Scott Stringer “Start Up City” report calls for upgrading NYC Internet #startupcity @scottmstringer

Start Up CityOn December 11 2012 Manhattan Borough President, and candidate for City Comptroller, Scott Stringer issued “Start-up City: Growing New York City’s Entrepreneurial Ecosystem for All“. The report delineates 11 areas in which NYC can act to foster growth and access to its developing tech economy. Section 3 is devoted to connectivity, and is reproduced below:


“It’s like the elephant in the room is that bandwidth here sucks…There has to be ways for the city to construct much better bandwidth availability for start-ups.” – David Pakman, Partner, Venrock111

Defining the Problem: New York’s lack of reliable, high-speed internet is limiting the growth of Tech 2.0. Though entrepreneurs in New York have access to broadband, many of those we interviewed said that the City’s telecom infrastructure is well behind where it should be for a city vying to be one of the nation’s two leading technology hubs. In fact, many start-ups that have looked for affordable space in former industrial districts outside of Manhattan have had to abandon those plans after discovering highspeed internet connections were not available.

Goal: Improve internet speed and reliability by increasing competition throughout the five boroughs and opening up government property to fiber optic cable.

Background: Internet connectivity is a national problem. A 2011 study by Pando Networks found that U.S. internet speed was 26th in the world.

Within the U.S., New York City’s connectivity lags behind some of its major competitors, including Austin, San Francisco, Boston, and Seattle.

Not only do New Yorkers endure slower internet service than similar cities in other parts of the world, but they also pay higher prices for that substandard service, according to a study by the Open Technology Institute at the New America Foundation.

Tokyo residents enjoy speeds that are eight times faster than New York’s, for a lower price. And Hong Kong residents enjoy speeds that are 20 times faster, for the equivalent price. In New York, frequent outages, limited redundancy, and slow speeds wreak havoc on businesses. According to Tom Pinckney, Co-Founder and VP of Engineering at Hunch, every hour without internet access costs about $1,000 of salary.

Chris Dixon, Co-Founder and CEO of Hunch, added, “It’s embarrassing how bad internet access in Manhattan is.”

Competition (or the lack thereof) may be a major cause of New York’s slow speeds. As the Open Technology Institute found, while broadband connectivity in San Francisco lags behind global cities like Seoul and Hong Kong, access in the Bay Area remains “faster, more affordable, and far more flexible in comparison to other large U.S. cities like New York.”

One of San Francisco’s key advantages is the presence of local Internet Service Providers (ISPs). As the report notes, the Bay Area broadband market is “the most diverse, boasting several popular local ISPs that deliver high-speed wireless and fiber access to residences and businesses. In addition to offering faster speeds than Comcast and Verizon, these ISPs tend to have lower prices and do not bind their customers to lengthy contracts.” Put simply, the ISPs have injected a “competitive, innovative element to San Francisco’s broadband market.”
One government policy that has a significant impact on the ability of small ISPs to develop is “unbundling,” also known as open access. Open access policies require that broadband providers offer to lease capacity on their networks to new entrants selling competing internet services to consumers. These policies are credited with stimulating competition during the dawn of the broadband revolution in the last decade.

Internet access is not just important for start-ups and tech companies. It is critical for the long-term viability of the financial services industry in New York City. As the Wall Street Journal reported, “In a stock market transformed by cutting-edge computer and data-networking power, speed has emerged as an obsession and an overriding competitive advantage.”

Just as importantly, reliable broadband access at home and in the classroom has been shown to improve education, particularly in math skills that are crucial to success in the entrepreneurial ecosystem. Last year, CFY, a not-for-profit organization, provided home computers (and arranged for discounted broadband access) to every sixth grade student at the Bea Fuller Rodgers Middle School in Washington Heights.

In addition, CFY trained the students and their parents on a web-based platform called PowerMyLearning, which contains thousands of digital learning activities. The results were remarkable: the percentage of students with learning disabilities who met or exceeded standards in math increased by 36 percent, while the percentage of students who were below standard decreased from 23 percent to zero.

