The Impacts of Broadband
Research Findings from the Broadband Economists
Doug Adams
Head of Communications
Blandin Foundation Conference Webinar
November 8, 2012 - Minnesota
© Strategic Networks Group, Inc. 2012
Michael Curri
President
We are the “Broadband economists”
WE ARE a global leader in broadband planning for socio-economic development
WE PROVIDE data and insights to increase
broadband utilization and impacts
WE DELIVER strategies for economic development
and community transformation through broadband
UK Department of Trade
and Industry
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© Strategic Networks Group, Inc. 2012
Some of our clients:
Why we Build Broadband Networks
Operators
Revenues from client subscriptions
- Investment and maintenance costs
= PROFIT
Local Economy
Increased productivity and competitiveness,
increased revenues, new jobs,
better quality of life, etc.
“Offbalancesheet”
= BENEFITS FOR THE COMMUNITY
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© Strategic Networks Group, Inc. 2012
- Investment, maintenance, support
Broadband Direct Impacts
© Strategic Networks Group, Inc. 2012
Benefits from the Digital Economy
Broadband’s Profound Impact
on Job Creation
Broadband is responsible for 22.4% of all new jobs
0.35
0.31541537
1
Percent of New Jobs
Related to Internet
0.3
0.25
By Size of Employer Group
0.21390707 23.1% 0.19189229 22.4%
8
2
Small businesses
create 12x more
Internet jobs
relative to large
firms
0.15
0.1
0.05
0
Employees
Source: SNG Digital Economy Database n = 3,574 from NC, VA and KY collected in 2010-12
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© Strategic Networks Group, Inc. 2012
0.2
Broadband and Communities
Broadband retains and attracts population and businesses
72% of home-based businesses
say broadband was essential for
their business
32% of households have a homebased business, with 14%
planning to start one in the
coming year
55% of business and organizations
said broadband is essential for
remaining in current location
6
Source: SNG Digital Economy Database n = 34,000
© Strategic Networks Group, Inc. 2012
38% of households said they
would definitely, or likely,
relocate if broadband was not
available
ROI from Broadband Networks
SNG projects have revealed common return on investment (ROI) multipliers
from broadband investments
Economic ROI from Public Investments in Broadband
10 x
Variable
Number of Jobs created and saved
Fiscal revenues increase
the initial public investment
3 to 4 x the initial public investment
Average multipliers identified from economic impact studies conducted by SNG.
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© Strategic Networks Group, Inc. 2012
Contribution to GDP
Build It and They Will Come????
© Strategic Networks Group, Inc. 2012
The Marketing Theory Behind Why
Building Is NOT Enough
Utility vs.Technology
Utility
Technology
Basic Need
(water, roads, electricity)
A Luxury, a “nice to have”
(smart phone, DVR, HD TV)
Basic Internet Service
Ultra fast and/or fiber Internet Service
The “Broadband is a Utility” argument discounts the fact that
adopting better broadband is a technology upgrade decision.
 E-Solutions
 Ultra-fast broadband
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© Strategic Networks Group, Inc. 2012
In 2012, to maximize broadband’s benefits and drive innovation,
business, organizations and households must adopt and utilize…
Technology’s Adoption Groups
We all tend to fall somewhere on the “technology adoption curve”
“Innovators” alone will not create a sustainable network
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© Strategic Networks Group, Inc. 2012
This is the “nature part of the equation of broadband’s consumers (stay
tuned for the nurture)
“Crossing the Chasm” *
“Faster” is not a benefit!
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* Geoffrey A. Moore, 1991
© Strategic Networks Group, Inc. 2012
Innovators buy features, The rest of us want benefits
2 Simple Steps (But Not 1)
Education – driving understanding of the benefits
of ultra-fast broadband
Close – getting the household, company, organization
to actually signup
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© Strategic Networks Group, Inc. 2012
So how do we do this????
And to the Nurture…
The theory of “Diffusion of Innovations” tells us
that you can NURTURE a person’s nature by doing
the following…
Explain the technology – Distinguishing the difference and
the promise of the new technology
Create a communications plan to reach target audience(s)
Use the social system (Influencers) to tout the technology’s
advantages
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© Strategic Networks Group, Inc. 2012
Reduce the time it takes to realize benefits by ratcheting up
Knowledge of ROI, benefits, etc.
