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NYC Struggles to Compete on Broadband Service

HOST INTRO: New York City and its Economic Development Corporation are offering city businesses the chance to improve their Internet service. Winners of the contest will receive a free optical fiber connection and substantially faster broadband speeds. But that’s still not enough to help some companies. Chris Mossa has more.

Photo by Flickr user Arnybo, via Creative Commons.

Photo by Flickr user Arnybo, via Creative Commons.

Most technology companies start small – a few employees and a good idea. To save money, many decide to set up shop in a co-working space like SoTechies in midtown. The Company has a railroad-style office with a long row of workstations running along one wall. Up to 50 clients share the space at any point. There’s not a lot of movement – just a few mouse clicks and some keyboard strokes. But online – they’re flying. That’s because SoTechies was one of two dozen winners of last year’s Connect NYC Fiber Access challenge. The New York Economic Development Corporation provided free installation of dedicated fiber optic connections to the winning companies. For a business like SoTechies, faster broadband is a competitive advantage, according to the co-working spaces’ Nancy Gonzalez.

Gonzalez: I actually had people call and ask us to give them an ETA. And then when it was finally in, they actually came in and ran tests. I know that for them, at least, it was key. (0:10)

The new fiber connection is almost 70% faster than the copper cable service the Company used to rely on. SoTechies’ founder, Jason Juliano, says that it’s not just dotcoms and tech startups that crave faster speeds.

Juliano: We have some video production companies where they are doing final cuts and they need to upload it to the cloud – where a job would’ve taken hours, now it takes a few minutes. (0:10)

The free installation saves companies up to $50 thousand dollars. But that’s where the support ends.

 Blank: The grant doesn’t cover the actual service contract. (0:03)

That’s Dan Blank, the founder of BureauBlank, a strategy and design firm and another winner of last year’s contest. After pricing out the monthly service costs for dedicated fiber, he actually turned down the installation. Blank: As a small business it wasn’t at a price point that made sense for us. (0:04)

It costs more to get better Internet service. A lot more. SoTechies pays almost $2 thousand dollars a month for its fiber connection – a 500% increase over its old cable service. But BureauBlank can’t justify the expense and the Compay’s not alone. Andrew Rasiej [RI-SHAY], a serial entrepreneur and chairman of one of the city’s largest technology groups, worries that that puts the CITY at a competitive disadvantage.

Rasiej: The problem is that New York City is in a global battle to reinvent its workforce to succeed in the 21st century hyper-connected global economy. And businesses need to be able to access the fastest speeds possible to make their businesses succeed. (0:19)

New York City ranks only 8th in the nation in overall broadband speed, according to broadband-testing company, Ookla. It’s also far behind world cities like Hong Kong, Singapore and Paris – all of which offer speeds at least twice as fast as those in New York. Rasiej [RI-SHAY] says that’s because those cities have done something that New York hasn’t.

Rasiej: New York City is woefully behind in recognizing that broadband is a critical infrastructure like water and electricity that is essential to its economic and social health. (0:12)

Other cities in the U.S. are trying to get ahead by installing more fiber, says Susan Crawford, a law professor and former technology advisor to President Obama.

Crawford: San Francisco, Chicago, Seattle, Boston – are all looking at major plans to ensure that that there’s cheap fiber access. (0:09)

Crawford says New York could achieve that by making better use of the miles of unused glass tubes already in the ground – or dark fiber. If the city can develop a plan to lease more dark fiber at affordable rates, there could be a greater supply of faster Internet connections. But so far it hasn’t done that and that’s one reason why it’s still so expensive.

Crawford: In New York City, the cost to lease dark fiber is many multiples of what it is in Stockholm, Singapore, Paris, London, Amsterdam and a bunch of other places. (0:11)

For now, Dan Blank and his company, BureauBlank are stuck on the sidelines – waiting for high speeds at lower costs.

Blank: What my hope is is that as more buildings and more neighborhoods adopt fiber access, the prices will come down and it will become accessible, or at least competitive, to the other service like cable and DSL. (0:14)

This year’s Fiber challenge winners will be announced on May 6th.

Chris Mossa, Columbia Radio News.

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