The City is installing fibre optic infrastructure, and this is a good thing. It is a significant step in the ongoing shift from our old economy of sawmills and manufacturing to the new “knowledge-based” (ahem) economy that will be our future if we choose to establish a balance between employment and living space in New Westminster in the decades to come. The Intelligent City Initiative is more than just fibre in the ground, it is about leveraging the advantages that come with that fibre to build a City ready to receive the future. It is about building the infrastructure the businesses and citizens of tomorrow are going to want/need, and about making that infrastructure accessible. But it isn’t without its challenges.
In Part 1 of this blog, I’m going to talk about the fibre. In Part 2, I will talk about some of the bigger ideas around the Intelligent City Initiative.
For those who don’t know about the Intelligent City Initiative, it starts with Broadband Connectivity, and the City plans to encourage this by providing open-source fibre-to-the premises of businesses (and eventually residences, I hope) along major corridors, which will provide the opportunity for others to offer Gigabit service to their customers. This does not mean the City is getting into the volatile telecom business in competition with Telus or Shaw. Instead, we are increasing the opportunities for the major telecoms and a myriad of smaller players to provide high speed and specialty internet service to the businesses and residents we want to attract to (and sustain within) New Westminster.
This technology and its benefits are hard for some people (even some of those who own the buildings in New Westminster that may benefit) to understand – what is the City’s role going to be? In an attempt to explain this I improvised a rough allegory during a Council meeting when the project was reviewed. I thought I would expand upon that allegory a little better here, with the benefit of long form-writing and hindsight.
The factories, sawmills, and warehouses that formed the economic backbone of New Westminster only a few decades ago relied on transportation infrastructure to move the goods they produced. Indeed they located here because the River was that original source of transportation. Before globalization, free trade deals, and the invisible hand smeared most of those manufacturing jobs to various regulation-avoiding far eastern shores, manufacturers needed roads, rails, and the river to move raw materials and manufactured goods. In the new “Knowledge Economy” (ahem), the raw materials and manufactured goods are information. They are lines of code that move at the speed of light, but they still need infrastructure to move, and the better the infrastructure, the more competitive our local businesses will be at adding value to that information.
Today, that information is being moved mostly by (allegorical) oxcart or rails. For most of us living and working in New Westminster, the data is moving by oxcart – by copper wires piggy-backed on phone service. This service is reliable and cheap, but slow with limited capacity. It is ok for surfing the net and the occasional NetFlicks binge, but if you are trying to run a 3D animation company and are communicating with head office in Palo Alto, or if you are running web services company with global customers needing access to your server, the oxen can’t carry the load and they move to slow. If you need to move more stuff, you need to get a contract with one of the railways.
To continue the allegory, the railways are the major telecoms (Telus, Shaw). Much like the railways of old, they (and only they) can provide lots of capacity, but need to create a business case before they build the spur line to where the heavy lifting is required. When choosing between increasing capacity into existing tech hubs where the customers already are (downtown Vancouver) and building to the tech frontier where they don’t know who is going to show up (New Westminster), their business plan is pretty simple. The alternative for local businesses is to finance the building of their own spur, which can be a difficult investment at the start-up stage, and you are still beholden to the rail company you connect your spur to – you cannot ask for lower bids from the competition without also building them a spur.
What New Westminster wants to do is get away from the spurs belonging to the major monopoly players, and build some roads. Highways, actually. Serious onramps to the Al Goreian “Information Superhighway”. We will help our customers build driveways to connect to the road, but mostly our job is to build the road. We are not creating a new major trucking company (the telecoms will provide that service) nor are we supplying trucks. The major telecoms will be able to rent our roads for running trucks to customers in our City – they save the cost of setting up the infrastructure, we get the long-term benefit by having them here. As a bonus, the smaller telecoms (yes they exist) can also use those same roads to provide boutique services to high-tech customers in our City, and can really start to compete with the larger telecoms to push the wholesale cost of these services down, making businesses in our City more competitive in turn. The win-wins pile up pretty quickly.
By providing the road (in the form a glass fibre), we encourage the telecoms and service providers to sell a service, and we charge them rent on the infrastructure to support it. Unlike real trucks on roads, these ones move at the speed of light, and you can fit thousands of them on the same road at the same time. It is ridiculous to suggest that capacity is “unlimited”, but the limit on the installed capacity is so high that if we ever get close to exceeding it, we will be making so much money from the rental of the service that upgrades will be easily paid for. Another bonus is that the network hardware (another stretch of the transportation analogy: the intersections, crosswalks, traffic lights, etc.) can be supplied by the telecoms and service providers, and we can change them for using our space to store them. Imagine if trucks driving through New Westminster paid for their own intersection lights, and we charged rent for putting them there!
The business case here is solid, so you might wonder why everyone else isn’t doing it. The simple answer is that many of them are, although their models often differ. The New Westminster business plan was developed after careful review of what has happened in other jurisdictions, and what we can learn from them. It also leverages some significant advantages New Westminster has over other Cities. We are a compact city of only 15 square kilometres, with high commercial density along major corridors, which means the initial fibre installations can be put near a lot of potential customers for very low cost. We also own our own electrical utility, which provides us both an infrastructure advantage (we own rights-of way, poles and conduits, instead of having to negotiate them from a myriad of partners) and an administrative advantage (we can use the utility expertise and administrative structures in that agency to guide our operation). We also have a backbone of fibre already connecting many City assets (parks and buildings), and have been installing fibre-ready conduits as we upgrade and maintain our roads and sidewalks.
It happens we have a few “major tenants” (think educational and health care institutions) whose increasing need to move data would benefit from signing up to this, and we have recently developed, or are looking at developing, a lot of office space on our major corridors that are increasingly becoming attractive to the types of small- and medium-sized high-tech firms that would benefit from having access to this fibre.
The investment here is not insignificant, more than $5 Million in initial outlay. However, a conservative business case has this system revenue-positive within 6 years, and paying off the infrastructure investment in about 20 years. There are very good reasons to believe the payback time will be much shorter than this, and the City will begin to see revenue generation from this project within the first half of the long-term 30-year plan. Long after I’m gone from Council, but sometimes you need to plant a tree knowing the shade will be enjoyed by others, to bring another metaphor into the discussion.
In a future blog post, I will talk about some of the fruit that tee could bear. In the meantime, here is a taste: