Planning
for
Internet Connectivity

A Resource for Communities

Authors:
Jason Hendricks, GVNW Consulting, Inc.
and
Anne Heinze Silvis, University of Illinois

Funding provided by:
The Illinois Department of
Commerce and Community Affairs
and
University of Illinois Laboratory for Community and Economic Development


February 2003

 

Table of Contents

These materials provide information for communities to use as a starting point for evaluating and addressing their Internet and telecommunications infrastructure needs. The goal is to describe technical issues and deployment options in terms that are easily understood.


I. Acknowledgements

II. Overview

III. The Basics of Technology
1. Basic Technology Terms
2. Bits and Bytes
3. Dial-up Internet
4. Broadband
5. Broadband Service Options

IV. Determining the Availability of Internet Services

V. What Can a Community Do to Get Better Internet Services?
1. Analyzing Financial Feasibility - An Internet Provider's Perspective
2. Communities Can Assist in Evaluation by Quantifying Demand
3. What If No Provider is Interested?

VI. Summary

I. Acknowledgements

The authors wish to thank everyone who reviewed drafts of this document. Their suggestions have improved the content and organization of this work.

Thanks to:
Reed Berger, Aviation and Economic Development, Rantoul, Illinois
Bob Dickey, Eastern Illini Electric Cooperative, Paxton, Illinois
Doug Dougherty, Illinois Telecommunications Association, Springfield, Illinois
Cynthia Erickson, University of Illinois Laboratory for Community and Economic Development
John Goldrick, Community and Economic Development Foundation, Inc., Ford County, Illinois
Sue Gortner, Monticello Chamber of Commerce, Monticello, Illinois
Doug Harlan, University of Illinois Extension Moultrie-Douglas Unit
Drew Hoel, City of Tuscola, Tuscola, Illinois
Kim Rahn, University of Illinois Extension Iroquois Unit

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II. Overview

This document provides information that communities can use as a starting point for evaluating and addressing their Internet and telecommunications infrastructure needs. Included in these materials is a primer on basic technology terms and broadband service options. Also included are suggestions on how to determine what services are available in a community. If the desired service is not available, a community may request service from potential providers. This document addresses some of the key variables involved in a provider's decision to deploy services so that a community can most effectively promote its interests to potential service providers. Included is a discussion of a community's role in quantifying demand for service through interviews with community leaders and surveys of residences and businesses. Finally, this document suggests several options available to a community if no company is willing to provide the desired services.

The "Internet" is the label we apply to the network of computers, all around the world, which are linked together to share information. As soon as you link to the network, you are part of the Internet. There are many options available which will allow your computer to link to the Internet, and this guide will help you sort through those options.

The term "Internet provider" refers to any enterprise that offers Internet and/or broadband services, including traditional ISPs (Internet Service Providers), telephone companies, cable companies, satellite companies, and wireless companies. The term "Internet" refers to any type of service a community desires, whether it is basic Internet service, quality Internet service without interference and/or per-minute charges, or broadband service. Regardless of the type of company or service, these evaluation and fact-finding suggestions will be useful.

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III. The Basics of Technology

1. Basic Technology Terms ~ When evaluating Internet options in your community, it is important to understand some basic terms, such as "central office," "switch," and "loop." A central office is a building in which telecommunications carriers house switches used to transfer calls from the calling party to the called party. A switch is essentially a computer that routes telephone calls. Loops are the copper (or in some cases, fiber) wires that run from a switch in a central office to a home or business. When you pick up a telephone, dial-tone is provided from the switch, over the loop, through the building's inside wiring, and into the phone.

2. Bits and Bytes ~ These units of measure indicate how fast data is moved from place to place over the Internet. Bits-Per-Second (bps) is the standard unit of measure. A 56K modem carries approximately 56,000 bytes per second. A set of bits that represent a single character is called a "byte." Usually there are 8 bits in a byte. A kilobyte is 1000 bytes, a megabyte is 1,000,000 bytes, and a gigabyte is 1000 megabytes.

