Roy Brister and Max Tom install wireless equipment on |
the Cardinal water tower. Taking fate into their own hands,
South Dundas has proven that bandwidth equals jobs
... at least in their Ontario East community.
A Leap of FaithThe South Dundas Experience
Risk taking is usually not seen as a virtue in municipal politics, but sometimes we find ourselves in situations where using the accepted approach just doesn't produce the results we need.
This might characterize the South Dundas experience.
Whether or not you agree with their methods, the lessons they have learned will benefit decision makers and planners in communities across Canada and beyond for years to come.
The Seed for Success
This story begins with a local business man, Roy Brister who owns an insurance brokerage firm with a chain of five offices scattered across the township of South Dundas which extends along the shores of the St. Lawrence river, about 50 miles south of Canada's capital city, Ottawa.
Faced with the effect that the Internet revolution was having on his industry, Roy felt compelled to keep up, through the use of IP technology. His vision was to consolidate his administrative services at one location, and connect them through high speed Internet to the newly converted sales offices in the other four communities. In the end Roy could reduce administrative and travel costs, while at the same time increasing the amount of time available for his staff to spend serving clients and generating new business.
In 1998 South Dundas, was not a high priority market for established Internet service providers. High speed service was either not available, or only available at the cost of installing dedicated circuits which was far beyond what was reasonable for a rural business to afford. Taking matters into his own hands he hired a wireless engineering firm out of Hamilton to help him design and install a high speed wireless IP network between his offices. The implementation was not without complications, but before the end of the year 2000 he had established his own 2.4 GHz dedicated wireless network for about what it would of have cost him, at the time, to purchase dedicated 56k service for each rural office, that is about $6,500 per month!
The project was a success! Savings in administration costs more than compensated for the operating and carrying costs of the wireless network. So what was next? Having a wired business was Roy's goal, but to complete the picture he needed wired customers as well. It was fine to have his staff using up to date IT services, however he knew that in urban centres insurance clients were paying their bills on line and buying policies at home in their pyjama's at 10 pm over the Internet. This would not happen in South Dundas until the broadband services in the surrounding community were more available, affordable and reliable. This is in fact where the real story of South Dundas starts.
The Real Story
By 2001 the township of South Dundas was in a situation, which will sound familiar to many small Canadian municipalities. Its young people were heading for the big city where they could find educations and jobs, its industrial base was being whittled away by manufacturing plants, which would close their doors for various reasons, and then not be replaced. In all, the township with a population of approximately 11,000 lost 600 jobs during the period between 1991 and 2001.
It was during the year 2000 when Roy Brister approached the South Dundas municipal council, asking for permission to lay fibre for his business network onto township property, that the idea was born. If a local businessman with no specialized technical training could implement a successful broadband network, then maybe the municipality could do the same.
Roy Brister volunteered to chair a municipal communications committee, which would ultimately come to work with Business Development Manager, Rob Kinnard of Expertech to manage the design of a network, and the laying of fibre to the doors of all 160 local businesses.
Expertech was formed from what was originally the fibre optic arm of Bell Canada. They are now an independent supplier for the design and deployment of municipal fibre networks, like the one in South Dundas.
According to Curri his most recent results are even more impressive, "… the total jobs gained in the community now exceed 700, since the first fibre was lit. We have looked for other explanations that could account for the sudden increase in employment and have found none.
The remarkable result has been measured and documented in an economic impact study carried out by the management-consulting firm Strategic Network Group. Company president Michael Curri reports that from the date that the first fibre was lit, in June 2001 until the end of the study period in September 2002 the community as a whole gained 537 new jobs, 42 of which were directly attributable to the availability of broadband service. This is a remarkable result. In the face of an average job loss rate of 60 jobs per year, the community "gained" 537 jobs in one fourteen month period following the lighting the first portion of its fibre optic network.
According to Curri his most recent results are even more impressive, "… the total jobs gained in the community now exceed 700, since the first fibre was lit. We have looked for other explanations that could account for the sudden increase in employment and have found none."
Peter Oliver, manager of the new Canadian Tire Store in Morrisburg says that ".. Canadian Tire head office made the decision to come to Morrisburg with their new store because they see the town as being the new economic hub for South Dundas, factors such as proximity to the 401 and being at the cross roads of highways 2 and 31 were key. At the same time Canadian Tire depends heavily on the use of e-learning for staff training. We have over 260 courses that our staff can take and access to broadband services makes this process much more effective."
Anne Marie Waddell, Economic Development Officer for South Dundas speculates, "… there could be a snowball effect from the broadband. Some businesses expand or establish themselves specifically because of the broadband services and others invest in the community because of the new spirit of optimism and the community's demonstrated commitment to investing in its own growth."
The After Math
South Dundas is unique in that it stands as one of first communities that have been able to measure the economic benefit that it is receiving from its investment in broadband services.
It is unique in other ways as well. Conventional wisdom may now be coming down on the side of demand-aggregation as being the proper role for the municipality to play in the broadband deployment process. Infrastructure building is now most commonly considered to be the domain of the private sector.
South Dundas on the other hand finds itself acting in the role of owner operator of a municipal fibre optic utility. Max Tom president of a South Dundas ISP explained how the service delivery is now structured. "My company, Prophet Technologies Inc. was originally brought in to help fix problems with the Brister Group wireless network. We have gone on to work with the municipality in helping them design and install their own fibre optic network. At this stage we wear two hats. Firstly we manage the municipally owned fibre optic network and secondly as a privately owned ISP we resell the municipal bandwidth to commercial end users. At the end of the process we collect money from our commercial customers and then send a cheque to the municipality for the bandwidth supplied by their backbone."
The fact that South Dundas now owns its own fibre optic utility raises an interesting question: Is fibre optic deployment the proper business for a municipality to be in?
If we look at the examples being set in other Canadian communities you might say that the answer should be 'no'.
Many other communities are following the example set by ORCNET in the city of Ottawa and investing in studies that define the market need sufficiently to motivate commercial suppliers to come in and set up infrastructure. Along these lines the Industry Canada BRAND program requires that the services to which their funds are applied be privately held and not be owned by municipal governments.
Anne Marie Waddell responded to this question by wondering out loud, " …. Would South Dundas be enjoying the employment boom we are seeing today if we had waited to lower the risk sufficiently for an established vendor to be willing to come in and install services? Also would they have installed the level of service we enjoy today, or would they have simply provided just enough service for them to obtain a reasonable return on their investment in the shortest possible time?"
Micheal Curri points out that, "… models exist for municipally owned services. Municipal Hydro utilities were one good example. If we view broadband as utility, then municipally owned fibre optic infrastructure could make sense. As we do more economic impact studies like the one in South Dundas, we may start to see municipal governments viewing their investment in broadband infrastructure in the same way that they now see their investment in water mains, roads and public transit."