Driving Utilization
© Strategic Networks Group, Inc. 2012
Technology is not enough
One Factor is not Enough
Lagging
Technology
Skills
Average
Technology
No Skills
Average
Technology
Skills
BENEFITS
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© Strategic Networks Group, Inc. 2012
In the Broadband Equation,
the quality of each input affects the output
Experience Matters as much
as Technology
6.764232078
7
6.263257888
6.5
6.001933744
5.863567046
6
5.5
5.660102041
5.272681704
5
Time using broadband
Optimized broadband utilization is not inborn, but acquired
16
Source: SNG Digital Economy Database n = 14,176 from NC, VA, KY and LA collected in 2010 and 2012
© Strategic Networks Group, Inc. 2012
Broadband utilization from 0 to 10 (DEi score)
Average Broadband utilization from 0 to 10 (DEi Score) /
Experience using broadband
The Biggest Barrier is Not Knowing
Fear of the unknown overrules slow Internet as a barrier
Privacy concerns
41.0%
Security concerns
40.3%
25.5%
Loss of personal contact with clients
23.6%
Available Internet is too slow
18.4%
Lack of internal expertise and knowledge
0%
10%
20%
30%
40%
50%
Percent Establishments defining above barriers to using the Internet as “Very Important”
17
Source: SNG Digital Economy Database n = 12,177 from NC, VA, KY and LA collected in 2010 and 2012
© Strategic Networks Group, Inc. 2012
22.5%
High cost of development/maintenance
Adoption and Utilization Is Key
© Strategic Networks Group, Inc. 2012
How SNG Helps Drive Utilization
How SNG Measures Utilization
We uncover Internet use at a micro-level
and benchmark against peers
17 e-solutions1 by organizations
30 e-solutions1 by households
Utilization data collected2 by SNG directly
From 23,000 businesses / organizations
And 11,000 households (a normative database).
DEi scoring process enables
comparisons and rankings by sector or region
1. Internet-enabled applications and processes; 2. Between 2008-2012
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© Strategic Networks Group, Inc. 2012
Results shown use SNG’s Digital Economy index (DEi), a composite score
between 1 and 10 to reflect level of Internet utilization.
Increased Utilization Directly
Correlates to Revenue Growth
0.368129151
40%
0.2935330190.306674009
35%
0.254713514
30%
0.199863014
25%
20%
0.147755556
0.156912162
15%
10%
5%
0%
Level of Broadband Utilization (DEi score)
Businesses underutilizing the Internet miss significant revenue opportunities
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Source: SNG Digital Economy Database n = 1,202 from NC, VA and KY collected in 2010-12
© Strategic Networks Group, Inc. 2012
% of Revenues attributed from Internet usage
Contribution of Internet to Revenues / Level of utilization
The adoption process
for e-solutions by businesses
e-Solutions with greatest impact used by those
with most experience & skills (i.e. highest DEi Score)
1
0.9
Utilization
0.8
Fast / Early Adoption
0.7
0.6
0.5
Highest value,
but requires awareness
and high quality
Internet connection
0.4
0.3
0.2
Slow / Late Adoption
0.1
0
0 up to 1
1 up to 2
2 up to 3
3 up to 4
4 up to 5
5 up to 6
6 up to 7
Fast / Early Adoption
7 up to 8
8 up to 9
9 up to 10
Slow / Late Adoption
© Strategic Networks Group, Inc. 2012
DEi Score
Access government information
Research by staff
Teleworking
Deliver services and content
Electronic document transfer
Website for organization
Selling goods or services
Social networking
Purchasing goods and services
Rich media or service creation
Source: SNG Digital Economy Database n = 9,677 from NC, VA, KY and LA collected in 2010-2012
© Strategic Networks Group, Inc. 2012
Broadband Utilization and
Household Earning Power
Higher value e-solutions being used by fewer households
7.5
100%
90%
7.0
80%
6.5
60%
50%
6.0
40%
Utilization
DEi Score
70%
30%
5.5
Highest value, but requires awareness and
high quality Internet connection
20%
10%
0%
Biggest benefits!
Average DEi Score
Source: SNG Digital Economy Database n = 4,638 from NC, VA, KY and LA collected in 2010
Percentage of Households (%)
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© Strategic Networks Group, Inc. 2012
5.0
Driving Adoption and Utilization
DEi Scorecard is delivered to each
business and organization
Individualized one page report that presents:
benchmarking against peers, potential ROI
from increased utilization, local advisors
Data based on the individual’s current
broadband utilization and industry average
Automatically created and distributed by
SNG online tools
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© Strategic Networks Group, Inc. 2012
Shared with local economic development
agencies so they can help businesses and
organizations throughout the process
Why Drive Utilization?
