Technology in Government

Committee on Technology in GovernmentBruce Lai, Policy

Fredy H. Kaplan, LegalSteve Hamill, Press

Carl Thelemaque, Finance

THE COUNCIL OF THE CITY OF NEW YORK

BRIEFING PAPER OF THE INFRASTRUCTURE DIVISION

Marcel Van Ooyen, Deputy Chief of Staff

COMMITTEE ON TECHNOLOGY IN GOVERNMENTHon. Gale A. Brewer, Chair

January 10, 2005

Oversight: Is Brooklyn Business Suffering From A

Broadband Gap?

Introduction

On Monday, January 10, 2005 in Dibner Auditorium, Polytechnic University, Downtown

Brooklyn, the Committee on Technology in Government will hold a hearing entitled “Is

Brooklyn Business Suffering From A Broadband Gap?” At this hearing, we will discuss

the following:

Is there a "broadband gap" for Brooklyn businesses?

Does city government have a role in closing this gap, if it does indeed exist? If

so, what role should city government play?

What can incumbent wireline broadband providers do to close the gap?

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Is wireless broadband an affordable broadband alternative for small and medium-

sized businesses?

Those expected to testify include:

Agostino Cangemi, Deputy Commissioner, Franchise Administration and

Planning / General Counsel, New York City Department of Information

Technology and Telecommunications (DoITT);

Gil Quiniones, Senior Vice President, Infrastructure, New York City Economic

Development Corporation (EDC);

Donald Giampietro, Executive Director for Business Incentives, New York City

Department of Small Business Services (SBS);

Dianah Neff, Chief Information Officer, Mayor’s Office of Information Services,

City of Philadelphia;

Jonathan Bowles, Research Director, Center for an Urban Future;

Matt Stone, Co-Founder and Government Strategist, Civitium LLC;

Bernard Dushman, Vice President for Technology and Information Services,

Brooklyn Navy Yard Development Corporation;

Phaedra Thomas, Co-Interim Executive Director, Southwest Brooklyn Industrial

Development Corporation;

Chris Owens, former President, The Weeksville Society and former President,

Community School Board 13;

Peter Fontanes, National Chair and Founder, National Association of Hispanics in

Information Technology and Telecommunications;

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Joe Di Geso, General Manager, High-Speed Internet Service, Time Warner Cable

of New York City;

Thomas A. Dunne, Vice President, Public Policy and External Affairs, Verizon

Communications;

Robert C. Atkinson, Director of Policy Research, The Columbia Institute for Tele-

Information;

Dr. Binay Sugla, Executive Director, Wireless Internet Center for Advanced

Technology, Polytechnic University;

Myron Uretsky, Professor of Information Systems, New York University;

Kirk Watson, President, Flushing Community Access Network Corporation;

Ann Barre, Managing Director, New York Wireless Access Coalition;

Dustin Goodwin, Board Member, NYCwireless;

Jeff Thompson, President and Chief Operating Officer, Towerstream Corporation;

Ron Sege, President and Chief Executive Officer, Tropos Networks;

Lou Slaughter, Chairman and Chief Executive Officer, GigaBeam Corporation;

Mohsen Garabagallo, SES Americom; and,

Dan Vaccaro, Orbital Systems.

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What is Broadband?

Broadband “is a high data transmission rate Internet1 connection. … It is generally

accepted that the term is used to mean a connection of 512 kilobits-per-second (0.5 Mb)

or above for the final user and the FCC [Federal Communications Commission2]

definition of broadband is 200 kbps (0.2 Mb) in one direction, and advanced broadband is

at least 200 kbps (0.2 Mb) in both directions.”3 One of the characteristics of broadband

Internet access is that it is “always on”; that is, it does not tie up the phone line.4

Broadband technologies encompass “all-evolving high-speed digital technologies” that

provide consumers integrated access to voice, high-speed data, video-on-demand,5 and

interactive delivery services.6 Cable modem7 and Digital Subscriber Line (DSL)8 are the

latest in broadband technologies. Currently, these two types of broadband technologies

dominate the United States broadband market with cable modem service comprising 54

percent of all broadband connections and DSL comprising 42 percent.9

1 “The Internet, or simply the Net, is the publicly available worldwide system of interconnected computer networks that transmit data by packet switching using a standardized Internet Protocol (IP) and many other protocols. It is made up of thousands of smaller commercial, academic, and government networks. It carries various information and services, such as electronic mail, online chat and the interlinked web pages and other documents of the World Wide Web.” (http://en.wikipedia.org/wiki/Internet) 2 http://www.fcc.gov/. 3 http://en.wikipedia.org/wiki/Broadband_Internet_access. 4 http://www.nycfuture.org/images_pdfs/pdfs/telecom.final.pdf, page 4.5 “Video on demand systems are systems which allow users to select and watch video content over a network as part of an interactive television system.” (http://en.wikipedia.org/wiki/Video_on_demand) 6 http://www.fcc.gov/broadband/.7 See section entitled “Wireline Broadband Technologies” in this briefing paper for more information on cable modem service.8 See section entitled “Wireline Broadband Technologies” in this briefing paper for more information on Digital Subscriber Line (DSL) service.9 http://www.pewinternet.org/pdfs/PIP_Broadband_Report.pdf, page 2.

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Major Benefits of Broadband

Broadband has many benefits, including: (1) promoting overall economic growth (2)

enabling e-business solutions (3) helping businesses taking advantage of the Internet and

(4) reducing the cost of telecommunications services.

Broadband Promotes Economic Growth

Several studies over the last two years have been released projecting “the prevailing

economic benefits of broadband deployment,” ostensibly derived from a wider network

of broadband access nationwide.10 One study by the Yankee Group predicted $223

billion in cost savings with universally available broadband in the United States, while an

August 2002 study by Dataquest, Inc., a unit of Gartner, Inc., estimates that the

implementation of “true” broadband infrastructure could result in an incremental increase

in the United States gross domestic product by as much as $500 billion annually for each

of the next 10 years.11 A 2002 New Millennium Council study found that the broadband

expansion will potentially add 1.2 million jobs within the United States.12

Broadband Enables E-Business

According to a report13 by the Initiative for a Competitive Inner City14 (ICIC), a national

non-profit organization that promote economic development in inner cities, “companies

implementing successful e-business strategies are already enjoying dramatic reductions in

10 The Economic and Social Benefits of Broadband Deployment, page 7, The Telecommunications Industry Association (http://www.tiaonline.org/), October 2003.11 Ibid.12 Ibid.13 America’s Inner Cities Wired to Compete: A Report on Inner City Broadband Readiness and E-Business Technology Adoption, The Initiative for a Competitive Inner City (http://www.icic.org/) & The Boston Consulting Group (http://www.bcg.com/home.jsp), November 2002.14 http://www.icic.org/.