3. Dial-up Internet ~ The first goal of any community's communications plan is usually to obtain affordable and reliable Internet service. For some communities, calls to the Internet are billed on a per-minute basis because there are no ISPs within the untimed local calling area of the subscribers. In addition, there are problems with the quality of the Internet connection in some rural communities because phone companies have not sufficiently maintained their rural telephone plant. For example, very old loops were provisioned in such a way that exposure to air and water causes interference with voice service and basic Internet service. Thus, access to quality dial-up Internet service is often a community's primary objective. In the long run, rural communities are also interested in ensuring that they are not left behind in the deployment of broadband Internet service. Information presented in subsequent sections regarding community roles in obtaining broadband access can also be applied to dial-up Internet service.

4. Broadband ~ The term "broadband" describes the provision of high-speed data services with large amounts of "bandwidth" (the capacity of the communications channel). Typically, dial-up Internet users who have purchased computers within the last few years have computer modems that, theoretically, allow data to be downloaded from the Internet at rates up to 56 kilobytes per second (kbps), although the common connect rates with these types of modems are about 33 kbps, with typical transmission rates much lower if there are Internet congestion problems. Broadband technologies use different techniques that result in greater bandwidths and allow users to download data at rates much faster than can be obtained with a 56k modem. The term "broadband" is commonly used in the industry to refer to transmission speeds of at least 200 kbps in at least one direction. For comparison purposes, note that a megabyte is equivalent to 1,000 kilobytes. A one-megabyte file can be downloaded nearly 18 times faster via a 1 mbps advanced service offering than via a 56 kbps dial-up modem.

5. Broadband Service Options ~ There are number of ways to provide broadband service. This section will describe the advantages and disadvantages associated with some of the common broadband technology options, including Digital Subscriber Lines (DSL), cable modems, satellite, and wireless.

Digital Subscriber Line (DSL) ~ DSL provides high-speed data service over existing copper phone lines. Historically, a phone company's network was designed to provide very reliable phone service with minimal bandwidth. As customer demands changed to include data services such as the Internet, these networks were modified to accommodate the new services. DSL was developed to allow new services to be provided over older networks.

DSL technology splits voice and data services, with data occupying the high frequency range and voice occupying the low frequency range. There are many types of DSL, with different speeds varying by technology type and direction (i.e., "download" to customer and "upload" to the Internet). Typical offerings are asymmetric, with higher download speeds of up to 8 mbps and upload speeds of up to 1 mbps. However, these speeds are on the high end of affordability for a typical residential customer. The $40-$50 offering of most providers is typically limited to 750 kbps to 1 mbps downstream and 128 kbps upstream. Higher speeds are often purchased by businesses for a higher monthly fee.

The primary advantages of DSL are:

  • DSL is always on -- there is no need to dial in and tie up a phone line.
  • Since voice and data frequencies are split on the same line, users can cancel second lines used only for Internet service. The savings from canceling the second line often makes up for much of the price increase associated with purchasing DSL.
  • DSL is much faster than 56kbps modems.

The primary disadvantage of DSL is that it doesn't work for customers too far from a central office. The limitation on loop length for DSL is about 15,000 to 18,000 feet. Therefore, DSL is often not available to customers located three or more miles from a central office.

Cable Modem ~ Cable Modem Internet service is provided over the same coaxial cable used to deliver television service. Typical download speeds for cable modem service range from 3-10 mbps and upload speeds range from 128 kbps to 10 mbps. Unlike DSL, cable modem service cannot offer different speeds to different customers. So, the typical $40 per month cable modem service allows for the full bandwidth potential, with local transmission speeds fluctuating depending on the number of users "sharing" the cable network. As use of the cable modem increases, transmission speed decreases.

The primary advantage of a cable modem is speed . . . "affordable" cable modem services are typically faster than comparably priced DSL services and much faster than dial-up services.

Disadvantages of cable modems also involve speed. . as the number of users in a given area increases, transmission slows because of the system's shared network. Also, there are security issues associated with the shared network architecture. Finally, cable modem services are only available where cable TV service is available, which often doesn't include many rural areas.

