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Looking beyond Chorus' Gigatown promotion
Posted on 8-Sep-2013 10:46 by Bill Bennett. | Tags Filed under: News.

Sheldon Grizzle, The Company Lab founder visiting Auckland to promote Gigatown
Sheldon Grizzle, The Company Lab founder visiting Auckland to promote Gigatown

Chorus plans to make one New Zealand town the best-connected place in the Southern Hemisphere.

The telecommunications infrastructure company is running Gigatown: a year-long competition pitching communities against each other to show their worthiness as New Zealand’s fibre showcase.

When the competition closes, Chorus will offer residents in the winning town 1 Gbps fibre connections on the UFB network at the same price they would normally pay for the cheapest 30 Mbps plan.

To win, a town has to prove it has what it takes to best exploit the faster fibre internet speeds.  That means coming up with innovative ideas and rethinking how to weave digital communications into everyday life.

The competition is only open to towns, or parts of cities, in Chorus’ UFB coverage area – about 70 percent of the total.

Gigatown: smart marketing or social stimulus?

Chorus says it is running the competition: “to encourage New Zealanders to start thinking about UFB as a huge opportunity to transform our country's economy and also deliver great social outcomes”.

That’s nice, but it’s not the whole story.

To date the UFB project has not been an entirely happy experience for Chorus. When the company was still part of Telecom NZ, it won the bulk of contracts to build the government’s fast fibre network – which was a National Party election promise in 2008. Chorus demerged from Telecom NZ as part of the deal with the government – a painful, expensive process for both companies.

Creating a fibre buzz

Once the UFB project began, it was clear the government had negotiated fierce terms. Chorus found its costs were higher than anticipated. Meanwhile, the rate of customer sign-up to the new network was lower than some early expectations.

As the implications of this dawned, the government controversially intervened with Commerce Commission regulation of copper internet services.

Despite this, UFB project economics mean Chorus needs to encourage more businesses and consumers on to the network.

Chorus is not a retail service provider. It’s a wholesaler, so marketing UFB services isn’t really the company’s job. Indeed, if it goes down that route it could step on its customers’ toes.

Hence Gigatown. A smart piece of marketing to give the UFB network a higher profile with potential customers and stimulate interest, even demand for fibre, but without cutting across the direct sales pitches from retail service providers. Creating a Gigatown buzz will certainly help raise awareness of fibre with early adopters and key business groups.

Like Chattanooga, only different

Chattanooga, Tennessee is the poster child for what fast broadband can do to regenerate a community. The city is roughly the same size as Wellington – although the physical geography is quite different. Historically it was an industrial city. In 1989 it was named as America’s dirtiest town.

Chattanooga, Tennessee
Chattanooga, Tennessee

Chorus invited Sheldon Grizzle, heads a non-profit economic development agency in Chattanooga to explain how fibre turned the city around. He says the city was in decline. At one point the population fell by 10 percent as people drifted away to nearby cities where they had more prospect of work. The word Grizzle uses is not drifting, but ‘fleeing’.

Like many post-industrial US cities, Chattanooga suffered when the factories closed. Then a decade ago a online TV channel set up business in town. It brought-in people with digital knowledge and design skills. The TV project fell through, leaving behind a core of around 300 people determined to carve out a future in the city.

Reversing the decline

Grizzle says the influx of broadband TV people kickstarted a freelance economy in Chattanooga. They were mainly developers and designers who realised they could contribute to the global economy from any place that had the right communications networks.

At first the city’s broadband was only average, but Grizzle says there was a fibre network which was originally installed to help manage the city’s energy grid. When this was used to deliver gigabit-fibre, things turned around fast. He says the most important thing was that gigabit-fibre just made everything so much more efficient.

Since the network went into operation three years ago, the population drift has reversed. Grizzle says Chattanooga is the first city to see a 10 percent decline in population followed by a 10 increase as people returned. Today there are start-up incubators in renovated factories and one of America’s largest web design schools has set up there.

Fibre by-products

One interesting by-product of having what Grizzle calls “ubiquitous” fibre throughout the city is that it meant the city authorities could cheaply and quickly build a wireless mesh network for city services. Grizzle says this wireless network sits on top of the fibre network and is used by emergency and public safety services.

Grizzle says a net 6700 new jobs have been created since the fibre network began and there’s a noticeable influx of talent. There’s also fresh money. He says the amount of venture and angel capital in the city has grown by a factor of five – a clear sign of returning prosperity and confidence.

It didn’t take long for the word to spread. Now Chattanooga is a testing-ground for high-speed broadband applications in a range of vertical markets. And other cities, including Detroit, now one of the most run-down in America, have turned to Chattanooga to tap into the lessons from installing fibre.

Lessons for New Zealand

Grizzle says it’s taken a long time for people to get their heads around the potential, benefits and opportunity of fibre. Three years after the network began, he says it is still only early days. To date the residential take-up of fibre services remains relatively low, this hasn’t made much different to the city’s economic growth.

While only one town – or part of a larger town – will get Chorus’ gigabit service at an entry level price, the faster internet service will be available throughout urban New Zealand. And the prices New Zealand businesses are charged for UFB are roughly in line with those in Chattanooga.

In other words, if we get this right, our fibre-lead regeneration could be on a national scale rather than just in one centre.

For the immediate future most gains will come from the efficiency of faster broadband, but we could expect something of a design renaissance.

One aspect of special interest will be what happens to New Zealand’s economy relative to Australia’s. It now looks as we will build a fast fibre-to-the-premises network while Australia could stick with fibre to the node. Can fast broadband reverse our relative economic decline, or at least improve it compared with our rich neighbour?

While you can find plenty of opinions on this, no-one knows for sure. No doubt governments and planners around the world will be watching closely to see how that works out.

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