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inventory and other costs, as well as revenue growth.”15 “Within its client base, The

Boston Consulting Group has identified successful e-business initiatives that have

resulted in as much as 50 percent inventory reductions, 25 percent revenue growth, and

15 percent cost reductions.”16 ICIC’s study estimated that:

Internet business solutions have helped increase revenues of United States

organizations by approximately $444 billion dollars over three years and will help

increase revenues by $1.5 trillion by the end of the decade;17

E-business solutions have yielded a cost savings of $155 billion to United States

businesses and are projected to yield an additional savings of another $373 billion

by 2010;18 and,

Half of productivity growth increases over the next decade will come from

Internet business solutions.19

Examples of How Businesses Use Broadband

“’Broadband makes businesses more efficient,’ says Tom Naklicki, operations manager

of the Greenpoint Manufacturing & Design Center.20 ‘One can purchase online,

communicate with accountants and lawyers online, complete banking transactions online,

receive and send time- and content-sensitive files online.’”21 For example:

15 America’s Inner Cities Wired to Compete: A Report on Inner City Broadband Readiness and E-Business Technology Adoption, page 3, The Initiative for a Competitive Inner City (http://www.icic.org/) & The Boston Consulting Group (http://www.bcg.com/home.jsp), November 2002.16 Ibid.17 Ibid.18 Ibid.19 Ibid.20 http://www.gmdconline.com/. 21 http://www.nycfuture.org/images_pdfs/pdfs/telecom.final.pdf, page 5.

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“Printing companies, for instance, are increasingly receiving high-resolution

digital files from clients via e-mail, and sending proofs back the same way. With

broadband, these often image-heavy files can be downloaded”22 quickly.

“Woodworkers, architects and other design-oriented businesses also use fast,

reliable broadband connections to receive orders in digital format and to transmit

multiple design options to their clients.”23

“Recording studios and audio mastering houses now transmit audio files – from

demos to finished recordings – to music companies and others involved in the

creative process. … Broadband makes it possible for technicians to work with

digital editing equipment and other sophisticated software programs that need to

be updated regularly.”24

“Animation and film businesses typically need large amounts of bandwidth to

upload extensive visual files and edit projects online.”25

“Businesses in the health care sector – from hospitals to HMOs – have been

streamlining their billing and claims services online,”26 resulting in substantial

cost-savings.

“In the air cargo industry, businesses at JFK Airport and other airports around the

country are already using broadband technologies – including wireless, hand-held

devices – to track freight shipments and book freight reservations online.”27

22 Ibid.23 Ibid.24 Ibid.25 Ibid.26 Ibid.27 Ibid.

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Broadband helps Businesses Take Advantage of the Internet

Traditional dial-up services that run at 56 kbps maximum (such as AOL and NetZero) are

extremely slow compared to broadband. Facilitating access to and promoting the use of

broadband may be a key factor to developing New York City’s business sector, as

broadband’s “fast, seamless connection to the Internet enables companies to reach an

infinitely larger pool of customers,”28 particularly customers in other parts of the country

and in other countries. Despite the recent dot.com collapse, the pool of customers on the

Internet is continuing to increase. The Pew Internet Project29 Internet tracking survey30 in

February 2004 recorded its highest readings ever on Internet users (in the United States)

who are e-shopping (65%)31 and participating in online auctions (23%).32 The survey also

found that 63% of American adults use the Internet, which amounts to 128 million

people.33

Broadband Reduces the Cost of Telecommunications

With broadband access, telecommunications services such as voice, data and video

transmission can be “bundled,” which enables “operators to offer more services to

consumers at lower prices, creating added efficiencies in both time and money.”34

Broadband also helps businesses take advantage of new technological innovations, such

28 Ibid, page 1.29 http://www.pewinternet.org/index.asp.30 “The results reported here come from a national phone survey conducted between February 3 and March 1, 2004. Some 2,204 adults (those 18 and older) were interviewed, of whom 1,371 were Internet users. The margin of error is plus or minus two points for the full sample and plus or minus three points for results drawn from the Internet user population.” (http://www.pewinternet.org/pdfs/PIP_April2004_Data_Memo.pdf)31 http://www.pewinternet.org/pdfs/PIP_April2004_Data_Memo.pdf, page 1.32 Ibid.33 Ibid.34 America’s Inner Cities Wired to Compete: A Report on Inner City Broadband Readiness and E-Business Technology Adoption, page 6, The Initiative for a Competitive Inner City (http://www.icic.org/) & The Boston Consulting Group (http://www.bcg.com/home.jsp), November 2002.

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as Voice Over Internet Protocol35 (VoIP), an inexpensive way of providing telephone

service using cheaper digital technology. For example, if a business has a broadband

connection, they could get 500 minutes a month of calls to anywhere in United States and

Canada for only $14.99 a month.36

A Broadband Gap Exists in New York City

For Small and Mid-Sized Businesses Outside of Manhattan

Although 66.8 percent of all home Internet users in New York City have broadband

connections (fourth-highest percentage among U.S. cities),37 affordable, reliable

broadband service is not universally accessible, particularly outside Manhattan. Jonathan

Bowles, in a recent Center for an Urban Future38 report, writes:

“In New York, a vast number of businesses – particularly small and mid-sized

firms located outside of Manhattan’s office districts – still rely on super-slow

dial-up connections to access the Internet, and many are not hooked up to the

Web at all. But in many of the industrial parks and other low-density commercial

areas around the five boroughs, businesses continue to face extremely limited

options for obtaining broadband, and often find it downright impossible to access

a reliable high-speed connection. In these areas – including large parts of Hunts

35 “A technology for transmitting ordinary telephone calls over the Internet using packet-linked routes. Also called IP telephony.” (http://www.anadigics.com/glossary/v.html)36 http://www.vonage.com/. 37 Nielsen/Netratings (http://www.nielsen-netratings.com/news.jsp?section=new_pr&thetype=date&theyear=2004&themonth=8), Press Release, September 15, 2004. 38 http://www.nycfuture.org/content/home/index.cfm?CFID=13166408&CFTOKEN=67603881.

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Point, Sunset Park, Long Island City, Williamsburg, Red Hook, the Brooklyn

Navy Yard, East New York and DUMBO – cable modem service still isn’t

available and DSL either isn’t accessible or is of extremely poor quality.”39

Example: Brooklyn Navy Yard

“The massive 3.6 million square foot complex houses roughly 220 businesses, is one of

the only places in the five boroughs to witness new industrial development in recent years

and has the capacity to accommodate growing companies in the decade ahead.”40

However, “the overwhelming majority of companies in the complex still can’t access

DSL”41 and “the infrastructure [i.e., conduit] to support T1 lines or cable modem services

hasn’t yet been installed in many of the 40 buildings in the Yard.”42

Infrastructure: Downtown Manhattan versus Brooklyn

In downtown Manhattan and a part of Brooklyn, the following graphic (provided by

Universal Access, www.universalaccess.net) shows two things: (1) the fiber lines of all of

the companies that provide telecommunications services in competition43 (or CLECs44)

with the primary companies that provide telecommunications services in New York City,

Verizon, Time Warner Cable and Cablevision, and (2) all of the fiber lit (or fiber

serviced) buildings served by the CLECs (the CLEC Fiber Buildings) and Verizon (Geo

LIT Buildings). A fiber lit or fiber serviced building means that the dedicated fiber

39 http://www.nycfuture.org/images_pdfs/pdfs/telecom.final.pdf, page 1.40 Ibid, page 9.41 Ibid.42 Ibid.43 Go to this link to see a list of these companies: http://www.nyc.gov/html/doitt/html/business/business_telecom.shtml. 44 “Competitive Local Exchange Carrier. A company that creates and operates communication networks and provides customers with an alternative to the local telephone company.” (http://www.google.com/search?hl=en&lr=&oi=defmore&q=define:CLEC)

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connection has been run into that building, and all tenants in that building are able to

access the bandwidth of that fiber line. Notice the concentration of fiber lines and fiber

lit buildings in downtown Manhattan compared to northwestern Brooklyn, which

includes downtown Brooklyn.

