10 years ago, the rand was much stronger than what it is today and South Africans paid far less for imported goods. In April 2007, the local currency was trading at around R7.00 to the US dollar – compared to April 2017’s figures of around R14.00. The stronger rand in 2007 meant that imported goods – like televisions, computers, and smartphones – were relatively more affordable.
The full effect of the current weakening rand will only be felt in a few months’ time, and consumers can expect most industries to be affected. Even products which are produced locally are expected to see price increases, as higher fuel prices increase transport costs. It is not all doom and gloom, however.
Advances in technology have seen the price of many computing products decrease and Internet connectivity is much cheaper than what it was a decade ago.
The graphic below provides an overview of how the price of products have changed in South Africa over the last 10 years.
As the city looks to lay new fiber infrastructure in partnership with Axia, a Canada-based fiber infrastructure company, internet service providers already operating in Bloomington will follow their own visions of a well-connected city. National broadband companies Comcast and AT&T have already made changes to their Bloomington networks ahead of any city-driven installation. Whether it’s freshly lain fiber or a new technology that runs information across existing copper cables, both companies have announced gigabit speeds in Bloomington. The advances are in addition to Monroe County provider Smithville Fiber’s ongoing efforts to expand its fiber gigabit service across the city, a neighborhood at a time.
“There was a rush to fiber. When we were rolling out fiber in Bloomington and Columbus and other markets, it was the greatest thing. But now, people look at the dollar and are conscientious,” said Cullen McCarty, executive vice president of Smithville.
“The mayor believes we can just put fiber out there and people will go get it,” he said. “No. That’s not happening now.
That’s the business reality of it.”
Mayor John Hamilton selected Axia as the city’s preferred provider in December 2016. He cited three aspects of the data management company’s profile that fit his vision, the first of which addresses the “citywide” portion of the proposed fiber network. A citywide internet infrastructure is not citywide if it isn’t available to all, but identifying where one company’s grasp outreaches another’s is difficult. AT&T, Comcast and Smithville all deferred on producing a map of existing and targeted expansion areas for this series, claiming the knowledge is proprietary information in a competitive environment. And though none were chosen as the city’s provider, each has its own take on how to tackle Bloomington’s new information super highway.
Smithville introduced its fiber infrastructure after procuring a $90 million loan in 2008. It now operates 3,000 miles of fiber across 16 counties. Smithville began laying gigabit residential fiber in Bloomington with the Blue Ridge neighborhood in 2015 and has since located across Bloomington in both businesses and residences. According to Darby McCarty, CEO of Smithville, the company has spent $5 million to $15 million over 10 years to bring fiber to parts of Bloomington.
“Certainly, once you put fiber in the ground, that’s certainly a big step in the right direction, but then you’re going to have to make sure that equipment that connects that fiber back and forth is up to date. Short term and long term, this is not an inexpensive thing to engage in, and we have to make sure the business case supports it,” said John Patten, CEO of Smithville Communications. That’s why Smithville Fiber identifies expansion on a by-neighborhood basis. In addition to Blue Ridge, Smithville has identified several other neighborhoods for full network expansion.
The footprint and locations of AT&T and Comcast’s infrastructure aren’t as clearly defined. According to the company’s website, AT&T has the largest fiber network when compared to major U.S. cable providers listed in the Federal Communications Commission’s 2015 Measuring Broadband America – Fixed Broadband Report. Mike Wilson, public relations director for Comcast in Indiana, said Comcast’s hybrid copper and fiber network is already at a citywide level.
“As far as Bloomington goes, the map is easy, because it’s basically everywhere,” Wilson said.
Deadline Friday for Axia report
Gaps in coverage do exist where there are noncompliant building owners or businesses with exclusivity contracts with other carriers, but that will be the case with any service provider. The city’s vision is to avoid “cherry-picking” affluent neighborhoods and passing over low-income, low access areas.
“This whole notion of cherry-picking, I think, portrays an ignorance of how business works. In order to get to those federal housing projects, you can’t just target that by itself. You have to have some sort of income, a revenue stream. It takes time to build up to that,” Smithville’s Cullen McCarty said. “To have him (Hamilton) bash us in public, and he even got upset when we would meet with him privately, that we were cherry-picking — it just drove him crazy.”
