roger Caron said. “There is the mapping side — you map out the infrastructure. Southeastern Regional Planning Commission (SEWRPC) is taking this on as a layer of their service. We approached them because they do transportation and land-use maps. Now they will offer maps illustrating connectivity — showing where it is.”
Caron said that apart from mapping, the project will deliver data on how well existing connectivity lines are functioning.
“Other elements will be actual testing of network performance using tools provided by Ecom-Ohio to test the level of utilization, test for corruptions and the speed of DSL lines in particular geographic locations,” Caron said.” We are looking at six to eight locations in Racine County alone — more in Walworth and Kenosha counties. Ecom-Ohio will test connectivity speed, interruptions and file transfer speed from various locations using a laptop computer and special tracking software. DSL, ISDN and dial-up connections will all be monitored. A third step will be a survey of households and businesses to determine their current level of connectivity and how they use their connections.”
Caron said such information could be used to encourage economic development.
“You set your strategies around that baseline,” Caron said. “Maybe we find out that some rural areas and part of our downtown are not served — then we can deal with that.”
Mike Hobach, president of Racine-based connectivity provider Cyberlynk, stressed that, with the exception of DSL, any connectivity service could be provided to most any customer willing to pay for it — regardless of their location.
Hobach also said that DSL was of very limited use for businesses.
“We went down the DSL path,” Hobach said. “People we provided it to were so unhappy with it we no longer offer it.”
An Ameritech spokesperson echoed Hobach’s sentiments.
According to Blair Klein of Ameritech, any data service from Ameritech is available to any customer — with the exception of DSL, which is available only within 2.6 miles of a DSL-enabled Ameritech office.
“The fiber is in the ground — so if you want a sonnet ring, you can get it,” Klein said.
Sabety took issue with the idea that most services are already available everywhere.
“Many telecom providers say that,” Sabety said. “But the record shows that, more often than not, it is extraordinarily complicated to get connectivity out to a rural area. But if you do not have the base level of demand necessary to lay that fiber, they cannot afford to do it.”
Klein agreed with Hobach that DSL is of limited use for businesses.
“We see DSL as a fabulous product,” Klein said. “It is good for smaller businesses or for a satellite office — or for someone working from home. But when you have an office of 25 or 30, DSL will not be practical for an office of that size.”
Already, DSL is available from Ameritech in most major metro areas of the state, including the southeastern Wisconsin communities of Cedarburg, Hartland, Jackson, Kenosha, Lake Geneva, Milwaukee, Muskego, Oconomowoc, Pewaukee, Parkside, Port Washington, Racine, Sheboygan, Sturtevant, West Bend and Waukesha.
Absent from the list are communities in Racine, Kenosha and Walworth counties such as Burlington, Union Grove, Elkhorn, Twin Lakes, Walworth, Paddock Lake, Pleasant Prairie, Waterford — and others.
“Providing DSL to all areas will take time,” Klein said.
Slowdown in capital spending
Because of high demand for various data services, it might take even longer than might otherwise be the case.
According to Ameritech’s 2000 annual report, overall capital expenditures rose from just under $9 billion in 1998 to $13 billion in 2000.
Increases were driven largely, according to the report, by “the expansion of our local exchange service into new markets, DSL, digital and broadband network upgrades and regulatory commitments.”
The report also implied that capital expenditures would slow down in 2001, resulting in a total outlay of between $12 billion and $13 billion. That leveling off is in lockstep with many other major telecoms around the country that have scaled back capital expenditures substantially. Verizon’s New York-based Genuity Telecom in May announced capital expenditure cuts of $800 million from its previously planned budget of $2.2 billion. Denver-based Qwest Communications announced in December that it will cut capital spending by $2 billion to $5.5 billion. Late last year, Bell South announced cutbacks in its network expansion of $500 million.
The slowdown in equipment spending by telecom carriers has been blamed for difficulties experienced by network service providers and other businesses reliant on the expansion of broadband availability.
But even in a time of slower capital expenditures by telecoms, Sabety is optimistic.
“You can run fiber with no customers out there,” Sabety said. “The key in rural areas is to figure out inexpensive ways to extend the infrastructure. Network technology is becoming cheaper at an amazingly quick pace. In some cases, communities have banded together to aggregate demand. That way, you can get better services together than any one of them might be able to do alone.”
Hobach’s belief that many involved in the project don’t understand how the Web works is supported by disparities between what Caron said Ecom-Ohio could do and what Sabety said they were capable of.
Caron was under the impression that the speed of DSL and other broad-band connections could be tested by the group, but Sabety stressed that only the speed of dial-up connections could be tested. Companies relying on e-commerce applications typically do not use dial-up connections — the tests will be used to determine whether consumers in various areas have adequate telephone connections to allow them to access the Web at a reasonable speed and without frequent drops.
“We are not testing the speed of DSL lines nor are we testing cable,” Sabety said. “We are only testing the speed of dial-up connections. We do not yet have the capability to test DSL connections or cable.”
According to Beth Norris, the workforce development professional hired to coordinate the grant projects, there was a gap in the Wisconsin economic development community’s understanding of the Internet.
