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TheNextAmericanUpgrade:
TheRoleofHigherEduca3oninProvidingtheUnitedStatesa
StrategicBandwidthAdvantage
BlairLevinExecu3veDirector,Gig.U
Presenta3ontotheNewEnglandBoardofHigherEduca3on
Boston,MassachuseFs
March2,2012
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AGENDA
2
Introduc3on:Thewhatandwhyof
astrategicbandwidthadvantage
BackgroundandStatusofGig.U
StepsMovingorward
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INTRODUCTION:THEWHATANDWHYOFASTRATEGICBANDWIDTH
ADVANTAGE
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4
AStrategicBandwidthAdvantage
Whatdoes
aarmer
anda
Doctor
need?
25yearsago
Today
Dialtone DialTone
MobileDataEnoughBandwidthfor
real3mecollabora3on
withanMRI
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5
AStrategicBandwidthAdvantage
Aregionorcountryhasastrategicbandwidth
advantagewhenitsresidentshavetheappropriate
bandwidthtomosteffecJvelycollaboratewith
othersinimprovingeconomicgrowthandsocial
welfare,withafuncJonalityandatapricesuperior
tothoseinotherregionsorcountries
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DoesAmericaneedastrategic
bandwidthadvantage?
No Gotobeach
Yes.Insomeplacesbutnot
everywhere
Willcurrentmarketforces
provideoneina3melymanner
Yes Gotobeach
NoWhatisthepathfora
3melyupgrade?
Yes.Everywhere Goodluck
Ay,theres
therub
DoesAmericaneedastrategicbandwidth
advantage?Aques3oninthreeparts
6
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Ques3on1:DoesAmericaneedastrategic
bandwidthadvantage?
Impactofbandwidthonproduc3vity Othercountriesarenotwai3ng Thecomingdatadeluge
7
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1800s
Accesstonewformsofpower(steamengines) Accesstonewformsoftransporta3on(canals,then
trains)
1900s
Accesstonewformsofpower(electricity) Accesstonewformsoftransporta3on(cars,trucks
andplanes)
2000s
Accesstocompu3ngpower Accesstodatastorage Accesstodigitalcommunica3ons
Newinputsdriveeconomicgrowth
astestgrowingpartsoftheeconomyarethose
thatbestusenewinputs
Produc3vity
8
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Suchchangesarekeytoproduc3vitygrowth
Technological
changeandotherfactors
Improvedlaborquality
Capitalinvestment
Data:USBureauofLaborStaJsJcs
Contribution to long-term productivity growth
52%
7%
11%
Produc3vity
9
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Reboo3ngtheeconomyrequiresinnova3on,for
whichbroadbandplaormiskey
Analyzeinforma3on
ActonitRevise
courseofac3on
Gatherinforma3on
Thebiggestleapsingrowtharedrivenbymeta-ideas
Improvingtheexchangeofinforma3on
improvesthecondi3onsforinnova3on.
Produc3vity
10
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Broadbandisthecommonplaormfor
knowledgeexchange
Networks
Devices
Applica3ons
Users
Improvementsineachelementoftheecosystem
driveimprovementsinothersinavirtuouscycle.
BroadbandEcosystem
Produc3vity
11
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Thebenefitsofworldleadingnetworks
Gr8forJob
Crea3on@JohnDoerr
TwiFer7/28/11
Economicgrowth,
investmentandjobcrea3on
Improvedplaormfor
research
Improvedplaormfor
smallbusinessdevelopment
Newwaystodistributethe
benefitsoftheinforma3on
revolu3ontoallpartsofthecountry
Newapproachestohealthcare,
educa3on,jobtrainingandother
cri3calsocialneeds
Produc3vity
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Othercountriesarenotwai3ng
HomeInternetMayGetEvenFasterinSouthKoreaByMarkMcDonald,ebruary21,2011
Othercountriesinves3nginGigabitconnec3vitythroughpolicydrivenac3ons...
Cheap,UltrafastBroadband?HongKongHasItByRandallStross,March5,2011
SouthKoreaalreadyclaimstheworldsfastest
Internetconnec3onsthefastestgloballybyfarbutthatishardlygoodenoughforthe
governmenthere.
