This document summarizes Blair Levin's presentation on building an "information rich commons" through ubiquitous broadband access. Levin discusses how economic value is shifting from physical goods to information, and that assets critical for future progress will include abundant bandwidth networks, smart sensor networks, and a digitally ready population/government. He outlines a vision of an "information rich city" enabled by gigabit fiber and wireless networks, the Internet of Things, open data, and universal broadband access. Levin predicts that in 5 years there will be two types of cities - those with cable vs copper, and those with cable vs fiber networks, and shares early data showing benefits of high-speed broadband for housing values, economic attractiveness, and

1. From the Early Adopter’s
Dilemma to the Game of Gigs:
Building the Information Rich
Commons
Blair Levin
Brookings Institute
Metropolitan Policy Project
Kansas City – Gigabit City Summit
January 13, 2014

2. The Arc of History

3. You Are Here

4. A Commons in Our Time

5. What assets would be critical for
economic and social progress in the
decades ahead?
Known
• Water?
• Electrical?
Unknown
• Distribution Center?
• Airport?
• Technology Focused University?
City Thinking in 1914

6. The Future
Economic value creation, which for several
millennium was based on the manipulation
and distribution of physical objects,
increasingly will be based on manipulating,
transporting, and analyzing bits of information.

7. What assets will be critical for economic
and social progress in the decades
ahead?
Known
• Ubiquitous, affordable and abundant bandwidth
networks
• Device, Sensor and M2M networks that provide
actionable intelligence
• A digitally ready population and digitally ready
city government
City Thinking in 2014

8. The
Information
Rich
Commons
Bandwidth
• Never a constraint to
innovation,
economic growth,
social progress
Tools
• Ubiquitous, cheap,
smart sensors
providing actionable
intelligence
People
• A digital ready
population
• A digital ready city
government

9. The
Information
Rich
Commons
Networks
• Gigabit Fiber
• Muni Wi-Fi
Devices
• The Internet of Things
• Open Data
• Big Data
People
• Universal Affordable
Access
• Digital Readiness
• Responsive
Government

11. The
Information
Rich City
Networks
• Gigabit Fiber
• Muni Wi-Fi
Devices
• The Internet of Things
• Open Data
• Big Data
People
• Universal affordable
access
• Digital Readiness
• Responsive
Government
Today’s Focus

12. Prediction:
In Five Years There Will be Two Kinds
of Cities
Cites with
Cable v.
Copper
Cities with
Cable v.
Fiber

13. Prediction:
In Five Years There Will be Two Kinds
of Cities
Cites with
Cable v.
Copper
Cities with
Cable v.
Fiber
Housing

14. Early Data: Increases Housing Values
The Impact of High-speed Broadband Availability on Real Estate
Values: Evidence from United States Property Markets
By Molnar, Savage & Sicker
University of Colorado, August 15, 2013

15. Prediction:
In Five Years There Will be Two Kinds
of Cities
Cites with
Cable v.
Copper
Cities with
Cable v.
Fiber
Economic
Attractiveness

16. Early Data: Increases Attractiveness as
Business Location

17. Prediction:
In Five Years There Will be Two Kinds
of Cities
Cites with
Cable v.
Copper
Cities with
Cable v.
Fiber
GDP Growth

18. Early Data: Increases GDP
“Our study suggests that communities where gigabit
broadband was widely available enjoyed higher GDP,
relative to similar communities where gigabit broadband
was not widely available. The 14 communities with widely
available gigabit broadband that we studied enjoyed over
$1 billion in additional GDP when gigabit broadband
became widely available, relative to communities where
gigabit broadband was not widely available.”

19. The Early Adopter’s Dilemma:
No Map of Path to the New World

20. Two Questions
What Networks will
Market Forces, Left
Alone, Produce?
What Have
Municipal Efforts To
Date Produced?

21. Topics for Today
What Networks will
Market Forces, Left
Alone, Produce?
What Have
Municipal Efforts To
Date Produced?

