Michael Curri: Bridging the Small Business Digital Divide Through Utilization (Gigabit City Summit)

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Bridging the Small Business Digital Divide Through Utilization

Gigabit City SummitKansas City, Missouri

January 14, 2015

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Revenues from network subscriptions

- Investment, operations & maintenance costs

= PROFIT

Operators

Local Economy

Increased productivity and competitiveness,

increased revenues, new jobs,

better quality of life, etc.

- Investment, utilization programs and support

= BENEFITS FOR THE COMMUNITY

Why We Build Broadband Networks

“Off-

balance-sheet”

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Broadband Means Jobs

Broadband is responsible for 42.8% of all new jobs since 2013

Percent of New Jobs Related to InternetBy Size of Employer Group

Small businesses create 8x more Internet jobs

relative to large firms

Source: SNG Digital Economy Database, n = 2,536 (Commercial businesses in IL, KY, NC, NE, GA; 2012 to present)

60.4%

47.4%

40.0%37.4%

41.9% 42.8%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

0 - 19 20 - 49 50 - 99 100 - 499 500 ormore

Total

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Economic ROI from Public Investments in Broadband

Contribution to GDP 10 x the initial public investment

Number of Jobs created and saved Variable

Fiscal revenues increase 3 to 4 x the initial public investment

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… as well as ROI For Our Communities

SNG projects have revealed common return on investment (ROI) multipliers from broadband investments

Average multipliers identified from economic impact studies conducted by SNG.

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The Digital Divide in 2015 is about Our Businesses

• Traditionally, the digital divide has been about home use… – Availability

– Expense

– Connection Speed

• The digital divide in 2015 centers on small businesses– There is a “gap in awareness and understanding”

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The Smaller the Organization, The Lower the Internet Utilization

6.22

6.79

7.087.20

7.63

5.00

6.00

7.00

8.00

1 - 4 5 - 9 10 - 19 20 - 49 50 or more

Number of Employees

Average DEi Score

8,431 commercial enterprises (2012-14)

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Availability Adoption Utilization

This is Problematic Because…

Utilization Growth

BUT Availability is Our Primary Industry Focus …

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8Source: SNG Digital Economy Database, n=3,341 (Businesses in CA, CT, MD, NC, NE, OH, SC, VA; 2012 to Present)

Faster does not solve other, more significant barriers

Internet Speed Is NOT the Utilization Barrier

20.1%

17.4%

15.9%

30.0%

41.0%

18.2%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

Loss of personal contact with clients

High cost of development/maintenance

Lack of internal expertise and knowledge

Privacy concerns

Security concerns

Available Internet is too slow

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Also Contributing to the Digital Divide? Ultra-Fast (Gigabit) Broadband is…

• Not universally understood

• Not universally accepted as a platform for innovation that requires maximum bandwidth

• Not seen as a utility – Ultra fast networks are different than

traditional broadband… benefits need to be understood to drive adoption and utilization

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Gap in Understanding Starts with Marketing a Feature… Not a Benefit

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Marketing just ‘Speed’ Leaves Small Businesses in the Dark

Target Market Demand Drivers Feature Benefit Result

HouseholdsNetflix, Gaming, Multiplehousehold users, and Devices

SpeedEnhanced lifestyle

Uptake

LargeBusinesses

Collaboration, Security and Backups, Cloud Applications

SpeedCompetitiveness Collaboration

Uptake

SMEsEmail, websites, basic online tools, all accomplished with “basic” service

SpeedHow does fast Internet impact my bottom line?

Limited Uptake

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In the Broadband equation, the quality of each input affects the outcome

Utilization AverageLagging

Technology

Technology Low Utilization Poor

UtilizationTechnology BENEFITS

Cannot Only Focus on Technology

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Increased Utilization Grows Revenue

Businesses underutilizing the Internet miss significant revenue opportunities

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

4 up to 5 5 up to 6 6 up to 7 7 up to 8 8 up to 9 9 up to 10

21% 22%26%

32%35%

43%

% o

f R

eve

nu

es

attr

ibu

ted

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tern

et u

sage

Level of Broadband Utilization (DEi score)

Contribution of Internet to Revenues by Level of Utilization

Source: Strategic Networks Group, Inc. 2014. N = 2,606

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Why Drive Utilization?

For an individual business or organization, increasing utilization by 10% means:

Increasing revenues by 24%

Decreasing costs by 7%

For a Community or Region, it means :

Allowing businesses to be more competitive

Creating a demand for high-skilled workers

Adding fiscal revenues

Average multipliers identified by SNG from over 12,000 data records collected in 2009-10.

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Small Business Utilization: Revenue Impacts

Revenue Impact % of Revenue

Selling Goods or Services 24.3%

Customer Service and Support 24.1%

Advertising and Promotion 20.2%

Website for Organization 17.1%

Organizations less than 50 employees, average percent of revenues created by utilization:

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Driving Utilization: Community Financial Impacts

Economic Impact for every 100 businesses trained in North Georgia project who adopt Internet Applications:

IndustriesAggregate additional revenues (annually)

All Industries $7.2 Million

Manufacturing $17.5 Million

Professional and Tech Services $2.7 Million

Tourism $4.8 Million

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The Takeaway: Make a Compelling Case For Broadband Benefits

Support training of Internet applications

Help businesses understand benefits of gigabit broadband (not just speed)

Develop a “business case” for businesses to take action

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A DEi Scorecard is delivered to each business and organization

Individualized ‘broadband assessment’ that:‒ benchmarks competitiveness against

peers (by size and industry sector)‒ estimates ROI from increased utilization‒ provides links to local advisors and

support

Data based on the individual’s current broadband utilization against industry average

Shared with local economic development agencies so they can raise awareness, increase adoption, and drive utilization

The SNG Business Case: DEi Scorecard

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Michael Curri, PresidentStrategic Networks Group, Inc.

+ [email protected]

Let’s connect !

www.sngroup.com

Thank You