“None of us are technical people,” Norris said. “We really don’t know the details of how this stuff works.”
Hobach said there was also a more far-reaching misunderstanding of how the Web works and how companies provide access to the Web. One potential fault in the audit might be that it could overlook fixed wireless, Hobach said. Fixed wireless allows a company with a clear line of sight with a provider’s transmitter to get a broadband connection.
“We offer fixed wireless — anywhere in Racine, Kenosha and Milwaukee counties,” Hobach said. “And all we need is a line of sight.”
Not like sewers
While economic development professionals and SEWRPC officials are likening the counties’ information infrastructure to more traditional infrastructure such as water and sewer, Hobach said that perception is off the mark. Typically, a municipality plans for development and runs utilities out to an area before the fact.
“It’s not like a sewer line running down the street, and you plug in a lateral,” Hobach said. “Where the companies use a community’s right-of-way — that’s totally immaterial for where the customers are. … The business people are under the misconception that a telephone company or carrier is going to run a matrix of this fiber hoping that someone is going to want to tap into it. They have to have someplace to go when they put it in. Sometimes I think some businesspeople are expecting someone like the ice cream truck to come driving down the street, asking who wants a connection.”
Hobach said that in some areas – such as metropolitan Milwaukee — there is ready access to broadband because, for years, there was an existing need.
“A case in point is Norlight — a division of the Journal-Sentinel,” Hobach said. “Their fiber network came about from the needs of the newspaper and it is now used to serve the public. The point is not really where this stuff is in the ground. The reason that it is concentrated is that you have a large number of users in that area. If you are sitting out in the middle of an industrial park and say you need a T3 connection — whoever is handling the last mile will trench in there and get you that cable.”
Hobach said it typically takes three months to get fiber installed, but said Cyberlynk has installed T1 lines in three weeks.
“Any telecom or carrier needs to have some kind of projected return on its investment to build into any area,” Hobach said. “They need commitments for customers to pay a bill in order to pay for connection. That is my response. It is not like ‘Build it and they will come.’ It is more like ‘If there is a need, we will build it there if we can bill our customers for it.'”
The study, which will illustrate existing capacities in communities, is of limited value, according to Hobach.
“They are naïve in what they are looking for,” Hobach said. “It is not like you are looking for large amounts of power to build some type of metal processing facility where you need megawatts of power. The data — there is so much that can be handled on a cable the size of your small finger. That premise is moot. Tell me what you want and where you want it and we will get it there.”
One element Hobach might be overlooking, according to one cabling contractor, is competition.
“In many cases, the cable is in the ground,” said Nick Ivancevic of Cablecom in Milwaukee. “But the question is — do you want your supplier to be Ameritech?”
Info slow in coming
At a recent Wisconsin Venture Network luncheon, Milwaukee City Development commissioner Julie Penman mentioned the difficulty the city was having obtaining information on the location of high-speed Internet connection infrastructure.
Her experience is being borne out by others. The Racine/Kenosha/Walworth project is already behind schedule. While the group originally planned to have a preliminary report in-hand by the end of summer, it now looks like that will not transpire until October at the earliest.
Caron said that information had not been offered up very freely by some of the telecoms but “there are ways to get that information with or without the cooperation of all the service providers. Whether or not they all cooperate, we will have a map showing where all of the infrastructure is.”
Norris said that once data is in from ISPs and telecom providers, there is still some sorting out to do.
“There are only a few people that have the main line in the ground,” Norris said. “Others are leasing or brokering lines. There is duplication, and a lot of people are giving us the same maps. And these maps are difficult for the telecoms to provide — there are proprietary issues, and they could be affecting their ability to compete in the marketplace.”
According to SEWRPC executive director Philip Evenson, local telecoms are not the only groups that have not been forthcoming with information.
“I was scheduled to get an initial set of maps from this Ohio group — they say they have developed sources and techniques to get this information,” Evenson said. “But it has yet to materialize. Once we get our hands on that — we will seek confirmation and updating from our service providers.”
Evenson and others said one alternative means of getting this data would be to dig through permitting information.
“Most of this infrastructure is in public rights-of-way,” Evenson said. “They would have to get permits from some agency. We ought to be able to daylight that information. It might take more time and cost more money — but when things go into the public right-of-way, it should be our job to be able to find out what is in there.”
According to Caron, some information could be arrived at through dead-reckoning.
“In most cases, you know where something might deadhead or where the main lines are,” Caron said. “We would also like to know the (telecoms’) plans for expansion and help areas that need expansion.”
Evenson said he could understand why some parties have not been very willing to reveal where they are offering service.
“There is a certain amount of proprietary interest in these things that makes them want to play their cards close to their vest,” Evenson said. “That makes our jobs a little harder.”
Hobach was more specific on why local telecoms are reticent to reveal where they have broadband cables buried.
“They don’t want their competition to know,” he said, implying that making this information public would allow competitors to approach a telecom’s large business clients and attempt to better-deal them.
“What we really want to do is have everyone cooperate,” Caron said. “There is some information they are hesitant to give. But they must know that if we have a map that shows us this information — we will be supporters of their efforts.”
November 9, 2001 Small Business Times, Milwaukee