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Sunday, 03 August 2014 22:00

Broadband connectivity grows, but gaps still exist

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Broadband connectivity grows, but gaps still exist SOURCE; CONNECT MICHIGAN, 2014

New research shows that the availability of high-speed Internet for Michigan households is on the rise.

In a new report, Lansing-based Connect Michigan Inc. found that 83.4 percent of households in the state can access fixed broadband that has a minimum download speed of 100 megabits per second. That’s a 60 percent improvement from the organization’s most recent survey on broadband availability in 2011.

But that still leaves 643,000 underserved households that have no access to broadband or that do have access, but just at slower speeds.

Just 31,000 households are underserved when measured by Internet service that has a slower upload speed of at least 768 kilobits per second, the report found.

Most counties in West Michigan have near universal access to some form of non-mobile connectivity, although access lagged in some rural counties. Outliers included Barry County, where 93.76 percent of households were served by some form of broadband, and Calhoun County at 95.46 percent.

While not addressed in the 2014 research, the increasing availability of broadband is also crucial for businesses in the state, which rely on connections to increase efficiencies, boost production and connect to the global economy.

As companies put a premium on accessible information, they’re demanding increased bandwidth, particularly as they turn to cloud-based services to store and safeguard data, said Mike Hemmingsen, West Michigan regional director of Windstream Communications Inc.

“Whether they are companies supporting larger businesses or those large companies themselves, they understand that their data is their greatest asset and to lose that data puts their company at risk,” said Hemmingsen.

A 2013 survey by Connect Michigan Inc. found that 75 percent of businesses in the state are connected to broadband, up from 70 percent in 2010. But that still leaves 52,000 businesses without high-speed Internet.

While connection speeds and methods vary, the organization defines broadband as connections faster than 4 megabits per seconds, whether via terrestrial providers like Comcast Corp. or mobile connections from companies such as Verizon Wireless, said Eric Frederick, executive director of Connect Michigan.

The case for connectivity

With broadband becoming a more pervasive part of doing business, having a strong communication infrastructure will make the region more competitive when attracting companies to the area, said Megan Sall, business development manager at The Right Place Inc., a West Michigan-based regional economic development group.

“It is an important differentiator when you look at a region in terms of a business environment and what companies and talent are able to do in those areas,” Sall said.

As skilled positions continue to require digital literacy, broadband access keeps potential employees and existing workers current on new technologies and trends, allowing companies to source the talent they need to grow, Sall said.

When taken in the larger picture of digital literacy, broadband connections help boost workforce education and drive productivity, Frederick said. Connect Michigan found that approximately 39 percent of businesses have trouble finding employees with adequate technology skills across the general workforce.

“It’s not just the high-tech skills we are looking at,” he said. “Everyone that is in the workforce needs to have some basic level of digital literacy in order to function.”

Despite broadband growing in popularity among businesses, some companies do not see the benefits of turning toward the web, Frederick said. But as the business community becomes more interconnected, companies of all sizes and across a range of industries are realizing myriad benefits related to broadband adoption. Numerous firms, particularly in manufacturing, rely on broadband connections to connect with customers across the globe and increase exports of their products.

Approximately 144,000 Michigan businesses interact online with a global customer base, according to a recent Connect Michigan survey.

“We have a lot of unique products in Michigan and talented people who can make just about anything,” Frederick said. “If they can have access to some kind of exporting portal to get their product around the globe, that makes us more globally competitive.”

A number of businesses also derive significant revenue from web-based sales, Frederick said. In 2013, Connect Michigan reported 33 percent of businesses in the state earned revenue from online sales, which total an estimated $28 billion. The median annual revenues for companies without a broadband connection and a website average 84 percent lower than those with these capabilities, the organization reported in 2011.

“Technology might not be for every business, but if an establishment takes a look at ways that they could improve their business through technology, I bet they’d find something,” Frederick said.

Infrastructure woes

In an unregulated market, telecommunications companies tend to build broadband infrastructure in areas with high residential density, meaning urban areas have access to the fastest speeds, Frederick said.

In past years, the state’s rural areas typically had the most trouble finding reliable high-speed connections. However, a rapidly growing technology known as “fixed wireless” that uses radio signal equipment attached to high points, like water towers and grain silos, provides service to pockets of businesses in Michigan’s more secluded areas, according to a June 2013 report in Crain’s Michigan Business.

While overall access to broadband connectivity has become less expensive over the years, significant increases in demand may outweigh savings for companies requiring faster connections, sources said.

However, as demand grows and existing infrastructure becomes maxed out, investment in new infrastructure and expanding construction and material costs could cause connectivity prices to spike, said Hemmingsen of Windstream Communications.

“You’re going to see an impact down the road on companies having to invest in new infrastructure,” he said. “Fiber only lasts so long.”

Industry prevalence

While calls across industries for broadband connectivity have increased on a whole, the West Michigan-based U.S. Signal Company LLC experiences the most demand from the health care sector, said Kirk Dombek, the company’s vice president of business development.

“When you think about the information passing through hospitals and what they are doing with remote real-time health care, it takes up a lot of bandwidth,” Dombek said.

Approximately 71 percent of health care services are connected to broadband, according to the 2013 Connect Michigan report. With 75 percent of all businesses using broadband, it may seem strange that an industry known for its use of cutting-edge technology would fall short. However, rural doctors offices and remote urgent care facilities often do not see the need for high-speed connections.

“There are a lot of rural health care establishments that are still struggling with broadband adoption,” Frederick said.
In contrast to health care, approximately 77 percent of manufacturers use broadband, according to the survey. This highlights the manufacturing industry’s move toward cloud-based systems and efficient technologies, Frederick said.   

Read 3076 times Last modified on Wednesday, 13 August 2014 10:34
John Wiegand

Staff writer

jwiegand@mibiz.com

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