Bytheendof2012,SouthKoreaintendsto
connecteveryhomeinthecountrytotheInternetatonegigabitpersecond.Thatwould
beatenfoldincreasefromthealreadyblazing
na3onalstandardandmorethan2003mesas
fastastheaveragehouseholdsetupintheUnitedStates.
HongKongresidentscanenjoyastoundinglyfast
broadbandatanastoundinglylowprice.Itbecameavailablelastyear,whenascrappy
companycalledHongKongBroadbandNetwork
introducedanewop3onforitsfiber-to-the-
homeservice:aspeedof1,000megabitsasecond--knownasagig--forlessthan$26a
month.IntheUnitedStates,wedonthave
anythingclosetothat.Butwecould.Andwe
should.
...OtherswithGigabitnetworksincludeJapan,Sweden,Spain,Turkey
Compe33on
1
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Otherinterna3onalefforts
Osborneannounces10superconnectedciesByMaijiaPalmer,November0,2011
Englandhasdifferentstrategiestobuildfasterbroadband
LondonsCityFibretobuilda$800milliongigabitnetworkByOmMalik,November,2011
Thechancellorhaspledgedanaddi3onal100m
fundtohelpcreate10super-connectedci3esacrosstheUK,whichwillhavebroadbandspeeds
of80to100megabitsasecondItmeans
crea3ngnewsuperfastdigitalnetworksfor
companiesacrossourcountry.Thesedonotexisttoday.SeewhatcountrieslikeChinaor
Brazilarebuilding,andyoullalsoseewhywe
riskfallingbehindtherestoftheworld,Mr
Osbornesaid.
Whenitcomestofiber-basedbroadband,the
U.K.lagsbehinditsEuropeanneighbors,whichhavebeenaggressiveinrollingoutreallyfast
networks.Manycri3csblameBri3shTelecom
draggingitsfeetmostlybecauseitdoesnthave
anyrealcompe33on.
Compe33on
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Researchfacili3esaremovingto100Gbps
connec3ons
NaonalLambdaRailprovides100GigabitConneconfor
NOAAatSupercompung
2011.NextGeneraon
ResearchCapabiliesWillBe
DemonstratedUsingCisco
TechnologyandNLRTransport
NetworkByBizjounrals.com,November7,2011
Researchinstutedeploys100GigabitEthernetfromcore
toclosetByShamusMcGillicuddy,November28,2011
Compe3on
15
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WeknowthereareboFlenecksahead
DNASequencingCaughtinDelugeofDataByAndrewPollack,NewYorkTimes,November0,2011
BGI,basedinChina,istheworldslargestgenomicsresearch
ins3tute,with167DNAsequencersproducingtheequivalent
of2,000humangenomesaday.
BGIchurnsoutsomuchdatathatitoencannottransmitits
resultstoclientsorcollaboratorsovertheInternetorother
communica3onslinesbecausethatwouldtakeweeks.Instead,itsendscomputerdiskscontainingthedata,via
FedEx.
DataRevolu3on
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Ques3on2:Willcurrentmarketforcesprovideone
ina3melymanner?
TimingmaFers Whatthecurrentmarketistellingusabout
thenextupgrade
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Acceleratedpaceofdevelopment
meansless3metoreactsotheslowloseout
IncrementalValueAdd
Winner
Loser
Electricity
Telephone
Internet
Mobiletelephone
Inven3on Ubiquity
high
valueadd
mediumvalueadd
lowvalueadd
INNOVATION
Actnow
Poten3alfor
compe33veadvantage
Actlater
Television
Time
Earlyac3onleadstoleadership
18
b f k
Ti i
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irst,3mingmaFersbecauseifwewait,werisk
losingleadership
Timing
19
Ti i
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wewillaccelerateoureffortstoimproveouroverall
growthprofile.Wewilldothatbylookingatopportuni>estoeitherdivestorrestructurelow
performingandnonstrategicassets.