For an individual business or organization, increasing utilization
by 10% means :
Increasing revenues by 24%
Decreasing costs by 7%
For a Region, it means :
Allowing businesses to be more competitive
Adding fiscal revenues
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Average multipliers identified by SNG from over 12,000 data records collected in 2009-10.
© Strategic Networks Group, Inc. 2012
Creating a demand for high-skilled workers
The Elements of Success
TO ENSURE
Economic Growth and quality of life from broadband
YOU NEED
Reliable, affordable BB
Meaningful utilization
Local ownership to drive economic development
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© Strategic Networks Group, Inc. 2012
Responsive Customer Service
Thank-you
Michael Curri, President
Strategic Networks Group, Inc.
North America + 1.613.234.1549
mcurri@sngroup.com
Doug Adams, VP of Communications
Strategic Networks Group, Inc.
Let’s connect !
www.sngroup.com
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© Strategic Networks Group, Inc. 2012
North America + 1.330.933.3374
dadams@sngroup.com
Community Anchor Institutions
© Strategic Networks Group, Inc. 2012
First in line for community improvements
Better Broadband, Healthier Citizens
Internet benefits to health organizations
Make day-to-day operations easier
Use existing resources more effectively
Improve service to customers and clients
0.755898367
0.175136116
0.74137931
0.201451906
0.709618875
0.685117967
Reach new customers and clients
0.615245009
Adopt new operational processes
0.612522686
Lower operating costs
0.586206897
Increase revenues
0.575317604
Improve coordination with suppliers
0.226860254
0.225952813
0.264972777
0.22323049
0.212341198
0.556261343
Reduce cost of products and services
0.24137931
0.530852995
Keep pace with competitors
0.20508167
0.482758621
Reduce time to market for products or services
0.230490018
0.453720508
introduce new products or services
0.163339383
0.402903811
Increase teleworking
0.253176044
0.351179673
0%
10%
20%
0.245916515
30%
40%
50%
60%
70%
80%
90%
100%
Internet benefits/ Pct. establishments
Very Important
Somewhat Important
Not Important
Source: SNG Digital Economy Database n = 894 from NC, VA, KY and LA collected in 2010-12
Not Sure
Not Applicable
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© Strategic Networks Group, Inc. 2012
Improve staff skills
0.172413793
The Impact of Better Broadband
on Schools
Internet benefits to schools by speed of connection
0.9375
Adopt new operational processes
0.653846154
0.615384615
0.8125
Reach new customers and clients
0.653846154
0.615384615
0.8125
Lower operating costs
0.653846154
0.615384615
0.8125
Improve coordination with suppliers
0.538461538
0.461538462
Increase teleworking
0.5
0.307692308
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
Somewhat to Very important benefits / Pct. establishments
25Mbps and more
6 to 25Mbps
1.5 to 6Mbps
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© Strategic Networks Group, Inc. 2012
0.625
CAIs are Early Adopters and
Broadband Savvy
Pct. Establishments having acquired IT skills
in the past 12 months
Schools
Libraries
Pct. Establishments
All businesses and organizations
0
0.1
0.2
0.3
0.4
0.5
0.6
30
© Strategic Networks Group, Inc. 2012
Health
Tools for Economic Development
© Strategic Networks Group, Inc. 2012
Maximize broadband impacts
DEi Scorecard
DEi Scorecard is delivered to each
business and organization
Individualized one page report that presents:
benchmarking against peers, potential ROI
from increased utilization, local advisors
Data based on the individual’s current
broadband utilization and industry average
Automatically created and distributed by
SNG online tools
32
© Strategic Networks Group, Inc. 2012
Shared with local economic development
agencies so they can help businesses and
organizations throughout the process
DEi Impact Calculator
- customize to individual needs -
1. Select your organization characteristics
33
Source: SNG Digital Economy Database n = 26,200
© Strategic Networks Group, Inc. 2012
2. Select your actual and needed e-Solutions
DEi Impact Calculator
- choose e-strategy based on ROI -
3. See your potential benefits from increased utilization
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Source: SNG Digital Economy Database n = 27,200
© Strategic Networks Group, Inc. 2012
4. Details of potential revenues and cost savings