The United States Broadband Gap

The United States is very far behind in terms of broadband adoption, ranking 11th in the

world.45 Currently, “39% of adult Internet users – or 24% of all adult Americans – have

[broadband] at home,”46 while “78% of Korean households subscribe to broadband, the

highest penetration rate in the world.”47 “In Japan, for as little as $10, consumers get

45 Availability of Advanced Telecommunications Capability in the United States: Fourth Report to Congress, pg. 40, Federal Communications Commission (http://www.fcc.gov/), September 9, 2004.46 http://www.pewinternet.org/pdfs/PIP_Broadband04.DataMemo.pdf, page 1. 47 http://www.manhattan-institute.org/html/_wsj-bringing_the_broadband_mi.htm.

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broadband service at 8,000 kbps [or 8 Mbps]” and “in Korea, consumers get 10,000 kbps

[or 10 Mbps] for the same price that we pay for 1,500 kbps [or 1.5 Mbps].”48

Why the Broadband Gap Exists

Antiquated Telecommunications Infrastructure

“A big part of the problem is that the copper wires that formed the backbone of the city’s

original telephone network more than 100 years ago remain the primary type of wiring

used to reach businesses and homes”49 in New York City. Modernizing the infrastructure

is not cheap. “Verizon is reluctant to spend significant sums when they believe … that

within a few years’ time, fiber optic technology will soon render all copper wiring

obsolete.”50 “While fiber optic trunks lay under the main streets and avenues of every

borough, it’s expensive to connect fiber over the last few hundred yards from under the

street to a firm’s office or an individual’s apartment building”51 – typically cost[ing]

between $50,000 and $200,000.52

Lack of Competition

Today, broadband is primarily provided by three companies: Verizon, Time Warner

Cable and Cablevision. Verizon’s DSL is available in most parts of the City. The

primary competition to Verizon in providing broadband service is Time Warner Cable in

most parts of the city (Manhattan, Queens, Staten and the western half of Brooklyn) and 48 Availability of Advanced Telecommunications Capability in the United States: Fourth Report to Congress, pg. 5, Federal Communications Commission (http://www.fcc.gov/), September 9, 2004. 49 http://www.nycfuture.org/images_pdfs/pdfs/telecom.final.pdf, page 12.50 Ibid.51 Ibid.52 Ibid, page 14.

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Cablevision in the parts of the city Time Warner Cable does not serve (the Bronx and the

eastern half of Brooklyn). However, Verizon still “faces little pressure from competitors

to improve their DSL service or upgrade their copper phone infrastructure.”53 As a result,

Verizon has focused on providing their more expensive T154 services aimed at businesses.

Because Verizon and the cable companies own extensive communications networks,

competitors are put at an immediate disadvantage, leaving most residents and businesses

with a limited choice in broadband providers. Wireless Internet Service Providers

(WISPs) are an emerging alternative in other cities. But because of the complexity of

entering the New York City market, particularly finding buildings or poles to place

wireless transmitters, very few WISPs have entered the New York City market as of yet.

Despite the fact that there are huge swaths of New York City that are yearning for more

broadband options, alternative carriers55 face “barriers that often put them at a

competitive disadvantage to Verizon.” 56 “For instance, every broadband provider but

Verizon must pay the city a franchise fee — roughly 5 percent of their gross revenues or

a minimum of $200,000 per year — to gain permission to open up city streets to install

cable, wire or fiber lines.”57 “In addition, Verizon’s legacy as the city’s local telephone

carrier means that it already has the equipment to support broadband networks installed

in most commercial buildings across the city. Other providers typically have to pay

building owners—sometimes in excess of $100,000—for the right to enter the property

and set up infrastructure needed to deliver broadband to customers in the building.”58

53 Ibid, page 15.54 See section entitled “Wireline Broadband Technologies” in this briefing paper for more information on T1 service.55 For a list of other broadband franchise holders in New York City, go to: http://www.nyc.gov/html/doitt/html/business/business_telecom.shtml. 56 http://www.nycfuture.org/images_pdfs/pdfs/telecom.final.pdf, page 15.57 Ibid.58 Ibid.

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“Verizon is operating on a much lower cost basis than everyone else. [Thus, a telecom]

company or investor can’t afford to go into the neighborhoods.”59

Demand Exists for Broadband but not a Critical Mass

Nationally, “according to the Yankee Group,60 70 percent of small businesses (firms with

between 20 and 99 employees) that have broadband responded that Internet access is

‘very important to the functioning and productivity of their business.’”61 However, in

New York City, only “’specific isolated companies who see the need to be on the Internet

and do business online, and who have a need to access appropriate technology,’ [says]

Sara Garretson, executive director of the Industrial Technology Assistance Corporation62

(ITAC).”63 Unfortunately, most businesses are “blissfully free”64 of broadband, says

Leah Archibald, former Executive Director of the Southwest Brooklyn Industrial

Development Corporation.65 Some of the reasons for this lack of critical mass among

small businesses in New York City include:

Costly Process of Identifying Appropriate Technology: Many of the CEOs found

no accessible source of information for understanding and evaluating technology

options for their businesses without having to spend a tremendous amount of time

doing research or incurring large expenses by hiring consultants.66

59 Ibid.60 http://www.yankeegroup.com/. 61 Ibid, page 3.62 http://www.itac.org/. 63 http://www.nycfuture.org/images_pdfs/pdfs/telecom.final.pdf, page 10.64 Ibid, page 11.65 http://www.swbidc.org/. 66 America’s Inner Cities Wired to Compete: A Report on Inner City Broadband Readiness and E-Business Technology Adoption, page 8, The Initiative for a Competitive Inner City (http://www.icic.org/) & The Boston Consulting Group (http://www.bcg.com/home.jsp), November 2002.

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Insufficient Understanding of the Value of E-business Practices: “’In many cases,

companies are led by executives who don’t understand the technology and don’t

easily use it on their own. This has a great impact on the degree to which the

company utilizes technology.”67

Cost, Cost, Cost : Broadband providers “have not yet lowered prices to a level at

which firms with low profit margins could justify the additional expense.”68

The Broadband Gap Requires First Mile Solutions

The Last Mile is Really the First Mile

One of the biggest obstacles to expanding broadband access is connecting individual

computers and/or local area networks69 (LANs) to high-speed fiber optic network

backbones owned by Verizon, Time Warner, etc. that connect their users to the Internet.