AT&TChairmanandCEORandallStephenson,January
26,2012
VerizonhasstoppedtheiOSBuild
AndAT&Tislookingtosell
wirelineassets
Second,marketforcesarenotprovidingcri3cal
massofworldleadingnetworksinU.S.
Timing
20
Market orces
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Itisnotthefaultofthecompanies
ItisasimplemaFerofmath:
ortheinvestorinthenetworks,themathusuallydoesntwork
Marketorces
21
Market orces
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Thebasicequa3ons
Benefitsaccruingto:
Investorinthenetwork Contentandapplica3ons Equipmentanddevices Localcommunity Theregion Thecountry
Total
benefits
of
highspeed
networks
ButtheonlybenefitsthatmaFerfortheinvestmentcasearethebenefitsthatmaFertotheinvestor
Marketorces
22
Market orces
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C+O>(r)R+SB+(-CL)
CCapitalExpenditures
OOpera3ngExpenditures
rRisk
R-Revenues
SB-SystemBenefits(Benefitsthatdriveincreasedrevenuesoutsidethecommuni>eswhere
theneworincrementalinvestmentsaremade.)
CL-Lossesduetocompe33on
ortheinvestor,theequa3onusuallylookslikethis:
2
Marketorces
Thereturnsdonotjus3fytheinvestment
Market orces
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Sector/
opportunity Ecosystemchange CapEx OpEx Risk RevenueCompeJJve
Losses
Telco GrantofmonopolyLower Raise
Cable Grantofmonopoly,poleaFachmentlaw,
compulsory
broadcastlicense
Lower Raise
Ruralareas US Lower Lower
Wireless Limited#oflicenses Lower
DBS Limited#oflicenses,programaccess Lower Raise
Broadbandupgrade
Deregula3on,twowirepolicy
Raise Raise
Wirelessupgrade
Morelicenses,loweredTAC,
oversightofsi3ng
authority
Lower Raise
Marketorces
Historically,investmentsaremadewhenthis
equa3onisaltered
24
Market orces
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C+O>(r)(.5)R+SB+(-CL)
Revenuesforunderlyingwiredinfrastructurespiltbetween
twofacili3es,crea3nggreaterriskforlong-termfinancing,but
compe33veforcesnotstrongenoughtocompelinvestment
Today,theequa3onisworseforbroadbandinthe
UnitedStates
Marketorces
25
Market orces
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C+O>(r)R+SB+(-CL)
Rwontincreaseun3lnewapplica3onsdevelop,butthe
newapplica3onswontdevelopun3lnewnetwork
investmentsaremade.
Marketorces
Andtheresthechickenandeggeconomics
26
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Ques3on:Whatisthepathtoachievean
upgrade?
Keyelements Biggestbarrier
27
Key Elements
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C+O
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TheonlybenefitsthatmaFerfortheinvestmentare
benefitstotheinvestor
Notrelevanttoinvestment
decision
Analysisofexpectedbenefit
determinesinvestment
Investorinthenetwork Contentandapplica3ons Equipmentanddevices Localcommunity Theregion Thecountry
Otherbeneficiaries,par3cularlylocalcommuni3escan
drama3callyaffectthemathoftheprovider
KeyElements
29
h h fKey Elements
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Communi3eshavedevelopedcrea3vepartnershipstoreducingOpEx,CapExwhileraisingexpectedrevenues.