Just as each private company has its own business standards it must meet, so too does the mayor’s vision. Another of his criteria for choosing Axia was the fact it had a proposal that was financially feasible for the city.
“There’s nothing that binds Axia to follow through,” Smithville’s Patten said. “Axia is going to have to build that (accessibility) into their business case. It would be surprising to me that Bloomington would be the only city Axia is doing this review in, and the cost of doing a citywide build — which incidentally just got 10,000 acres bigger because of the annexation — means that Axia’s cost to play in this game just went up.”
The deadline for Axia’s engineering feasibility study comes this week after a three-week extension. On Friday, the company is set to present a final cost and more details on whether the company will create Bloomington’s infrastructure. A citywide network could cost $50 million or more, according to Art Price, CEO of Axia Connect USA Ltd.
“It’s purely engineering and inspection and speculation on their part,” Smithville’s Cullen McCarty said. “They’re going to discover we’re the limestone capital of the world for a reason. They recapitalized last year, so they’ve got a lot of money, but in a couple of years from now, who knows? The investors may hand it off to somebody. The Chinese are good at making investments in infrastructure around the world.”
AT&T declined to comment on its expansion plans and existing footprint.
Wilson explained Comcast’s relationship with selective expansion through cherry-picking.
“That absolutely happens, and we do not do that,” Comcast’s Wilson said. “Because of the technology we invest in, we’re able to bring our network to that ubiquitous level we like, just through some system upgrades. It not only future-proofs our business, but it also winds up being an economic development tool for the state of Indiana.”
Wilson credits that ubiquity to the fact that Comcast’s gigabit speeds run on the existing, hybrid coxial cable and fiber system that’s already in the ground. Wilson said it costs thousands of dollars any time you open up the ground to lay fiber.
“A lot of people are thinking of fiber as the end-all, be-all of what the system should do,” Wilson said. “And yeah, fiber is super important to the backbone of any network, but I also think the technology that we’ve worked on is actually kind of a game changer.”
Comcast has already launched its Xfinity Gigabit system over its existing coaxial cable network by changing the way the information running over the lines is packaged. One-third of the network is carried by fiber, but the filaments transition back to the copper cables telephone lines use as the network approaches a customer’s door. That one-gigabit speed rivals Comcast’s fiber counterparts, but the methods are very different.
“How does the old and new network compare? It’s like apples and lawn furniture,” Wilson said. Wilson uses several images to describe the technology Comcast uses to compress its information, called DOCSIS 3.1.
“If I’m to put it in the lay-est of terms, and this may sound comical, but it’s almost like when you shrink wrap a bag full of sweaters,” Wilson said. “We’ve been able to do that with an MP4 file.
We’ve essentially compressed these files, and that gives us a lot more space on our network because of that file compression, and we’re able to deliver much faster speeds.”
If the city’s broadband network were to be characterized as a highway, as these types of infrastructure often are, Comcast’s Wilson said the technology has “…either made the cars smaller or added more lanes, and you’re able to go faster if you’ve got more lanes. It doesn’t matter what the pavement is made out of, what matters is the flow of traffic.”
Comcast’s alternative approach forgoes costly digging, but Wilson said the savings aren’t the only reason for the new system. Wilson said Comcast isn’t concerned with getting caught up in the fray of what its competition is doing.
“We’re doing this because we want to use what we already have for technology and infrastructure as best as we can, as efficiently as possible,” Comcast’s Wilson said. On the other hand, AT&T Internet 1000 and Smithville Fiber’s Bloomington systems are 100 percent fiber all the way to a customer’s door. As Comcast has expanded its speeds, so too have AT&T and Smithville outgrown the previous 300 megabit-per-second threshold to bring speeds approaching one gigabit per second to Bloomington.
Availability and demand
Each company’s high-speed services are marketed as available in select areas. Timelines for when AT&T and Smithville’s coverage will reach citywide levels have yet to be announced. Not every provider believes such citywide coverage is an immediate need.
“I don’t know how many people are going to need it right now, but are people going to be using it in the future? I will 100 percent guarantee you: yes,” Wilson said. “Our business model is to be wise and look ahead.”