The distance between a network backbone and the computer of a user or a computer

network is often called the “last mile” because in computer network terms, the user is

considered the “last” part of the network. The “last mile”, however, is somewhat of a

misleading term. The connection between the user and the network backbone that

provides Internet access might properly called the first mile,70 as a network without users

has no value. In other words, broadband technologies are really “first mile” solutions.

67 Quote from Leah Archibald, former Executive Director of the Southwest Brooklyn Industrial Development Corporation, http://www.nycfuture.org/images_pdfs/pdfs/telecom.final.pdf, page 10.68 http://www.nycfuture.org/images_pdfs/pdfs/telecom.final.pdf, page 10.69 A local area network or LAN is “A local area network (LAN) is a computer network covering a local area, like a home, office or small group of buildings such as a college.” (http://en.wikipedia.org/wiki/LAN)70 This term was mentioned to Council Member Gale Brewer and Committee Policy Analyst Bruce Lai in a meeting with John Gilbert, the Executive Vice President and Chief Operating Officer of Rudin Management, in August 2004.

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Types of Broadband Technologies

Broadband technologies can be grouped into two types of technologies: wireline, where

the data is delivered through some sort of wire (copper, coaxial cable, fiberglass, etc.),

and wireless, where the data is delivered on the waves of the electromagnetic spectrum.71

Some of the major wireline broadband technologies are cable modem, Digital Subscriber

Line (DSL), T1 and T3, fiber optic and associated FTTx systems, and Broadband over

Power Lines (BPL). Some of the major wireless broadband technologies are Wi-Fi,

WiMAX, microwave and satellite. Only Wi-Fi and WiMAX will be discussed in this

briefing paper because these two technologies are being deployed or scheduled to be

deployed on a large scale.

Wireline Broadband Connections

Cable Modem

Currently, cable modem broadband connections comprise the majority of broadband

connections in the United States.72 “Cable companies offer high-speed Internet service

by using a hybrid fiber coax, [which is] a technology that combines fiber optics and

coaxial cable. Fiber serves as the backbone of the cable broadband network, with strands

running out from the companies’ main fiber optic lines and terminating in nodes located

in neighborhoods throughout the city … Each node converts optical signals carrying data,

video and other information into electrical signals and redistributes them to homes and

businesses on coaxial cable, the same technology that delivers cable television service.”73

71 “The electromagnetic radiation spectrum [or radio spectrum] is the complete range of the wavelengths of electromagnetic radiation, beginning with the longest radio waves (including those in the audio range) and extending through visible light (a very small part of the spectrum) all the way to the extremely short gamma rays that are a product of radioactive atoms.”  (http://whatis.techtarget.com/)72 http://www.pewinternet.org/pdfs/PIP_Broadband_Report.pdf, page 2.73 http://www.nycfuture.org/images_pdfs/pdfs/telecom.final.pdf, page 4.

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Cable modem connection speeds vary, but are usually 1.5 megabits per second74 (Mbps),

which is equivalent to about 30 standard dialup connections at 56 kbps, and can go up to

3 Mbps. Bandwidth is usually split 3:1 in favor of downloading (i.e., if total bandwidth is

1.6 Mbps, then download speed to the user will be 1.2 Mbps and the speed of uploading,

or sending data such as e-mails or files to the Internet, will be 400 Kbps). Because “users

in a neighborhood share the available bandwidth provided by a single coaxial cable line,

… connection speed can vary depending on how many people are using the service at the

same time.”75 Locally, residential cable modem service ranges from $45 to $85 a

month,76 while business-class cable modem service ranges from $60 to $530, depending

on the speed of the connection.77

Digital Subscriber Line (DSL)

DSL is the second most common broadband connection type, comprising about two-fifths

of the broadband market.78 “A big advantage of DSL is that it operates using twisted

pairs of copper telephone lines, which most businesses already have. A digital

technology that is offered by telephone companies, DSL transmits voice and data on two

different frequencies [on the same copper telephone line], allowing users to talk on the

phone and use the Internet at the same time.”79 DSL connection speeds also vary, but are

generally lower than cable modem, usually maxing out at 1.5 Mbps. Though the speed of

a DSL connection is generally more consistent, the quality of DSL service does fall if the

user is farther than 5.5 km away from a telephone exchange80 and “if the copper wires are

74 One million bits per second.75 http://en.wikipedia.org/wiki/Cable_modem. 76 http://www2.twcnyc.com/index2.cfm?c=internet/rates. 77 http://www2.twcnyc.com/index2.bus.cfm?c=new_bus/roadrunner#soho. 78 http://www.pewinternet.org/pdfs/PIP_Broadband_Report.pdf, page 2.79 http://www.nycfuture.org/images_pdfs/pdfs/telecom.final.pdf, page 4.80 http://en.wikipedia.org/wiki/Digital_subscriber_line.

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in bad shape.”81 That can often be the case in older buildings. Locally, residential DSL

service costs $35 a month,82 while business-class DSL service ranges from $40 to $235 a

month.83

T1 and T384

T1 connections are always rated at 1.544 Mbps (equivalent to cable modem and DSL

connections) while T3 connections are always rated at 44.736 Mbps (equivalent to 28 T1

lines).85 The bandwidth mentioned above is total and is equally split between “upload”

and “download.” 86 “Unlike DSL or cable modem users, who share a connection with

other users in the area and experience slower transmission speeds during times when

many people are online, T1 and T3 users enjoy fast service at all times over specially

dedicated lines.”87 The cost of a T1 connection ranges from $350 to $1200 a month,88

with a typical T1 connection costing $800 per month, while a typical T3 connection can

cost as much as $15,000 a month.89

Fiber Optics

“Fiber optic (or ‘optical fiber’) refers to the medium and the technology associated with

the transmission of information as light impulses along a glass or plastic wire or fiber.

Fiber optic wire carries much more information than conventional copper wire and is far

less subject to electromagnetic interference.”90 Fiber optic connections are usually rated

81 http://www.nycfuture.org/images_pdfs/pdfs/telecom.final.pdf, page 4.82 http://www22.verizon.com/forhomedsl/channels/dsl/package+price.asp. 83 http://www22.verizon.com/ForBusinessDSL/channels/bdsl/dsl/bdsl_home.asp?ID=business. 84 “In telecommunications, T-carrier is the generic designator for any of several digitally multiplexed telecommunications carrier systems originally developed by Bell Labs and used in North America and Japan.” (http://en.wikipedia.org/wiki/T-carrier) 85 From Matthew Rubenstein, Advisor to the Committee on Technology in Government.86 Ibid.87 http://www.nycfuture.org/images_pdfs/pdfs/telecom.final.pdf, page 4.88 Ibid.89 http://www.t1-t3-dsl-line.com/page/32/. 90 http://searchnetworking.techtarget.com/sDefinition/0,,sid7_gci212113,00.html.

