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Minorities should seek a bigger slice of new media pie

The digital divide argument, that there is a disparity between non-whites and whites when it comes to broadband access, is losing its mojo for me. While broadband access for minority households via hard line may fall behind that of white households, since the mid 2000s, access via mobile wireless devices by minorities has been on par or exceeded that of whites. Stroll into the Starbucks near I-285 and Cascade Road and see every Black American patron connecting their lap tops to WiFi while checking messages on their smart phones. Even our kids have at least two wireless devices and we parents brace ourselves annually for our teenager’s request for the latest phone even when the one they currently own is still pristine.

Plenty of politicians and civil rights groups have been pushing for greater access to high speed broadband, making the argument that more broadband facilities should be deployed in communities of color especially since Black Americans and Latinos have been spearheading the “cut the cord” movement and going 100% wireless over the past 15 years or so. Minority leadership is demonstrating, however, that it has not been paying attention to changes in business models that would provide entrepreneurs in communities of color exposure to more lucrative opportunities versus following the same consumption of end-use product model that has been plaguing communities of color for decades.

Broadband access providers such as AT&T, Comcast, and Verizon are leveraging their customer data in order to attract advertising dollars. Verizon’s recent disclosure that it lost 307,000 subscribers in the first quarter of 2017 in part due to competition from Sprint and T-Mobile has some analysts on Wall Street wondering if Verizon is up for merger. Bloomberg has reported that the wireless company has considered Comcast, Walt Disney, or CBS for corporate marriage.  Ironically the aforementioned companies are content providers who could probably do well leveraging Verizon’s wireless infrastructure to get content out including use of the company’s spectrum.

While Black Americans and Latinos are, unfortunately, known primarily for providing entertainment content, both communities should consider exploring creating and investing in content storage and content delivery systems. Constructing these facilities in neighborhoods with large numbers of Blacks or Latinos means access to short term and long term employment. High tech labor will be needed to design, construct, and operate server farms and other facilities that result from the decision to do more than buy another cell phone or activate some unlit fiber from the old MCI days.

This is an opportunity for a young Black or Latino entrepreneur or engineer to break from the herd mentality and not wait for permission from the Jesse Jackson posse on whether or not it should be done. One would think that the old heads from the civil rights movement would have the capital or access to capital that would assist outside-the-box minority entrepreneurs in getting capital, but since these leaders have not demonstrated that they even understand the emerging business models in communications, this may be a closed avenue.

In the end, the minority entrepreneur should be prepared to abandon the collective mindset that has communities of color thinking only about the next smartphone and form new, smaller, leaner, profit seeking collectives that generate ideas of value and use these ideas to create their own data and media companies.

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Today’s data markets require data that brings value

Today’s data markets require that there be valuable data to trade but the Federal Communications Commission doesn’t quite see it that way.  Last week the Commission voted to accept a report that concludes that 17% of the American population or approximately 55 million people, do not have access to advanced broadband.  The Commission’s determination is based on new speed standards based on the speeds that approximately 70% of broadband customers are purchasing today.

From my view of the world here in Atlanta I can’t say that the Commission has much of a case when it argues that there is no choice among competing broadband providers even when you take income into account.  Here in the West End where median income in the 30310 area code is approximately $24,606, we have seven wireline and wireless providers of internet access.  They are Comcast (100 Mbps to 1 Gbps); AT&T (10 Mbps to 25 Mbps); Verizon (10 Mbps to 25 Mbps); T-Mobile (10 Mbps to 25 Mbps); Platinum Equity (6 Mbps to 10 Mbps); Sprint Nextel (6 Mbps to 10 Mbps); and MetroPCS (768 kbps to 1.5 Mbps).

The 30331 area code has a median income of $36,349 and the same choices in internet access carriers, with the only difference being the decrease in speed provided by Platinum Equity (3Mbps to 6 Mbps).

Our more affluent neoghbors to the north in Buckhead enjoy median incomes of $65,642.  Sprint is not available as a service choice for the residents of Buckhead, but no worries.  Platinum Equity provides service speeds of 25 Mbps to 50 Mbps while Level 3 provides 1 Gbps speeds.