Smithville’s Darby McCarty said residential fiber is perhaps something people would like to have and a plus for those looking to move to the city. In regards to the developing downtown technology park, The Trades District, Darby McCarty said you can’t do business without fiber. Bloomington does not exist in a digital divide, Smithville’s Patten said.
“There is adequate service to do most everything everybody could ever want to do in Bloomington as it exists,” Patten said. “To everybody’s thinking, fiber is certainly future thinking. But to the consumer that is asked to make a decision today, and to project into what I’m going to need 5 years from now?
They’re just not going to do it. If you’ve got three kids, why would you buy a house that could handle 10?”
Patten feels there’s currently not enough early adopters to make a business case for full citywide coverage. There just aren’t enough people willing to pay for the investment to make the jump from old technology to new. The mayor’s final reason for choosing Axia lies in its policy of providing an open network, which essentially means the company will build infrastructure to allow any of the area competitors to locate on Axia conduit — for a fee. It’s a stipulation meant to drive competition, according to the mayor.
Already, Smithville has seen a chilling effect on potential customer signups since the announcement, Patten said. Remaining competitive in a market already wired by Axia leaves companies with little choice but to follow Axia’s direction.
“We like to be in charge of our own destiny,” Darby McCarty said. “Therefore, we like to run all of our own fiber wherever we want to go.”
Smithville’s preference would be to refrain from co-locating with Axia and other providers, but Patten said the company won’t run its own separate line right next to existing infrastructure. Though not all companies agree with every aspect of the proposed city and Axia partnership, each has a direct response. Whether it’s a new technology, an affordable pricing plan, superior reliability or a local presence, each has an approach to bringing high speed internet to Bloomington.
For more on gigabit availability in the Bloomington area:
Each company characterizes its high-speed services in a different way. Comcast characterized its gigabit services as fast enough to download a 5 gigabyte, high definition movie in 40 seconds; a 15 gigabyte video game in 2 minutes; a 150 megabyte MP3 album in less than 2 seconds; and a 600 megabyte television episode in 4 seconds. In its Xfinity Gigabit announcement, Comcast announced its service will have a preliminary base cost $139.95-per-month. AT&T Internet 1000 can reportedly download an estimated 25 songs in 1 second, or a 90-minute high definition movie in less than 34 seconds. AT&T’s 1000 megabit per second service over its fiber network is available for $80 per month with a 12-month commitment. After those 12 months, the price will move to a standard rate of $119 per month.
Smithville’s depiction of its step-up in service is more relative, demonstrating that it would take the average internet speeds 85.4 seconds to download an MP3 album, whereas Smithville’s fiber network could download the same album in 1.6 seconds.
The company’s gigabit-speed fiber service is currently listed on the Smithville website for $70 per month with no contract where such services are available.
A community organization that works to help low-income families is increasingly frustrated with getting internet access for all Nova Scotians. Members of ACORN (Association of Community Organizations for Reform Now) Canada say they’re disappointed in the 2017 federal budget unveiled last month, because the $13.2 million over five years cited to support access to broadband relies on big companies to voluntarily create programs.
“ACORN members want their right to the digital economy to be guaranteed, not left to the whims of multi-billion dollar companies,” ACORN’s Tabitha Naismith said in a statement. The CRTC declared broadband internet a basic telecommunications service last year, and ordered the country’s internet providers to begin working on boosting internet services and speeds and isolated areas.
The United Nations declared earlier this decade that internet freedom and internet access are basic human rights.
Relying on the library
But none of these declarations matters much if people can’t afford to get on the internet, said Jonethan Brigley, Dartmouth chair for ACORN. Brigley said people on social assistance don’t have the internet in their budget. And with internet bills starting at around $85 a month, there’s little people can do unless they decide to cut into their food budget.
Without internet access, they can’t perform necessary work like checking emails, looking for jobs and going to government websites, he said.
“They feel isolated and alone and they don’t know where to actually go besides the libraries, and if they can’t afford a bus pass they can’t go there as well,” he said. Gis?le Bouvier, also of ACORN, said the internet should not be subject to market forces alone and should be capped for low-income people. The CRTC does not regulate internet prices, however, and passed the file onto the Immigration Minister Navdeep Bains.