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in "Optical Carrier" (or OC) units of 51.840 Mbps. Fiber optic connections usually serve

as network backbones for telephone service (e.g., long-distance telephone service) and

the Internet (e.g., connecting smaller networks together) and generally run at OC3 speeds

(over 150 Mbps, equivalent to 100 T1 connections) and up to OC192 (almost 10 Gigabits

per second91 (Gbps). Theoretically, a single strand of fiber can have a data rate of up to

40 Gbps.92

There is a growing movement to bring fiber to residents and businesses through Fiber To

The Home (FTTH) systems and Fiber To The Curb (FTTC) or Fiber To The Premise

(FTTP) systems, collectively known as FTTx. FTTH is a “type of Internet connection

involv[ing] the installation of a fiber-optic line all the way to your home. The connection

is high-speed; at the time of writing maximum potential downloads speeds of 100Mbps

are available, depending on the type of FTTH service you apply for.”93 FTTC (or FTTP)

is a “network where an optical fiber runs from the telephone switch to a curbside

distribution point [or in the basement of a building, otherwise known as the ‘premise’],

close to the subscriber where it is converted to copper pair.”94 “Most [fiber to the curb

or] fiber-to-the-premises projects use a technology called ‘passive optical networking,’

which allows download speeds of 622 Mbps and uploads of 155 Mbps. The technology

lets that bandwidth be split, so a single fiber could be shared by several homes [or

apartments].”95 Verizon has announced plans to deploy FTTH technology nationwide. It

91 One billion bits per second.92 http://en.wikipedia.org/wiki/Fiber_optics. 93 http://www.asahi-net.or.jp/en/glossary.html#ftth. 94 http://www.westband.net/information/glossary/. 95 http://news.com.com/Broadband+A+life-saving+technology/2009-1034_3-5261361.html?tag=nl.

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is offering its FTTH customers 5 Mbps download and 2 Mbps upload from $34.95 a

month and 15 Mbps download and 2 Mbps upload from $44.95.96

Broadband Over Power Lines (BPL)

BPL is also known as Power Line Communication (PLC). It is a “technology that allows

Internet data to be transmitted over utility power lines.”97 “With BPL, all you have to do

is plug a BPL modem into any power socket, and you instantly have a high speed

connection ... To do this, BPL uses a different frequency spectrum than the actual power,

so data and power can co-exist on the same power line at any given time.”98 BPL can

currently provide a combined bandwidth of 3 Mbps upstream and downstream. Because

BPL requires no extra infrastructure (while DSL and cable modem does), it is cost

effective to roll out – though amateur radio signals may interfere with BPL. “Trials of

BPL have begun in Manassas, VA; Allentown, PA; and Cincinnati, Ohio,”99 but BPL has

not deployed on a large scale anywhere in the world.

Wireless Broadband Technologies

Wi-Fi

Wi-Fi, short for "wireless fidelity", is the popular term for the high-frequency wireless

Local Area Network100 (LAN) standard 802.11 (the name given to this standard by the

Institute of Electrical and Electronics Engineers101). Wi-Fi technology operates in the 2.4

96 http://www22.verizon.com/FiosForHome/channels/Fios/HighSpeedInternetForHome.asp?promotion_code=&variant=. 97 http://searchnetworking.techtarget.com/sDefinition/0,,sid7_gci953137,00.html. 98 http://www.ugo.com/channels/tech/features/futureofbroadband/bpl.asp. 99 Availability of Advanced Telecommunications Capability in the United States: Fourth Report to Congress, pg. 23, Federal Communications Commission (http://www.fcc.gov/), September 9, 2004.100 A local area network or LAN is “A local area network (LAN) is a computer network covering a local area, like a home, office or small group of buildings such as a college.” (http://en.wikipedia.org/wiki/LAN) 101 http://www.ieee.org/portal/site/mainsite/menuitem.e0007c26eb2a454de38570e85bac26c8/index.jsp?&pName=home.

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gigahertz102 (GHz) and 5 GHz range offering data speeds up to 11 megabits per second,

much faster than cable, DSL and T1 connections.  The transmission distance of Wi-Fi

“hot spots” are between 100 to 300 feet range, depending upon the environment. “An

interconnected area of hot spots … is known as a hot zone.” 103 Also, like DSL and cable

modem, Wi-Fi’s bandwidth is shared among users so the speed of the connection varies.

A Wi-Fi network can be susceptible to access by unauthorized users, but they can be

secured through the use of virtual private networks104 or VPNs.105 In Cerritos, California,

“the city's Wi-Fi broadband service … come[s] in three basic packages: an at-home

service for $39.99 per month with downlink speeds of up to 500 kilobits/sec and [up] link

speeds of 250 kilobits/sec; an in-town service providing the same speeds that start at

$4.99 per hour; and a business-pro package delivering both uplink and downlink speeds

of up to 1 megabit/sec for $249.99 per month.”106 While in Chaska, Minnesota for speeds

up to 3 Mbps, the City is charging $15.99 per month for residential service and $24.99

per month for business-class service.107

WiMAX

WiMAX is a commercial consortium’s108 brand name for the wireless Metropolitan Area

Network109 (MAN) standard 802.16 (the name given to this standard by the Institute of

102 “A gigahertz is a billion hertz or a thousand megahertz, a measure of frequency. … Radio waves sent at gigahertz frequencies usually travel in line of sight. Gigahertz frequencies or microwaves are also used in cellular telephones, microwave ovens, radar and other uses.” (http://en.wikipedia.org/wiki/Gigahertz) 103 http://searchmobilecomputing.techtarget.com/gDefinition/0,294236,sid40_gci929334,00.html. 104 “Secure VPNs use cryptographic tunneling protocols to provide the necessary confidentiality (preventing snooping), sender authentication (preventing identity spoofing), and message integrity (preventing message alteration) to achieve the privacy intended. When properly chosen, implemented, and used, such techniques can indeed provide secure communications over unsecured networks.” (http://en.wikipedia.org/wiki/VPN) 105 Opinion of Matthew Rubenstein, Advisor to the Committee on Technology in Government.106 http://www.fcw.com/geb/articles/2003/1208/web-cerritos-12-08-03.asp. 107 http://www.chaska.net. 108 http://www.wimaxforum.org/home. 109 “Metropolitan area networks or MANs are large computer networks usually spanning a campus or a city.” (http://en.wikipedia.org/wiki/Metropolitan_area_network)

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Electrical and Electronics Engineers110). WiMAX “operates in the 2-11GHz frequency

band over a theoretical maximum range of 31 miles with a theoretical maximum data

transfer rate of 70Mbps.”111 “The purpose of 802.16 is to standardize broadband wide

area wireless networking for both fixed and mobile connections, offering extremely high

bandwidth connections without requiring a line-of-site [LOS] communications between

the device and the broadcast antenna.”112 The need for LOS is a problem with most

current wireless technology, including Wi-Fi. WiMAX theoretically solves this problem.