Satellite ~ Satellites beam data via a transmission from space to dishes and receivers similar to those used for satellite TV. Typical download speeds for satellite Internet services are up to 400 kbps. Uploading must occur through a regular phone line.

The primary advantage of satellite broadband service is that it will work well in rural areas where DSL and cable services are not available. In fact, satellite broadband services are available from a few providers nationwide. Satellite services are also faster than dial-up services, but not as fast as DSL and cable modem.

Disadvantages of satellite service are:
· Broadband capability is available only on the download side;
· The services are costly, relative to speed, when compared to other services; and
· Satellite service hardware and wiring are difficult and costly to install.

Wireless ~ There are many wireless broadband options. Not one can be identified as suitable for every situation. A point-to-multipoint fixed wireless solution would likely be the transmission medium of choice for rural communities interested in delivering broadband to a diverse and geographically dispersed group of users. Under a point-to-multipoint scenario, a base station transmits signals, which are received by multiple wireless modems connected to computers. The speed can vary, depending on technology and geography, but a wireless company using unlicensed spectrum in the Plains states could transmit data at up to 11 mbps for a range of about nine miles (in the Rocky Mountains, where mountains present line-of-sight barriers, the transmission range would be reduced to about four miles). Unlicensed spectrum operators provide service at frequency bands below six gigahertz. These providers exist in a "squatter's rights" environment, in which the first provider in the area gets the benefit of providing service. If another provider subsequently tried to provide wireless service in the area, the signals of the providers would cross and no signals would be transmitted successfully. Neither company would benefit, because users could not receive either company's services. Unlicensed spectrum is, therefore, like the "wild west" of wireless. Licensed spectrum, on the other hand, is a government-granted right to provide service at higher frequency bands, in a specified geographic location, based on a winning auction bid. Recent spectrum license auctions may allow for very high-speed broadband deployment in rural America. Unfortunately, it will be a few years before broadband services offered through this medium are available to users, because technologies to operate in these frequency ranges are not fully developed. Therefore, the unlicensed wireless providers have been the most common type of wireless broadband providers in rural communities and will likely continue to be for the foreseeable future.

The advantages of wireless broadband services include the potential to provide higher transmission speeds than DSL, cable modems, and satellite services. Wireless providers do not need access to landline copper and coaxial cable systems. In addition, the newer technologies being developed may allow users to receive broadband services on a mobile basis.

Primary disadvantages of wireless broadband services are line-of sight restrictions, and the interference that can be caused by precipitation. Whether it is a tree, a building, or rain, objects in the path of transmission can interfere with wireless signals and degrade performance. Expected speeds decrease as the number of users increase. Certain technologies have security concerns about which the user should be familiar.

Broadband Service Options Summary ~

TYPE OF SERVICE COST PER MONTH FOR SUBSCRIBERS SPEED AVAILABILITY OTHER RESTRICTIONS
DSL

Usually $40-$50 for 750 kbps service. High speed Over existing phone wires. Available only within three miles of central office.
Cable modem About $40. Fast, but slows Only where Only available where users
modem   with more users. cable exists, or where it can be installed. have cable.
Satellite Usually higher than DSL or cable. Fast download, slow upload, using wire. Anywhere. Works where geography or physical infrastructure are barriers to other options.
Wireless Similar to DSL. Higher speed than any of the other options. Slows with more users. Anywhere, once the transmission point is created. Blocked by trees, rain, mountains, etc. Need a tower or high point for transmission; could be provided by the municipality on its water tower, in turn for access. Line-of-sight restrictions for transmission.

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IV. Determining the Availability of Internet Services

Simple as it sounds, the local telephone directory is the first place to look in determining the availability of local Internet service. Under the heading, "Internet," the yellow pages should list all local Internet service providers (ISPs) and others providing service locally. Often, the yellow page advertisements will list the services these companies offer, such as DSL and wireless broadband. Cable companies and satellite companies should be listed in the yellow pages. In addition, local phone companies should be listed in the first few pages of the directory. The Illinois Commerce Commission provides a list of firms (also called LEC or Local Exchange Carrier) providing telephone service and the areas they serve. This report, entitled Illinois Local Exchange Carriers, is available at www.icc.state.il.us, under the "Consumer Services" link. These local exchange carriers can provide information about the services they offer, including Internet service. A number of web sites provide information on Internet availability. On the following web sites, a user can enter a phone number and/or other location information to get a list of Internet providers:

If there aren't any desired Internet providers located in the community, it may behoove the community to check into the availability of Internet providers in neighboring communities because these providers may be willing to expand their geographic service area. For example, many small rural telephone companies have offered competing voice and data services in neighboring communities traditionally served by larger phone companies at the request of the communities.

