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Long Tail Telecom: Why Smaller Markets Should Take a Long Hard Look at Alternate Broadband

Category:  Leadership > Central Texas as a Case Study

Here's at least the start of my argument for why it makes sense to see continued activity in the medium city market when it comes to Metropolitan Broadband.

First, the short story about the Long Tail....(I recommend this Wikipedia link).

1. The Bell Curve. This curve shows a distribution around a Mean with Standards of Deviation from the Mean. Early Adopters to the Left, Laggards to the Right...We see the Bell Curve throughout society, and it's a helpful tool.
2. The Power Law Curve. This curve shows a distribution of points based on connections, where a few nodes on the Left have numerous connections, while a massive number of nodes on the Right have a few connections each...We see the Power Law Curve in several phenomena, and like the Bell Curve, it too is a helpful tool to better understanding...most notably for our purposes, the Power Law Curve is a boon to understanding network phenomena - we call the multiply-connected nodes "hubs" and they show up on the Left, and the nodes along the long horizontal line that is the Right of the curve constitute the Long Tail.
3. Networks . As an organizing principle, networks are an alternative to hierarchies when looking at how to organize complexity. While Darwin looked to hierarchies to plot his thoughts about what he saw in Nature, Nature itself is a complex system that tolerates chaos and prefers networks.

If we were to plot cities based on population on a graph, we would find the most populous cities clumping over on the Left and moving right, we'd see the curve start to look like a Power Law Curve, as the graph slowly dropped in height, even as it sloped gently off into a Long Tail. I mapped this rather crudely in the graph below.

While a lot has been made in the recent press about the potential of Verizon opening up their networks to handset manufacturers (see Trains on Tracks v. Cars on Highways: Closed v. Open from earlier this week), and while I'm certainly not one to Poo Poo good news about a large incumbent moving in the right direction, so don't take this post the wrong way; I think there is another trend that may turn out to be as relevant or more so for those in Tier 3 and below markets (for the sake of argument, let's call Tier 3 cities with a population of 100,000 or below). The trend will be the realization of the options with Alternate Broadband and increasing experimentation with different business models and technologies.

People who live in smaller cities have different options than large city dwellers when it comes to wired broadband, generally, not-as-good options. In nearly all medium sized cities (25,000 - 100,000) there are legitimate options for accessing broadband. But as the size drops - and we know from the Power Law Curve that there are ever more of these smaller towns as they get smaller and smaller - these towns become less and less attractive to traditional telecom, DSL, and cable providers. Broadband options grow fewer, and prices go up. We call this the Rural Broadband problem.

Therefore, it makes sense for people in these smaller towns to be risk takers - you would otherwise assume they would be more conservative than their big-city brethren - it makes sense, however, when it comes to broadband infrastructure, for them to be more liberal, even radical. Arguably, smaller towns should be looking at more innovative business models, more risky providers, anything to stimulate lower prices and more accessibility. And indeed, we do see an explosion of wireless ISPs - WISPs - active in these smaller markets.

Starting from the right and moving left, as the cities go up in size, they have more revenues and more complexity in their city governments, which means not only bigger problems, but also more options. That should mean that there is a sweet spot somewhere along that curve, where the cities are small enough to have incentives to experiment and take risks because they are relatively underserved by traditional / conventional broadband providers, but large enough to have budgets and be attractive to private sector partners who seek to explore Alternate Broadband solutions.

That's where we find ourselves with the City of San Marcos down here in Central Texas (see also other articles by clicking on this subject heading at the top of the page - "Central Texas as a Case Study")

And watch these mid-sized towns for more and more activity in Alternate Broadband. They're in the sweet spot, and the sooner they realize this, the busier they will get.

Posted on December 03, 2007 at 01:50 PM

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