Towerstream,113 a WiMAX vendor that offers service in New York City, offers a full T1

line (1.5 Mbps) for $500 a month, less than the average wireline T1 line by a several

hundred dollars, and 100 Mbps for $5000 a month – more than double the bandwidth of a

T3 at about one-third the cost.114

Emergence of Municipal Wireless Broadband Initiatives

Many cities around the United States and throughout the world are going with wireless

broadband technologies as their first mile solution of choice. Three major U.S. cities that

are going forward with comprehensive municipal wireless broadband initiatives are

Philadelphia, Pennsylvania,115 Atlanta, Georgia,116 and Los Angeles, California.117 Cities

with existing wireless broadband initiatives include: Spokane, Washington,118 Chaska,

110 http://www.ieee.org/portal/site/mainsite/menuitem.e0007c26eb2a454de38570e85bac26c8/index.jsp?&pName=home. 111 http://mobilepipeline.com/specwatch/80216.jhtml. 112 Ibid.113 http://www.towerstream.com/content.asp?home. 114 Ibid.115 http://www.phila.gov/wireless/. 116 http://netstumbler.com/2004/12/16/wi_fi_network_could_become_nations_largest/. 117 http://www.etopiamedia.net/ula/pages/ula0-5551212.html. 118 http://www.time.com/time/2004/wireless/story.html.

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Minnesota,119 Santa Clara, California,120 Corpus Christi, Texas,121 Rio Rancho, New

Mexico122 and Cerritos, California.123 Internationally, Taipei, Taiwan is planning to

create the world’s largest municipal wireless broadband initiative.124 Some of these

municipal wireless broadband initiatives end up being publicly owned and operated

networks, while others are public/private ventures. One of the main reasons for the

emergence of municipal wireless broadband is that wireless broadband has some

significant advantages over wireline broadband. Namely, it costs less and it is easier to

deploy.

Advantages of Wireless Broadband

Lower Cost

“’The best thing about wireless is its low infrastructure costs. … Instead of spending tens

of thousands—or even hundreds of thousands—of dollars to bring fiber into a building,

wireless providers can install the necessary equipment with an upfront cost of around

$1,000. After that, businesses should initially be able to subscribe to WiMAX service for

about $100 a month, with rates declining over time,’” 125 says Shivendra Panwar, director

of the New York State Center for Advanced Technology in Telecommunications126

(CATT) at Polytechnic University. The City of Philadelphia believes wireless broadband

can be deployed for $40,000 to $60,000 per square mile, and they plan to cover all 135

square miles of Philadelphia, which has a population of about 1.6. million, by spending

119 http://www.chaska.net/. 120 http://www.bizjournals.com/eastbay/stories/2004/10/25/focus2.html. 121 http://www.muniwireless.com/archives/000402.html. 122 http://www.technewsworld.com/story/38040.html. 123 http://www.fcw.com/geb/articles/2003/1208/web-cerritos-12-08-03.asp. 124 http://www.dailywireless.org/modules.php?name=News&file=article&sid=3241. 125 http://www.nycfuture.org/images_pdfs/pdfs/telecom.final.pdf, page 21.126 http://catt.poly.edu/.

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only $7 - $10 million for the initial deployment – with maintenance being $1.5 million a

year.127 At the upper end, that is about $6.25 per person to initially connect every person

in Philadelphia. The City of Taipei, Taiwan plans to spend $70 million to connect over

2.6 million residents over 105 square mile area.128 That is about $27 per person to

connect almost 90 percent of Taipei’s population. In comparison, the borough of

Brooklyn covers 72.5 square miles and has a population of almost 2.5 million.

Easier to Deploy

Because wireless does not rely as intensely on the existing telecom infrastructure and can

draw upon city assets such as its lampposts and building rooftops, it can be brought more

easily to areas of the city that are currently underserved by major telecom providers.129

Also, one of the major problems with wireline broadband technologies is digging into the

ground to lay the lines and that is about “80 percent of the costs.”130 “Wireless doesn’t

have that cost. All you need is fiber close by, which you have in New York.”131 The City

of Philadelphia believes:

“Individual Wi-Fi cells can be mounted on streetlights creating a self-organizing

and self –healing wireless mesh. From 8 – 16 units will be needed per square

mile and a single worker can install ten units per day. Wireless access is scalable

and connectivity is available as soon as units are installed.”132

127 http://www.phila.gov/wireless/facts.html. 128 http://www.dailywireless.org/modules.php?name=News&file=article&sid=3241.129 http://www.nycfuture.org/images_pdfs/pdfs/telecom.final.pdf, page 20.130 Ibid, page 21.131 Ibid.132 http://www.phila.gov/wireless/facts.html.

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Wi-Fi and WiMAX Complement Each Other

WiMAX can deliver connectivity to a corporate office, offering T1-level (or higher)

connection speeds and reliability. Then internally, a business could then deploy Wi-Fi

hotspots to connect all of its computers and users.

Issues with Wireline Broadband Technologies

Cable Modem and DSL

Besides the fact that cable modem and DSL are not available – or are unreliable – for

many businesses, the cost of business-class cable modem and DSL service can be

prohibitively expensive, particularly for many small businesses.133

T1 and T3

“While some businesses across the five boroughs continue to be stymied in their attempts

to get any form of broadband, in most cases, the problem is that companies can’t afford

the one option they do have for a high-speed Internet connection: a T1 line … they

typically cost several times as much and are out of the price range of the overwhelming

majority of small businesses.”134 A T3 line is generally too much bandwidth for a small

business and even farther out of the price range of most small businesses.

FTTH, FTTC and FTTP

Currently, Fiber To The Home service is being provided in number of communities

around the country by local governmental bodies135 and though the telephone companies,

133 http://www.nycfuture.org/images_pdfs/pdfs/telecom.final.pdf, page 8.134 http://www.nycfuture.org/images_pdfs/pdfs/telecom.final.pdf, page 2.135 For a list of municipalities that have implemented FTTH systems, go to http://www.ftthcouncil.org/dbfiles/techexchange/2004%20-05-19%20OptFiberCommunList.pdf.

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such as Verizon, are touting aggressive FTTH plans,136 it is unclear whether these plans

will actually come to fruition, particularly in the face of increasing competition by other

broadband technologies. The main problem rolling out is the expensive and laborious

process of digging up those streets to install fiber lines.137 Although FTTH may be in one

million homes by the end of the 2005,138 the cost of one installation of FTTH connection

can be up to $1,000.139 Thus, FTTH is viewed as a broadband technology for “new

estates and areas”140 – which New York City has very little of. “To a large extent, the

economics of wiring business areas outside of Manhattan just doesn’t add up for telecom

companies. Outside of midtown and downtown Manhattan, there are few high-rise office

buildings, and few of the large corporations that make telecom providers salivate.”141

BPL

BPL has the potential to provide broadband connectivity to every home and business, but

the technology is not proven on a large scale – and not even on a small scale.

136 http://www.businessweek.com/magazine/content/03_31/b3844001_mz001.htm. 137 http://news.com.com/Broadband+A+life-saving+technology/2009-1034_3-5261361.html?tag=nl. 138 http://lw.pennnet.com/Articles/Article_Display.cfm?Section=Articles&Subsection=Display&ARTICLE_ID=165752. 139 http://www.ugo.com/channels/tech/features/futureofbroadband/ftth.asp. 140 Ibid.141 http://www.nycfuture.org/images_pdfs/pdfs/telecom.final.pdf, page 13.

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Should the City of New York Help Close the Gap?