Therearepathsforcommuni3estoimprove
investmentmath
McGinn:UW,Sealewantgreatideasfor
unusedfiberByToddBishop,GeekWire,November14,2011
HowKansasCity,Kan.,WonOverGoogleByJessicaMulholland,Governing,April19,2011
KeyElements
0
Key Elements
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Tomoveahead,weshouldfocusoncommuni3es
wheremathiseasiest
AdvantagesofUniversity-communi3es
Demandfor
Bandwidth=
Greatest
CostofDeployment
=
Least
Posi3veImpact
ofNetwork
AccessDueto
Innova3on
Cultureandirst
MajorUseCase
(HealthCare)
=
Greatest
KeyElements
1
KeyElements
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Universitycommuni3esarethebirthplaceofmany
network-basedinnova3ons
AccesstoKeyInputs
Search:Google(Stanford),Lycos
(CMU)
SocialNetworking:acebook(Harvard),
Newsgroups/USENET(UNC,Duke)
WWW:Gopher(UMinn),Web
Browser:Mosaic,Netscape(UofIll)
AudioandVideo:CUSeeMe(Cornell),SIP(ColumbiaU,
BrailleMusic(UofAriz)
Worksta3ons(SunMicrofromBerkeley,
Stanford)
Routers(CISCOfromStanford)
Largescaleintegratedcircuits
(CalTech)
Photoshop/ImagePro(Umich)
Security/IDS(ArborNetworksfromUM)
y
2
BiggestBarrier
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BuildtoDemandModelAccesstoROWs,acili3esReduceRegulatoryTimeReduceCapEx
AccessPaymentsReduceOngoingRegulatoryCosts
U3lizeExis3ngBillingPlaorms
ReduceOpEx
BuildtoDemandStandardizeunc3onsAcrossAreas,
VendorsReduceRisk
DemandAccelera3onMarke3ngPlaormNewServicesIncreaseRevenues
DistributedInnova3onSeedingLong-TermGrowthIncreaseEcosystemBenefits
Thenextstepistoorganizecommunityeffortto
changethemath
gg
BiggestBarrier
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Asymmetryiskeytochangingthemathinlocal
policy
Largeoutofpocketdollarbenefitsforprovider
Verysmalloutof
pocketcoststocommunityins3tu3ons
gg
4
BiggestBarrier
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HawaiiAGigabittoAnchors
Ini3a3ve
Illinois GigabitIncen3veund
Ohio 10xincreaseinstateresearchbackbone
Statescanalsoplayaroleinchangingthemath
gg
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BACKGROUNDANDSTATUSOFGIG.U
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Needforcri3calmassofnextgenera3ontestbedsNa3onalBroadband
Plan
Demonstratedcommunityabilityanddesiretoorganizetoimprovenextgenera3onbusinesscase
GoogleiberIni3a3ve
Needforseamlessexperiencebetweencampusandcommunity
Placewhereinnova3onhappensHistoryofUniversi3esandInternet
Leadto
BackgroundforGig.U
7
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TheUniversityCommunityNextGenera3on
Innova3onProject
Overthespringandsummerof2011,7leadingresearch
universi3es,workinginpartnershipwiththeirlocalcommuni3es,
formedGig.U
OurMission
OurStrategy
Acceleratethedeploymentofworld-leading,
nextgenera3onnetworksintheUnitedStates
Useuniversitycommuni3esastestbedsfortheaccelera3onofdeploymentofultra-highspeed
networkservicesandapplica3ons
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Gig.UMemberIns3tu3ons
ornewtest-bedstofosterexperimenta3onandinnova3on,itmakessensetowork
withcommuni3esthathavestrongtradi3onsofexperimenta3onandinnova3on
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Effortstodate
40
July2011ProjectLaunch
September2011
RIReleased
ReviewRImaterials:
Dec/Jan
Presenta3ontomembers:
1/2/12
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GoalsoftheRIProcess
Promotethedeploymentofnext-genera3onnetworksandservicesacrossmembercommuni3estos3mulateeconomicdevelopment
Iden3fycrea3veapproachestodesign,operateandfinanceself-sustainingnext-genera3onnetworksformembercommuni3es
whileevalua3ngthetrade-offsbetweenthesedifferentapproaches
Gainanunderstandingofhowdifferencesbetweenmembercommuni3esinfluencethelevelofprivatesectorinterestin
workingwithanyindividualcommunity
Considerwaysinwhichmul3pleProjectcommuni3escanworktogetherbeyondtheRIprocesstoimprovetheprivatesector
businesscasefornext-genera3onnetworksandservices
41
I t t i ki ith i i3 d
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Interestinworkingwithuniversi3esand