22. In the Summer of 2009, the National Broadband Plan Team asked
CITI to provide a report on all publicly announced broadband
deployments for the years ahead

23. The Data was Deadly

24. For the First Time Since the Beginning of the Commercial Internet
there was no National Carrier with Plans to Deploy a Better Network
than the Current Best Available Network

25. Report suggested, and experience confirmed,
current market forces would not drive deployment
of world leading wireline networks in the U.S.
25

26. For 85% of the Country, Cable had the Faster Network and the
Cheapest Upgrade Path

27. The Future Looked Like a Cable v. Copper Competition that would be
Premised on Allocating Scare Bandwidth Instead of Building on
Technological Advances to Deploy Abundant Bandwidth

28. Cable v. Copper
Business Model: Allocating
Scarce Bandwidth
Consequence for
Innovation:
Buffering drives desire for
higher priced tiers;
therefore upgrades follow
innovation
Core Proposition:
Harvesting from Past
Investment
Cable v. Fiber
Business Model: Deploying
Abundant Bandwidth
Consequence for
Innovation:
Scales to higher levels of
video (4k, 8k), thereby
upgrades enable innovation
of higher performance
knowledge exchange.
Core Proposition:
Future Proof
How do we move from here
to here?

29. The Prisoners’ Dilemma
A Way to
Understand the
Challenge

30. The Prisoners’ Dilemma
The Prisoners
Are Both Better
Off if They Trust
Each Other Not
to Confess

31. The Prisoners’ Dilemma
The Prisoners
Are Both Better
Off if They Trust
Each Other Not
to Confess
The Cops’
Mission is to
cause a
“Defection”

32. The Prisoners’ Dilemma
Substitute the
Idea of
Investing in
Next
Generation
Deployments
for Confessing
and Harvesting
Sunk Costs for
Staying Quiet

33. The Prisoners’ Dilemma
Cable and
Telcos Are Both
Better Off if
They Trust Each
Other Not to
Deploy NG
Networks

34. The Regulator’s Dilemma
How to Cause a Defection?

35. Topics for Today
What Networks will
Market Forces, Left
Alone, Produce?
What Have
Municipal Efforts To
Date Produced?

36. Three Different Drivers
Supply Side Driven
(Google Fiber v.
Incumbents)
Demand Side
Driven
(Gig.U, etc.)
Small Cities
(Federal Money,
Market
Structure
Driven)

37. C + O > (1-r)R + SB + (-CL)
C – Capital Expenditures
O– Operating Expenditures
r – Risk
R- Revenues
SB- System Benefits
(Benefits that drive increased revenues outside the communities where
the new or incremental investments are made.)
CL- Losses due to competition
Currently, the private investment equation usually looks like this:
37
Current Math:
Returns Do Not Justify the Investment
Costs Benefits

38. C + O < (1-r)R + SB + (-CL)
But how do we do that?
The path forward: change the math
38

39. Reduce CapEx, OpEx,
risk
Use Existing
Assets More
Effectively
Reduce CapEx, OpEx,
risk
Regulatory
Flexibility and
Efficiency
Reduce risk and raise
revenues
Aggregate
Demand
Key Strategies
39

40. • Build to Demand Model
• Access to ROWs, Facilities
• Reduce Regulatory Time
Reduce Cap Ex
• Access Payments
• Reduce Ongoing Regulatory Costs
• Utilize Existing Billing Platforms
Reduce Op Ex
• Build to Demand
• Standardize Functions Across Areas,
Vendors
Reduce Risk
• Demand Aggregation
• Marketing Platform
• New Services
Increase Revenues
• Distributed Innovation
• Seeding Long-Term Growth
Increase
Ecosystem Benefits
Tactics within existing powers of communities
40

41. Google Starts Spreading Information
Commissioned by Google
Published 2013

44. Winston-Salem*
Augusta
Dallas
Fort Lauderdale
Greensboro
Jacksonville
Houston
Miami
Oakland
Chicago*
Austin
Kansas City
Raleigh-Durham*
Charlotte
Nashville
Atlanta*
San Antonio
San Jose
Provo
Seattle*
Denver
Sioux Falls
Spokane
Tucson*
Columbia
Phoenix*
Las Vegas
Omaha
The Unfolding “Game of Gigs”
(as of August 5, 2014)
*Gig.U Community
**Note: Cox plans to eventually build a
gigabit throughout its footprint, but is
starting with these cities.
***Category not comprehensive
Independent
Projects***
Cleveland*
San Francisco
Chattanooga
Leverett
Longmont
Wilson
Urbana-Champaign*
Gainesville*
Burlington
Bristol
Chanute
Blacksburg*
St. Louis
San Diego
Los Angeles
Salt Lake City
Portland
Jefferson City
Colorado Springs
Albuquerque*
Minneapolis - St. Paul
Orlando
**