Reasons Why the City of New York May Consider Stepping In

Historic Role of Government in Spurring Technological Innovation

“Government almost single-handedly financed the research budgets of the technology

industry in the mid-20th century that led to some of the first breakthroughs in computing

technology. Government sponsored the original research that led to the Internet.

Government has been one of the primary buyers of the first generation of every new

computing technology.”142

Government Steps In When There is Market Failure

Robert Atkinson, Director of Policy Research and Special Projects at the Columbia

Institute for Tele-Information,143 says “’If the lack of broadband in certain areas is

because of market failure, government has a proper role to inject itself. The correct role

for government is to act as a catalyst. … It could nudge [private telecom carriers] to do

something in the Brooklyn Navy Yard or Red Hook.”144

More and More Governmental Bodies Are Stepping In

Besides the many municipal wireless initiatives already implemented or starting up all

over the country and the world, governmental entities are also moving forward with other

types of broadband initiatives, such as municipal FTTH initiatives. Some cities and

counties implementing municipal systems include Palo Alto, California,145 Kutztown,

142 http://www.governing.com/articles/12tech.htm. 143 http://www.citi.columbia.edu/. 144 http://www.nycfuture.org/images_pdfs/pdfs/telecom.final.pdf, page 17.145 http://www.pafiber.net/.

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Pennsylvania,146 and Grant County, Washington.147 In Utah, 14 cities are working

together on a project called UTOPIA, which will bring a 100% fiber optic network to

every business and household  (about 140,000) in those 14 cities.148  In Michigan, the

state government created the Michigan Broadband Development Authority.149 Its mission

is “to expand broadband access for Michigan's citizens and businesses … [by] offer[ing]

organizations in the public and private sector low-cost financing for the acquisition of

hardware, software and services that will improve or increase their use of broadband

technologies.”150 Finally, “South Korea, Singapore and other Asian nations supercharged

broadband adoption starting in the 1990s by pouring billions of dollars worth of

government money into building high-speed networks”151 to spur economic development.

The Importance of Small Businesses in the Other Boroughs

Small Businesses Are A Significant Part of the New York City Economy

“Small businesses now account for the lion’s share of new jobs being created in the U.S.

and are likely to be increasingly important to New York in the years ahead, as large

corporations continue to shift jobs to the surrounding region and other, less expensive

locations. As it is, 98 percent of all businesses in the city have fewer than 100 employees

and 90 percent have less than 20.”152

146 http://www.municonsortium.com/press/muni_031003_kutz.shtml. 147 http://lw.pennnet.com/Articles/Article_Display.cfm?Section=Articles&Subsection=Display&ARTICLE_ID=133474. 148 http://www.utopianet.org/. 149 http://www.michigan.gov/cis/0,1607,7-154-28077_28233---,00.html. 150 Ibid.151 http://www.usatoday.com/tech/techinvestor/2004-01-19-broadband_x.htm.152 http://www.nycfuture.org/images_pdfs/pdfs/telecom.final.pdf, page 3.

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Economic Growth is Occurring Outside of Manhattan

“Some of the city’s brightest prospects for economic growth lie outside of Manhattan’s

central business districts (CBDs). Roughly 48 percent (102,000 firms) of the city’s

213,000 businesses are located outside of Manhattan. In addition, many of the sectors

with the greatest potential for growth in New York are heavily concentrated outside of

the CBDs – including health services, the arts, film and music production, air

transportation and food production.”153

Global Competition Is Around the Corner

“Small businesses face ever-intense competition in today’s global economy. Whether it

is a printing company in Long Island City or a recording studio in Williamsburg,

businesses in New York that do not have broadband will surely miss out on opportunities

for growth and find themselves at a competitive disadvantage.”154 “Spreading fast

Internet access in the United States is so critical to long-term economic might that

TechNet, a group of top U.S. tech CEOs, says it’s the 21st-century equivalent of landing

a man on the moon.”155

Broadband: A Civil Right?

Michael Copps, a current FCC Commissioner, said recently “each and every citizen of

this great country should have access to the wonders of telecommunications—whether

they live in the rural countryside or the inner city; whether they are high income or low

income; whether they have disabilities, whether they are young or old. I’d go even

153 Ibid.154 Ibid.155 http://www.usatoday.com/tech/techinvestor/2004-01-19-broadband_x.htm.

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further: I don’t think it exaggerates much to characterize access to telecommunications

in this modern age as a civil right.”156

Possible Broadband Policies For NYC to Adopt

Consider Municipal Wireless Broadband Initiative

New York City may consider exploring the possibility of developing a municipal wireless

broadband initiative. The types of municipal wireless broadband initiative it could

consider are:157

Free Community Wireless Network. This network would provide free wireless

access for citizens for economic development purposes, often in more historic

areas. Funding for this type of project would come from government funding,

foundation grants, and revenues from ads on the network’s homepage.

Private Consortium Model. The aim of this type of initiative would be to

profitably provide a wireless network to businesses, governments, and citizens,

focusing on quality of service and security as well as building a subscriber base.

This model would be funded privately with the possibility of obtaining federal

government grant monies like E-rate.158

Cooperative Wholesale Model. This type of initiative would provide network

connections for all government agencies at cost, thereby saving taxpayer money.

Excess capacity could be sold at wholesale to private providers who then sell 156 Speech by Michael Copps, FCC Commission, to Manhattan Hispanic Chamber of Commerce on October 8, 2004.157 This section is based on Civitium's (Matt Stone, Co-Founder and Government Strategist, Civitium) presentation at PTI's 2004 Metro Wi-Fi Summit: http://www.civitium.com/PTICC.ppt. 158 http://www.libraryspot.com/erate/whatiserate.htm.

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wireless services to businesses and individual consumers. This network would be

funded using local, state, and federal monies as well as through revenue earned by

selling excess capacity wholesale to wireless Internet service providers and other

broadband providers.

Create a Commission With All Relevant Stakeholders159

The City should consider establishing and funding a non-partisan, non-bureaucratic (that

is, not run by a governmental agency), public/private sector “commission,” with all

relevant stakeholders from government, the non-profit sector and the private sector,

including incumbent wireline broadband providers. The City of Philadelphia created a

Philadelphia Wireless Executive Committee,160 and the City of Los Angeles created a

Broadband Executive Panel.161 The objectives of this organization could be: (1)

identifying the relevant dimensions of this problem (2) identifying alternatives along with

their implications (3) developing a strategic plan for moving forward expeditiously (4)

identifying funding alternatives and (5) recommending both priorities and specific action

steps.162 This “commission” would need not be permanent, possibly in existence for one

year to eighteen months, and deliverables should be available for wider discussion within

a short period of time.163

159 This idea was proposed by Mike Uretsky, Professor of Information Systems, Stern School of Business, New York University.160 www.phila.gov/wireless/. 161 http://www.etopiamedia.net/ula/pages/ula0-5551212.html.162 E-mail from Mike Uretsky to Bruce Lai on December 28, 2004.163 Ibid.