communi3estobreaktradi3onalmolds
42
TypeofRespondent Number
Operators&serviceproviders 24
Networkequipment 14
Consultant,content&services,user
equipment8
Research&educa3onnetwork 2
Other 9
Gi U idi i lid t d b th RI
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Gig.UsguidingpremiseswerevalidatedbytheRI
process
Premise1:Universitycommuni3esareincubatorsofnetworked-basedinnova3ons
4
Validated:numberandqualityofresponses
Validated:contentofresponses
Premise2:Thecurrentmarketwillnotproduceworld-
leadingnetworksinthenearterm
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Importantthemesacrossresults
Interestinworkingwithuniversi3esandcommuni3estobreaktradi3onalmolds
Investmentanalysisdependsonmarketadvantages,assets
Needformorecommunityinforma3on,usecasesandinvolvement
ValueinGig.Uasaplaormfornewtechnologies Importanceofscale,scopeandwelldefinedorganiza3on
44
I t f l d ll d fi d
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Importanceofscale,scopeandwelldefined
organiza3on
45
Asconsumers
Economiesofscale Influenceonthevaluechain
Asinforma3on
holders
Loweredtransac3oncoststhroughstandardizedopera3ons
Asalearningorganiza3on
Sharedexperiences Bestprac3ces
Asavoice Outreachtovendors Communityengagement
Clearorganiza3on
iscri3calfor
success
CollaboraJon,doneright,iseffecJve
InSummary
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C+O
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Which,astheGooglefiberprojectdemonstrates,isoen
withinthepowerofthelocalcommunity
Sector/
opportunityEcosystemchange CapEx OpEx Risk Revenue SystemBenefits
Google DealswithCity,State,
andU3li3esLower Lower Lower Raise Raise
47
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STEPSMOVINGFORWARD
48
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Thepathahead
Presenta3ontomembers:1/2/12
CommunityConsulta3ons
VendorMee3ng:March20-21
BeginPhaseTwo
49
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Mul3plePoten3alUpgradePaths
50
Mul3-vendorCompe33on
Localvendorpartnership
U3liza3onofExis3ngAssets(U3li3es)
Consor3umPilots
HighBandwidthHealthCareModel
OpenBusinessModels
Innova3onHub
WhiteSpaces
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WhiteSpaces
51
DynamicAccesstoSpectrumTrialsUnderwayNewWireless
Technology
UnderservedAreasHighDemandCommuni3esewTVBroadcasters/LotsofSpectrum
StrongestPoten3alfor
SpecificCommuni3es
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Innova3onHub
52
AreasofGreatestStrength AreasmostlikelytobenefitfromadventofBig
DataRevolu3on
Exis3ngCentersofExcellence
Areasofbusinessandresiden3alconcentra3on AreasofnetworkassetsMapping
Exercise
TypicalexerciseinorganizingcommunitytoaFracteconomicdevelopmentasset Non-typicalexerciseinthattherearemul3ple
technologicalpathstoachievingsuccess
PartnershipBuilding
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WhatNowontheLocalLevel?
5
EveryGig.Ucommunityhasnewop3ons Areanyappealing? Whatmoredoweneedtolearn?
Canyourcommunitydefineitspreferences? Networkingobjec3ves Procedural/organiza3onalpreferences?
Community and university preferences will define
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Communityanduniversitypreferenceswilldefine
theuniverseofacceptableop3ons
54
Referencearchitecture&opera3ngmodelArchitecture
Municipal,privateorotherOwnership
Total1sq.blockortodemandin10sq.milesGeography
Micro-trenching,sewersystems,etc.Construc3on
Streamlinedperming,rightsofwayIncen3ves
Healthinforma3onexchange,communityservicesUsecases
Dataonly,tripleplay,wireless,etc.Services
Desiretofocusonwhitespaces,lasersTechnologies
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WhatNowonANa3onalLevel?
Na3onalEffortstoAssistLocalOrganizing
Na3onal
Messaging
Na3onalAssistancewith
Transac3ons
PhaseTwoofGig.U
TobeResolvedatandImmediately
AerMarch
Mee3ng
55
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Inclosing,theworldiswondering.
1GbpsGigUHeadlinefromChineseNewspaperdayaGerig.Ulaunch