Summary
1) Europe has a history of public sector initiatives that echo what is being proposed for San Francisco.
2) For San Francisco, I fail to see the underlying rationale for providing this infrastructure, when it is already well served.
3) In Europe, there has been much talk of fibre projects – but the only material one I know of is in Holland near Eindhoven where public funding was used to create a ‘Kenniswijk’.
4) However, there is a municipal project with social objectives that has launched well in London. In the Borough of Hackney, a public-private sector partnership between the local council and Homechoice has launched selling services under the ‘Digital Bridge’ brand.
Analysis
Europe has a history of public sector initiatives that echo what is being proposed for San Francisco. Many of the underlying aims covering social and political angles are admirable; however the challenge is in delivering the right product to the appropriate user base in order to generate a viable commercial return (without having to resort to further public funding). Many of these municipal projects are vanity based for ‘bridging a digital divide’ and the opportunity cost for the local tax payer is high – given the dire need for basic provisions for the most disadvantaged in some of these local areas.
The city of San Francisco’s spokesman is clear in stating that the FTTH network would compliment the proposed EarthLink and Google WiFi network. However, I fail to see the underlying rationale for providing this infrastructure, when I guess that San Francisco is already well served by the local utilities and users can choose from a range of existing ‘good value’ bundle deals servicing many user segments.
In Europe, there has been much talk of fibre projects like this – but the only material one I know of is in Holland near Eindhoven where public funding was used to create a ‘Kenniswijk’ (information rich area) by building FTTP. Much has been made by the high consumer take-up of 90%+ (amongst a small launch target base); however, this was a new build area with no other competing pay TV and high speed Internet services. In addition, much thought was given to the needs of the local population and services such as exclusive behind the scenes footage from the local football team helped to drive take-up. Perhaps most tellingly the service was not rolled out – given the high capital cost of infrastructure and operational cost to provide specific services.
Many of these proposed municipal services rely on the social and political objectives of ‘bridging the digital divide’. However, once again I would guess that many of the disadvantaged consumers have access to the digital services; it is more a question of cost from their weekly disposable income, whether they have the hardware (computer) and whether they have a use for the associated services. In these instances a public-private sector partnership would be more beneficial and cost-effective to meet the social objectives as opposed to a mass FTTP build. Even the proposed San Francisco wifi network would complement the ‘already-haves’ consumer segment serving the city-workers, young professionals and tech savvy as opposed to the ‘have-nots’.
In London, there has been much talk of WiFi mesh networks. Indeed, the financial district of London is covered by WiFi services from The Cloud. However, both business and consumer take up has been poor given the availability of better value substitutes such as low cost hotspots (given consumer behaviour to work/browse in a fixed location even when on the move), free unsecured WiFi services and 3G data cards (especially for the business community).
However, there is a municipal project with social objectives that has launched well in London. In the Borough of Hackney (north-east area of London), a public-private sector partnership between the local council and Homechoice (a company originally funded by Chris Larson of Microsoft and now owned by Tiscali) has launched selling services under the ‘Digital Bridge’ brand. Initial take up has been strong driven by a free trial offer and unique local services – such as a TV channel dedicated to local issues featuring local community and public service leaders, the ability to surf the Internet on the TV, view CCTV of the local area and control local cameras, and report local issues (particularly crime) and receive a response via the online TV interface. The commercial model rests on growing take up particularly amongst the poor demographic segments and retaining their custom. The cost base is low since it takes advantage of local loop unbundling and services being run over the short copper loops from British Telecom.
