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Economic Development: The Killer App For Local Fiber Networks Jim Baller Baller Stokes & Lide, PC [email protected] Overview • • • • • What is a “Killer App”? What is “Economic Development”? What Have We Learned About Broadband and Economic Development? What Are Successful Communities Doing? What’s Next? The Future of Work What is a “Killer App”? “[A]ny computer program that is so necessary or desirable that it proves the core value of some larger technology, such as computer hardware, gaming console, software, programming language, software platform, or an operating system. In other words, consumers would buy the (expensive) hardware just to run that application. A killer app can substantially increase sales of the platform on which it runs.” Wikipedia, http://bit.ly/P4G7PL What is “Economic Development”? “Economic Development creates the conditions for economic growth and improved quality of life by expanding the capacity of individuals, firms and communities to maximize the use of their talents and skills to support innovation, lower transaction costs and responsibly produce and trade valuable goods and services. Economic Development requires effective, collaborative institutions focused on advancing mutual gain for the public and the private sector. Economic Development is essential to ensuring our economic future.” U.S. Economic Development Administration Economic Development Strategies • • • • Attract or retain a few large employers, or a larger number of smaller employers, or a combination of both Increase profitability of local businesses, the number or quality of local jobs, or some of each Support of all local industries, or target particular industries – e.g., hightech, health care, data centers, etc. Community vs. regional approaches Common Economic Development Tools • • • • • • • Tax incentives (e.g., TIF, NMTC), “zones” and “districts” of various kinds Loans, grants, loan guarantees, or other financial incentives Upgrade infrastructure (roads, sewers, power, fiber, etc.) Make available attractive, low-cost sites Accelerate franchises, permits, and other authorizations Support workforce development and training Help boost sales via marketing support, demand aggregation, etc. See Texas Municipal League Economic Development Handbook, https://www.tml.org/p/EconomicDevelopmentHandbook2015_TML.pdf Why It’s So Hard to Quantify the Relationship Between Fiber and Economic Development • • • • • • • Still early – limited data base Circumstances vary widely Many different kinds of economic “success” (or “failure”) Fiber only one of several critical factors Competition varies in and among communities Corelation v. causation Many more factors What Have We Learned So Far? • Studies of First-Gen, Low-Capacity Broadband (2005~2015) (NTIA, Gillet, Crandall, Ford, Kolko, Whitacre, SNG, etc.) – At least an association, probably a causal relationship in some situations – More rapid growth in employment, number of businesses, especially IT-related businesses – High levels of adoption in rural areas cause income growth and increase in employment – SNG benchmarking econ impact of small business usage What Have We Learned So Far? (continued) • Studies Focusing on Fiber Networks (2010-current) – Home-based businesses on fiber networks annually add at least $40 Billion to US economy (RVA) – Fiber networks increase property values approximately $5,000-$6,000 on home of $300,000 in US (RVA and several other studies) – Early data suggest that fiber networks increase local GDP more than 1% (Sosa) What Have We Learned So Far? (continued) • Recent RVA study of impact of FTTH on local economies • Compared metro areas that have more than 60% FTTH with metro areas that have less than 25% FTTH • Results: – 10-year impact on jobs: 72% better for FTTH cities – 10-year impact on gross metropolitan product: 64% better for FTTH cities – 10-year impact on business formation: 46% better for FTTH cities What Have We Learned So Far? (continued) • Dr. Bento Lobo’s studies of economic impacts of Chattanooga’s fiber network in Hamilton County, Tennessee • Estimated household, community, business, and utility benefits (e.g., lower communications service bills (incl. from competitors), new investments and jobs, telehealth, telecommuting, increase in venture capital, publicity for community, business efficiency gains, disaster recovery, etc.) • Results: On investment of $195 million, created 2,800-5,200 jobs and $865 million - $1.321 billion in economic benefits What Have We Learned So Far? (continued) • Steve Ross (Broadband Communities) studies of all US Counties for the years 2010 through 2013 • Counties in the bottom half of their state rankings for access to 25 Mbps download speeds had a population growth of only 0.27 percent • The top half enjoyed growth of 2.79 percent – more than 10 times greater • Counties in the bottom half of their state rankings added just 134,390 people, and those in the top half added more than 7.2 million https://goo.gl/ivkKzd What Are Successful Communities Doing? • See “Killer App” paper for 23 examples (https://goo.gl/B6Rmt4) – Essential: one or more 24/7 local “champions” – Strong, holistic commitment to success of the community – Extensive and ever expanding knowledge of community – Bold, realistic, and pro-active vision – Extensive research into everything necessary to succeed – Ability to make, articulate, and execute action plans – 100% commitment to succeed in face of opposition What’s Next? The Future of Work • Some forms of economic development are better than others • Best ones create work opportunities that enable residents to earn a decent living and feel fulfilled • We’re now in the “Age of Accelerations” – especially given job-threatening artificial intelligence, robotics, and globalization • How will adaptive communities deal with this? Questions? Jim Baller Baller Stokes & Lide, PC (202) 833-1144 [email protected] www.Baller.com