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V. What Can a Community Do to Get Better Internet Services?

If the search for Internet services doesn't turn up providers, a community can approach an Internet provider with a request to provide the desired services in the community. Because it is costly to build a network from scratch, or upgrade an existing network to deploy new services, an Internet provider will only do so if it believes it has a reasonable chance to recover its investment and earn an appropriate return on the investment. The business case must be sound before a provider will consider a request to deploy services. By understanding how an Internet provider decides to deploy services, a community can better position itself by providing accurate and relevant information, which the firm will use in considering a request. This section presents a primer on the issues of importance in an Internet provider's deployment evaluations and suggests a role for the community in facilitating and expediting the evaluation.

1. Analyzing Financial Feasibility ~ An Internet Provider's Perspective
Internet providers decide whether to provide service in an area based on whether the venture is expected to be profitable. The firm compares the expected revenues and expenses of the venture, then determines if it is beneficial to invest in the network infrastructure necessary to provide the service. On the revenue side, the primary component of the analysis is an evaluation of demand for service, that is, what are consumers willing to pay for specific services, and how many "takers" will buy? Information relevant to such a financial feasibility analysis for Internet services includes:

  • What community members expect of Internet service, in general ~ Expectations may include, but are not limited to: basic Internet service, higher quality Internet service, or broadband services (where "broadband" may imply different bandwidth expectations to different customer classes and portions of the community).
  • Expectations for Internet access of different customer classes (for example, business and residential).
  • Expected demand levels, at various price points, for various service categories and bandwidth levels.
  • Expected demand level by section of community (e.g., town compared to rural).
  • Expected demand levels by distance from central office (for loop length considerations).
  • Locations of customer classes and, in particular, mid- to large-sized businesses within the town.
  • Expectations for when the community wants the service to begin.
  • For broadband, expected willingness to pay for content as well as bandwidth, for all of the above considerations, where "content" means specific applications that rely on higher bandwidth (for example: music, sports, and sports programming).
  • Location opportunities for equipment, with any business or public/government agencies.
  • Tower and tall building location options if a wireless solution is applicable.

Each item on this list provides an important piece of information relevant to revenue and expense expectations. For example, if subscribers in the community would be willing to pay $40 per month for broadband, provided at 750 kbps, and most of the customers are clustered in town, the financial evaluation would be much more favorable than if the community wanted 10 mb broadband service but was only willing to pay $30 per month and customers were geographically dispersed over very inhospitable terrain. A financially responsible Internet provider will perform an evaluation of these factors before it invests hundreds of thousands or millions of dollars to deploy Internet services. Because network characteristics provide a much more favorable opportunity to earn a sufficient return on investment in urban areas, Internet providers have tended to focus their financial analyses and deployment activities in urban areas. A survey and financial analysis of every community opportunity is very expensive. So, rural areas have tended to be the last in line for Internet and broadband deployment. A community interested in receiving these services can collect the information about demand to help an Internet provider more expeditiously evaluate its request. The next section discusses the community's role.

2. Communities Can Assist in Evaluation by Quantifying Demand ~
A community may need to convince an Internet provider that there is enough local demand to justify the Internet provider's investment needed to deploy the service. Internet providers decide whether to provide service in an area based on whether the venture is expected to be profitable. Communities can survey businesses and residences to develop expectations of their needs and willingness to pay for services. If the results show a sufficient level of demand, an Internet provider will be more likely to seriously consider the community's request.