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Conduct Survey of Broadband Connectivity in NYC

A survey of this kind could help government and the private sector, particularly

broadband providers, see where there are gaps in broadband. Additionally, this survey

could analyze what kind of potential demand for broadband in different neighborhoods,

helping the private sector target the right customers. Currently, the New York City

Council has introduced legislation, Int. No. 27164, that mandates a “a review of residential

and business broadband accessibility in the city of New York.”165 Passage of this

legislation might aid in the survey effort.

Educate Businesses about Broadband

As noted above, one of the reasons for the broadband gap in New York City is that many

businesses do not see the pressing need for broadband. Also, many businesses do not

have the knowledge and/or time to find the right broadband connection. Both City

government and broadband providers could implement marketing campaigns – possibly

through business intermediaries like industry associations, Chambers of Commerce, local

development corporations, and business improvement districts166 – on educating small-

and medium-sized businesses on the benefits of broadband and e-business technologies

as well as providing simple information about the availability of broadband, who to call

to get broadband service and what the rates for various services are.167 Also, city

government, possibly through the Department of Small Business Services, could provide

educational and technical assistance to “clusters of businesses that have common

164 http://webdocs.nyccouncil.info/textfiles/Int%200027-2004.htm?CFID=304399&CFTOKEN=47785191.165 Ibid.166 http://www.nycfuture.org/images_pdfs/pdfs/telecom.final.pdf, page 24-25167 America’s Inner Cities Wired to Compete: A Report on Inner City Broadband Readiness and E-Business Technology Adoption, page 11, The Initiative for a Competitive Inner City (http://www.icic.org/) & The Boston Consulting Group (http://www.bcg.com/home.jsp), November 2002.

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characteristics rather than to individual firms”168 through their Business Solutions

Centers169 that are in every borough.

Promote the Development of Clusters and Networks

One way to make broadband services affordable is to organize the buying power of

small- to mid-sized businesses, making broadband services – from DSL to cable to fiber

optics – economically feasible for both the broadband provider and the businesses

involved. Clusters170 (in close geographic proximity) and networks171 (not in close

geographic proximity, possibly organized by industry) could share the costs of buying

broadband services, whether it is for the cost of running a fiber lateral into an office

building or the sharing of a single broadband connection, like a T1 line, a DSL or cable

modem connection, or a Wi-Fi and/or a WiMAX connection.

168 http://www.nycfuture.org/images_pdfs/pdfs/telecom.final.pdf, page 3.169 http://www.nyc.gov/html/sbs/html/nycbs/. 170 The Greenpoint Manufacturing and Design Center (GMDC) is a model cluster, which shares machinery and equipment among companies’ programs, allowing small businesses to access state-of-the-art production technology without incurring the burdensome overhead costs that would result from purchasing and maintaining the equipment on their own account. (http://www.gmdconline.com/doc.asp?id=75&pid=204)171The New York State Education and Research Network (NYSERNET) is exemplary of a network that shares technology costs. NYSERNET has pooled the resources of many of New York’s colleges and universities to build their own private high-capacity fiber network throughout New York State, extending into New York City, with plans to build into Long Island, through Brooklyn and Queens, in the near future. To learn more about NYSERNET, go to: http://www.nysernet.org/.

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Reserving Bandwidth on Municipal Networks

Connecting to the City’s I-net

The Institutional Net172 (or I-Net) is the “backbone” of a municipal fiber-optic network

that serves multiple City agencies. However, with the large amount of bandwidth that it

has, I-Net could conceivably serve both City agencies as well as the general public,

including the many small businesses and nonprofit organizations that are a large part of

New York City’s economy. One way to provide this bandwidth is to use wireless

technology (e.g., Wi-Fi, WiMAX) to “beam out” a wireless signal to selected businesses

and nonprofit organizations, with I-net serving as the network backbone to an extended

municipal network. Of course, this may not be possible because allowing non-

governmental entities access to I-net might violate cable and broadband franchise rules.173

However, the City Council could change the authorizing resolution that allows

Department of Information Technology and Telecommunications to issue franchises so

that all future RFPs related to broadband will include stronger universal access

requirements.

172 “The Institutional Net or I-Net is an advanced telecommunications network that consists of high-speed fiber optic cables laid under the City that is able to transmit voice, video, and data at speeds far in excess of even T-1 lines. Right now, I-net provides, at virtually no cost to the City, high quality videoconference systems serving the Department of Education’s Citywide Training Network (CTN), the City's Court Judicial Systems and connections for computer systems operations and CityNet. New York City’s Institutional Network (I-Net) is provided for and maintained by the City’s franchise agreements with broadband and cable providers.” (Briefing Paper to the Committee on Technology in Government and the Subcommittee on Zoning and Franchises of the New York City Council, Oversight Hearing on February 10, 2004.)173 Testimony of Agostino Cangemi, General Counsel, New York City Department of Information Technology and Telecommunications, at an Oversight Hearing of the Committee on Technology in Government and the Subcommittee on Zoning and Franchises of the New York City Council, that took place on February 10, 2004.

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Utilizing Other Municipal Networks

Many municipal networks require an infrastructure that covers the entire city of New

York. It is possible for leftover bandwidth to be shared with businesses in underserved

neighborhoods. Some possible municipal networks, which could provide a network

“backbone” to a larger wireless municipal network for underserved neighborhoods,

include the fiber network that runs through the New York City’s subway system, the

Department of Education’s planned fiber network to connect all of the schools, and the

planned citywide mobile wireless network174 for public safety officers.

Encourage Build Out of Telecommunications Infrastructure

The City owns many rights-of-way where telecommunications equipment could be used

to install, expand and enhance the telecommunications infrastructure of New York City.

One way the City would promote the build out of the telecommunications infrastructure

to underserved areas, such as the Brooklyn Navy Year, Red Hook and East New York, is

to offer the private sector incentives to do so. Specifically, the City could reduce the

price of access to City-owned poles, for example, in underserved neighborhoods, while

leaving prices unchanged in high demand areas like downtown and midtown Manhattan.

Other rights-of-way that the City could use to promote broadband access are the rooftops

of municipal-owned buildings, the water mains and the sewers. Recently, the City sold

franchises for City-owned pole tops,175 including light poles, highway sign poles, and

traffic light poles. However, the franchises were not designed to promote wireless

broadband in underserved areas. To the City’s credit, the RFP (request for proposals) did

174 http://www.nyc.gov/html/doitt/html/miscs/rfp_mobile_wireless.shtml. 175 http://www.nyc.gov/html/doitt/html/business/poletop_rfp.shtml.

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offer incentives for companies to provide wireless VoIP to areas where many people do

not have a wireline (copper) phone service.

Move Towards E-Government Faster

By moving more City services on-line, such as applying for licenses and contracts as well

as paying fines, 176 as well as enhancing existing on-line services with multimedia

functionality, such as audio and video streaming and/or Geographic Information Systems

(GIS) map information,177 city government can improve the quality of services, lower

service delivery costs and stimulate broadband demand in New York City.

176 http://www.nycfuture.org/images_pdfs/pdfs/telecom.final.pdf, page 11.177 E-mail from Matthew Rubenstein, Adviser to the Committee on Technology in Government, to Bruce Lai on December 20, 2004.

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