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Introduction
For many
small communities in this country, the 'digital divide' is a real issue
with which to deal. Facing
limited choices for broadband access, more and more
communities are questioning how to attract private
investment into communications networks that can support
economic development efforts.
Situation
Our client, a small southern city whose residents and
businesses had limited choices regarding broadband
access, sought opportunities to increase community choice
for communications services. At the same time, the
community desired to expand on local infrastructure to
boost sagging economic development efforts. A decision
was made to explore the viability of establishing a
community broadband deployment.
Complication
The community did not
have the staff or experience for its contemplated move
into communications. While they knew that deployment
would provide some value and would likely require
significant funding, both the optimal choice of network
equipment and technology and the economic viability were
unknown.
Research
The Shpigler Group went
to work gathering a wide variety of data about the
market. We wanted to understand the makeup of the
community better in order to match the results to their
technical needs. The data we gathered revealed an
interesting story. We confirmed that the population and
employment within the community was, in fact,
shrinking. However, we also learned that a good sector
of the remaining business population demanded high
bandwidth capabilities and could be classified as 'high
tech' users. As a result, we were able to lay the
foundation for a business plan to follow our market
research.
Analysis
Having laid the foundation for the
business case through research into the characteristics
of the market, we were able to develop a plan for a
cost-effective broadband deployment sponsored by the
community. However, while some communities have
communications networks for the benefit of their
residents and businesses, some incumbent carriers have
adopted aggressive pricing in an effort to discourage
public investment in this field. In order to address
this key issue, we developed analysis focused on 'game
theory' – the science of evaluating the likely
motivations and economics associated with competitive
entry upon the actions of a competitive provider. Based
on proprietary modeling tools that we developed for our
client, we determined the price points at which
competitive pricing would be less likely to occur.
Problem Solved
Based on the financial analysis conducted, we identified a deployment approach that supported the
community's needs while also offering a smaller
investment than originally projected. As a final step to
our engagement, our client asked us to quantify the
likely impact to economic development efforts. Based on
research into the trends in place, we calculated an
economic development impact of nearly $14 million for
this community.
Result
Today our client is moving forward
toward market deployment. The plan calls for a
two-phased market approach. Phase I includes focusing on
a deep-fiber architecture with metro access and
connections to businesses throughout the city. Selected
wireless nodes will also be available for residential
access. Phase 2 calls for a full Fiber-To-The-Home
network to be built, offering complete 'triple play'
capabilities and beyond.
To receive more information on this topic, please visit
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