Communities attempting to quantify demand should collect information relevant to measuring the financial feasibility for Internet deployment for the issues set forth in the previous section of this document. Two primary means by which this information can be gathered is through interviews with community leaders and surveys distributed to businesses and residences. Community leaders may include the local chamber of commerce, the mayor and other elected officials, and county commissioners. Community "leaders" may also include entities most likely to benefit from better Internet services, or those firms already using the Internet, such as schools, hospitals, manufacturing operations, and police and fire departments. These groups and individuals may provide valuable information for the development of Internet demand in the community. Surveys should be distributed to a representative sample of residences and businesses, and the results should be based on sound statistical analysis.

To use an on-line tool to estimate existing service levels and the potential for demand, use the Telecommunications Infrastructure Readiness Index (TRI, go to www.communitydevelopment.uiuc.edu/tcii/main). The TRI is an inventory and evaluation diagnostic of the telecommunications infrastructure, in a defined community. Three components of the tool include:

Part A: The Telecommunications Quotient helps the user analyze his or her individual affinity for using telecommunications technology, and understand better his or her knowledge and strengths. This section of the tool can be used in a working group or committee to help people plan how to best allocate team resources on a telecommunications project;

Part B: The Internet Service Provider Worksheet helps the community to document existing local telecommunications service. After completing this survey, a benchmark score is calculated for future analysis; and

Part C: Assessing Demand for Internet Services provides a framework for a survey process that the community or organization can use to assess how people are currently using telecommunications services, estimate how much more people would use if more were available, and how much they would be willing to pay for a variety of services.

 

3. What if No Provider is Interested?
If no provider is interested in serving a community despite the documented potential for high demand, a community has three additional options to consider. A community could: 1) seek to deploy its own infrastructure and serve itself; 2) attempt to partner with potential providers through a joint infrastructure arrangement; or 3) provide incentives for private infrastructure investment. The first option requires the community to form a legal entity with the financial, managerial, and technical ability to offer the desired Internet services. Depending upon the services a community intends to offer, it may be required to receive a certificate to offer telecommunications service from the state public utility commission (in Illinois, the Illinois Commerce Commission) and be subject to the same regulatory obligations required of any other competitive telecommunications carrier. A community interested in providing its own service should first consult with an attorney and a consultant with expertise in telecommunications regulation and business planning. A second option would be to develop a joint arrangement with Internet providers, whereby the community deploys a key part of the network architecture, such as fiber or a communication tower, that Internet providers can deploy service through a lease arrangement. This approach eliminates the legal and regulatory requirements associated with establishing a stand-alone Internet provider. From an Internet provider's perspective, this may be attractive since it would minimize the investment risk associated with technology deployment. A third option is to provide incentives to private firms to offer the desired Internet services. Using this strategy, the community could:

  • Allow access to rights-of-way for all types of providers;
  • Create tax incentives and/or offer grants to Internet providers that deploy the infrastructure necessary to offer the desired services; and/or
  • Disseminate information about grants and loans available to providers of Internet and broadband service in rural areas.

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VI. Summary

Obtaining quality Internet services has been the Holy Grail for many rural areas. Often, the problem in obtaining service has resulted from a miscommunication between a community and service providers. By becoming familiar with the technical jargon and the evaluation tools upon which providers make business decisions to provide Internet services, communities can better position themselves with potential providers. Potential providers also need to understand the types of services for which communities desire better Internet services. For example, does the local health clinic require greater bandwidth for its telemedicine programs? If so, the provider may be able to provide a product offering that meets the clinic's needs. By following the tips contained in the document, a community can go a long way toward understanding its needs and relaying its requests to potential providers.

This document is designed to be an introduction to the issues most likely to be of concern as communities plan for telecommunications infrastructure. It does not present all of the nuances associated with each of the issues contained herein. For more information, go to:

  • University of Illinois Laboratory for Community and Economic Development ~ www.communitydevelopment.uiuc.edu
  • GVNW Consulting, Inc. ~ A telecommunications consulting firm with services available to communities, including demand analysis, market assessment, technical expertise, regulatory analysis, business planning, and communication facilitator between communities and providers. For more information, contact Jason Hendricks at jhendricks@gvnw.com, phone 719-594-5800 or 217-698-2701.

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