The Mayor recently announced a series of steps to improve broadband service in the City.123 These steps include:

  • ConnectNYC: A competition to build out fiber wiring for commercial and industrial buildings.
  • WiredNYC: A grading program for connectivity in city buildings and a crowdsourced digital map showcasing wired buildings citywide.
  • NYC Broadband Connect Map: A crowdsourced, dynamic website in which businesses can learn about connectivity availability and capabilities in a given building or neighborhood.
  • Broadband Express: A program to streamline the process for broadband-related permits and regulatory issues.
  • CitizenConnect: A competition to develop mobile applications that will help City residents access workforce development opportunities, job listings and worker support programs such as childcare, healthcare, and transportation. While these are important steps to improving the physical footprint of the internet in New York City and the information available to consumers, even more must be done.


1. Explore a Municipal Fiber Network/Using Municipal Assets to Boost Competition

“We need to wire up this city from Staten Island to the Bronx, from Harlem to Rockaway Beach. And we need to own this fiber plant and we need it to be the best in the world.” – Fred Wilson, Venture Capitalist/Principal, Union Square Ventures

New York City should explore the creation of a citywide municipal fiber network and an increased use of publicly-owned assets – including subway and rail lines owned and operated by the MTA and utility assets owned by ConEd and National Grid – as conduits for sparking competition among ISPs and improving internet connectivity for all.

Instead of waiting for cable companies to build out modern fiber networks, many cities have successfully built municipal fiber networks through partnerships with utility companies. These cities recognize that – like water, electricity, and gas – internet access is an essential utility of the modern age – critical infrastructure for economic development.

Lafayette, Louisiana has built a municipal fiber-optic network called LUS Fiber.125 Backed by a bond sale approved by voters in 2005, LUS Fiber is now cashpositive and operates as a not-for-profit.

Internet access is not just important for start-ups and tech companies. It is critical for the long-term viability of the financial services industry in New York City. As the Wall Street Journal reported, “In a stock market transformed by cutting-edge computer and data-networking power, speed has emerged as an obsession and an overriding competitive advantage.”
Not only have the people of Lafayette benefited from the service at home, but business is also booming. California-based visual effects house Pixel Magic opened a studio in Lafayette two years ago and more tech companies continue moving in. As Director of LUS Fiber, Terry Huval said, “We’ve built the infrastructure of the future.”

Chattanooga, Tennessee has seen similar success with its municipal network.

Working with the public electric company (which needed a fiber network to reliably transmit data in real time to monitor its grid), Chattanooga’s network now links 150,000 homes and businesses, supporting the city’s role as a hotbed for high-tech entrepreneurship.129 Hackathons in Chattanooga have taken advantage of the gigabit connection to develop:

  • Instant universal translation
  • Facial recognition in real time at a point of sale or security point
  • A better, easier way to use electric systems for the home that incorporate the smart grid as well as device management for consumers
  • Workstation apps as a service, such as delivering Photoshop or other CPU-intensive applications via the cloud

Each of these innovations, fueled by the municipal network, lays the groundwork for future economic growth.

Municipal fiber isn’t limited to small cities. Washington D.C. is using federal stimulus funds to upgrade and augment the District’s existing 293-mile fiber network with over 170 new fiber miles. This “Community Access Network” (DC-CAN) delivers affordable, value-added broadband services to over 250 health, educational, public safety, and other community institutions in underserved areas of the District, while leasing access to the network to local ISP’s who plan to bring service to as many as 248,000 households and 30,500 businesses.

A similar model is in use in Virginia, where county and municipal governments developed the “The Wired Road,” a regional open access, multi-service telecommunications network.

The municipalities do not sell broadband services directly, but instead operate the broadband network as a “public access digital roadway.” As with conventional transportation roadways, the city builds and maintains the digital roads, but private businesses use the system to deliver broadband services directly to the end-user, whether businesses or homes.

The Wired Road, which cost roughly $42 million to install, provides service to 54,000 people in the rural southwest corner of Virginia through private sector partnerships.132 Service providers that use the network to deliver goods and services share a portion of their revenue with the network, in direct proportion to the amount of network capacity that a particular company uses. The connection speeds run from 100 megabytes/second to 1 gigabyte/second – significantly faster than prevailing speeds available in New York City.