You can see these speeds yourself using a nifty broadband-by-zip code calculator provided by the National Broadband Plan Map.

Not to completely dis my neighborhood but the West End is not the epicenter of finance and industry.  While we have a couple grocery stores, a community and arts center, too many churches, a middle school, and a few banks, we are not generating the income that puts us on the list of high value data providers, not at an income of $24,606.  You find that action up in Buckhead.  There are enough banks, law firms, and high tech firms for you yto throw a cat at.  These are the sources of high value data.

Three of the Commission’s members would no doubt nake the argument that with higher speed broadband, the high value data economic activity I allude to would exist in the West End or even Camp Creek.  I would argue with them.  The SnapChats of the world are being bought and sold for billions while only having a staff no larger than the numerous fast food joints that pepper the West End.  These firms are not generating high value data that is made available for trade via data markets that consumers and producers access via broadband links.  The data comes from high income consumers who may not be necessarily employed in tech.

No. Raising speed standards out of sense of duty to equate everyone with everyone is not the approach our progressive friends on the Commission should be taken in order to promote broadband deployment.  Also, trying to preempt state law in order to encourage the deployment of municipal broadband is not the answer especially in neighborhoods like mine.  Half of us simply can’t afford broadband.

Links to the internet should grow organically with broadband providers meeting demand for their services when consumers signal they are ready to purchase them.  We will need to see a turnaround in economic development and incomes to see the broadband speed equality that progressives on the Commission desire.

 

http://techcrunch.com/2012/09/30/data-markets-the-emerging-data-economy/

 

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It’s time for broadband providers to raise their prices

Earlier today I sent out a tweet saying that it’s time for broadband providers to raise their prices. I know that is not a popular thing to say, but when you consider the increase in traffic driven by the demand for smartphones and tablets, and the emergence of social media, then it’s time to allow and not be afraid of the laws of supply and demand.

Take growth in the U.S. market for smartphones. TechSci Research forecasts that in terms of volume the compounded annual growth rate for the U.S. market to be 18% through the end of 2017. As the number of smartphones and tablets owned by consumers increases, there will be an increase in demand for data services which means greater constraints on networks as carriers attempt to meet the increased demand.

Specifically for carriers, they may not only face a spectrum crisis by 2015, but a revenue crisis sometime during 2013. As reported on CIOZone.com, the real cost of delivering a gigabyte of information may be surpassed by the revenue or real costs received by a carrier for delivering that data.

“The reason why is pretty clear. All mobile services rely on the infrastructure of wireless networks. These assets, in turn, rely on both man-made capital – items such as radios, base stations, high-capacity bit transport grids — and natural resources, namely the frequency spaces through which their signals hop. These infrastructure costs are variable based on usage of the network. As demand increases the cost to operate increases at a faster rate because of scaling data transmission costs tied to newer technologies to carry more data in the same frequencies. This gets capital intensive for the carriers and more expensive to deploy and maintain their networks”, wrote CIOZone.com’s Susan Kelley.

Social media is impacting network usage as well. As the demand for and usage of smartphones and tablets increase, so to is the demand for accessing social media platforms. These platforms are seeking out ways to keep their subscribers increasingly engaged. The Facebook “Home” initiative is a recent example of such attempts. As subscribers become increasingly engaged this means the demand for wireless network capacity continues to increase.

So where should wireless broadband carriers recover the costs for the increased traffic? This question was posed in a recent The Wall Street Journal post where it was discussed that Internet companies such as Facebook, Google, and NetFlix are paying backbone providers, such as Cogent, to prioritize their traffic over backbone or middlemen networks. Under net neutrality rules, such an arrangement would be a no-no for last-mile providers such as AT&T, Verizon, or Comcast, but the backbone market is unregulated.

But if congestion is being relieved along the highway due to payments received to open up a few fast lanes, shouldn’t that treatment also be afforded to the carriers bringing that traffic down the neighborhood street? If net neutrality is prohibiting prioritization thus denying carriers an additional revenue stream, shouldn’t broadband providers be allowed to increase rates on the consumers who in the end are driving demand for data?