45. But what about those
communities who are
not on Google’s Map?

46. GIG.U FALL 2014 STATUS CHART
University Community State Method Status
Virginia Tech Blacksburg VA PPP Downtown Gig Zone
Michigan State East Lansing MI PPP Local ISP Offering
U of Florida Gainesville FL Local Utility Innovation Zone Network Built
U of Louisville Louisville KY RFP 3 New Entrants Building Gig Networks
U of Kentucky Lexington KY RFP Pending
Texas A&M College Station TX RFP Incumbent upgrade to Gig
U of NC Chapel Hill NC NCNGN Deal with T, Negotiating with GF
NC State U Raleigh NC NCNGN Deal with T, Negotiating with GF
Duke U Durham NC NCNGN Deal with T, Negotiating with GF
Wake U Wake-Forest NC NCNGN Deal with T
ASU Phoenix AZ GF Negotiating with GF
Georgia Tech Atlanta GA GF Negotiating with GF
U of Chicago Chicago IL Legal Reform Telco Upgrading Network
U of CT
Storrs, New Haven,
others
CT State RFP RFP in Process
U of Missouri Columbia MO RFP Developing RFP
U of Montana Missoula MT Study Study Complete; developing response
U of New Mexico Albuquerque NM RFP Developing RFP
U of Ill Cham/Urbana IL RFP Local ISP Developing Network
Case Western Shaker Heights OH PPP Pilot Project
U of WV Morganton WV PPP Spectrum Based Pilot Operational
U of Washington Seattle WA Legal Reform Telco Upgrading Network
U of Maine Orono ME PPP In Discussions, Spin Off Projects

47. Zone
• Cleveland
• Beta Block
• Blacksburg
• Gigabit WiFi
Zone
• Morgantown
• Transit Areas
Using White
Spaces

48. Zone (Cleveland,
Blacksburg and
Morgantown)
District
• Gainesville
• Innovation
District in
Partnership
with
University,
Utility, and
Real Estate
Developers

49. Zone (Cleveland,
Blacksburg and
Morgantown)
District (Gainesville)
Neighborhoods
and City
• Lansing
• Community
Strategies
• Louisville
• RFP with Three
Providers
• Champaign-
Urbana
• RFP with Single
Provider

50. Zone (Cleveland,
Blacksburg and
Morgantown)
District (Gainesville)
Neighborhoods and
City (Lansing,
Louisville, and
Champaign-Urbana)
Region
• North Carolina
NGN
• Joint RFP with Six
Communities and
Four Universities

51. Zone (Cleveland,
Blacksburg and
Morgantown)
District (Gainesville)
Neighborhoods and City
(Lansing, Louisville, and
Champaign-Urbana)
Region (North Carolina
NGN)
State
• Connecticut
• RFI Organized
by Major Cities
in which All
Communities
are Invited to
Participate

52. Zone (Cleveland,
Blacksburg and
Morgantown)
District (Gainesville)
Neighborhoods and City
(Lansing, Louisville, and
Champaign-Urbana)
Region (North Carolina
NGN)
State (Connecticut)

53. Key Question for City Officials
Are the Networks Serving
Your Community Today
Sufficient for Ten Years from
Now?

54. Three Key Insights
1. Everything that happens in your city ten years from
now will be enhanced or degraded depending on the
quality of the networks.
2. Many things you are doing today or will do in the next
few years will affect the quality of the networks you
have ten years from now.
3. Broadband is bought as a community. While
Individuals think they make a choice, the choice is
predetermined by choices the community makes.

57. 86%
of the experts
believe there will be
“new, unique and
compelling
technology
applications that
capitalize on
significant increases
in bandwidth in the
United States by
2025.”

58. Bottom Line
Cities with
Cable v. Fiber
Cities with
Cable v. Copper

59. Thank You