All told, more than 150 local governments across the country have built or are planning to build networks, according to Christopher Mitchell of the Institute for Local Self-Reliance.

The City, along with the MTA, Con Ed and other public utilities, should carefully study the success of networks across the country to determine whether such a network could be built in New York. It may be the case that a municipal fiber plant in New York can only be cost-effective in dense parts of the City with many potential customers.135 Note, however, that the Wired Road and other networks described above operate in much less dense areas than New York. If a city-wide municipal network is not feasible, the City, the MTA, and the utilities should still consider whether opening government-owned property to private development could spur competition. For instance, many cities have partnered with private enterprises to lease City-owned space to lay fiber cable. J. Patrick Kennedy, CEO of the software company OSIsoft, pushed the City of San Leandro, California to install a municipal fiber network when it dug up streets to connect its traffic lights.

While the city declined to spend public dollars on the network, it agreed to rent space to Kennedy to build a network that would be accessible to any businesses in the city’s commercial/industrial loop (see map). The project will increase the speed of internet from about 1.5 megabits per second to 10 gigabits per second, or about 666 times faster than before. In addition, transportation agencies have used their existing physical infrastructure to build fiber networks – both expanding internet availability and raising money for ongoing transit operations. For example, Norfolk Southern Railroad created a subsidiary, Thoroughbred Technology and Telecommunications (T-Cubed), to lease fiber-optic ducts the company built along its rights of way throughout the Eastern United States.

The Massachusetts Bay Transportation Authority has taken a similar tactic, opening up over 400 miles of vacant fiber optic ducts along their rights of way in Eastern Massachusetts to private enterprise.

New York has long partnered with private companies to use public space to expand fiber networks. For instance, the MTA contracts with vendors to operate and maintain fiber optic cable running between Manhattan and Brooklyn through its tunnels.

However, given the remarkable breadth of the MTA’s footprint in the Manhattan Core and in other burgeoning job corridors, there is clearly room for expanding this effort, both underground and along above-ground Metro-North and Long Island Rail Road lines. In fact, such an effort would allow the MTA to wire subway tunnels themselves with WiFi, dramatically improving productivity for commuters and students, many of whom spend hours underground every day.

By encouraging competition through a municipal fiber network and/or maximizing the value of our municipal assets by opening up space for competition, the City can improve internet access to individuals and businesses alike.

2. Expand Municipal WiFi via Business Improvement Districts and Chambers of Commerce

Entrepreneurs interviewed for this report unanimously cited the density and diversity of New York City street life as one of the preeminent factors drawing people to the five boroughs.

One technology that has added to the vitality of our streets and neighborhoods is the use of municipal WiFi.

The City recently joined forces with AT&T to provide free WiFi service at 26 locations in 20 New York City parks across the five boroughs.

However, much more can be done to build out WiFi hot-spots.

One idea is to forge new partnerships with the City’s Chambers of Commerce and Business Improvement Districts (BIDs). Some BIDs, including the Downtown Alliance, Union Square Partnership, Bryant Park Corporation, and DUMBO, have already created small municipal WiFi hot-spots.

DUMBO Wi-Fi was launched via a public-private partnership between the neighborhood’s largest real estate holder, Two Trees, and the DUMBO BID. Alexandria Sica, Executive Director of the DUMBO BID, summed up the benefits of neighborhood WiFI, stating: DUMBO is the epicenter for digital start-ups and production companies. Wi-Fi is one more way to inspire the workforce we have and help attract new talent to the Brooklyn Waterfront. In DUMBO, you can put together a proposal while gazing at the Brooklyn Bridge and all of Manhattan. Creativity can literally flow into the streets. Businesses will be born in Brooklyn Bridge Park. The next Etsy could be thought up right under the Manhattan Bridge!

Other BIDs/neighborhood groups, particularly in heavily- trafficked pedestrian malls like Roosevelt Avenue (Queens), Fulton Street (Brooklyn), and Coney Island (Brooklyn), and burgeoning entrepreneurial hotspots like the Brooklyn Army Terminal in Sunset Park, should follow suit. Expanding WiFi will enable the flourishing of commerce and culture on streets, sidewalks, parks and piers throughout the five boroughs.