Optical fiber infrastructure as a location factor in

rural and mountain areas:

Realization models and socio-economic consequences in South Tyrol

and beyond

Mag. Michael Volgger

DANTE lecture 23/01/2013 – Ljubljana (Slovenia)

Institute for Regional Development and Location Management

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EUROPEAN ACADEMY OF BOZEN/BOLZANO (EURAC)

Volgger 23/01/2013 4 RESEARCH AREAS – 11 RESEARCH INSTITUTES

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• Institute for Renewable Energy

• Institute for Alpine Environment

• Institute for Applied Remote Sensing

• Institute for Regional Development and Location

Management

• Center for Biomedicine

• Institute for Mummies and the Iceman

• Institute of Mountain Emergency Medicine

• Institute for Minority Rights

• Institute for Public Management

• Institute for Specialized Communication and

Multilingualism

• Institute for Studies on Federalism and Regionalism

4

Technologies

Mountains

Health

Autonomies

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Bandwidth requirements

64-256 Kbit/s 2 Mbit/s >20 Mbit/s

E-Mail

Browsing

Social networks

Video conferences

Tele-Medicine

Tele-Learning

Online HD TV

Multilocation collaboration

PSTN DSL, 3G FTTx, LTE

Broadband Next-generation broadband Narrowband

Applications

Bandwidth

Technology

5

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Initiative of the Autonomous Province of Bolzano/Bozen-South Tyrol: Connect all 116 municipalities

to the backbone of the fiber optic network until the end of 2013 (FTTN) to prevent a so-called „digital

divide“ in South Tyrol

Unresolved issue in South Tyrol: Realization of the so-called „last mile“, i.e. to realize the last part

of the telecommunication network that reaches the final customer in fiber

Background of the study

Sources: http://www.provinz.bz.it/breitband/suedtirol/breitband-in-suedtirol.asp

Fiber optic initiative of South Tyrol

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Broadband initiative in South Tyrol

Historical overview

1) Until 2004: Development of broadband access left up to the market

2) 1st step: promotion of internet solutions via radio by an active involvement of

the regional government

3) 2nd step: Fiber optic strategy – connect all municipalities by the end of 2013,

provide a faster ADSL connection (7 Mbit/s upwards until the end of 2014)

4) 3rd and still largely unresolved step: Realization of the last mile

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1) Analyze socioeconomic consequences of connecting citizens and businesses

directly to the optical fiber network

2) Explore framework conditions and realization models for the roll-out of the

optical fiber network on the last mile

3) Reveal specific needs and wants of South Tyrolean telecommunication customers

Image source: http://web-de.digitalhub-frm.de/2012/03/neues-glasfaser-kabel-verbindet.html

Study objectives

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Study design and methods

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Qualitative study

11 case studies in South Tyrol and other Alpine and pre-Alpine regions:

Villnöss Taufers i.M. Vahrn Bruneck Pfalzen Tiers

Oberhausen a.d. Donau (D) Friedrichshafen (D) Pfyn (CH) Blons (A) Storo (TN)

Data collection:

3-5 qualitative interviews with political representatives & representatives from the business sector

Data analysis:

GABEK-analysis to reduce complexity of the collected information and to visually represent the

results (causal net graph) (see. Zelger, 1999; 2000)

Comparative analysis:

Qualitative comparative analysis to discover conditions under which specific effects can be

realized (see. Ragin, 1987; Ragin, 2000)

10

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Quantitative study

Data collection:

• Standardized online-survey among citizens and businesses in South Tyrol, about some aspects

of demand concerning optical fiber infrastructure

• Time period: 15.07.2012 until 19.10.2012

• Using web portals of some municipalities and professional associations

• N=840 utilizable answers

Data analysis:

Analysis with the statistics software SPSS

11

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Realization of the “last mile” of an optical fiber infrastructure may lead to

an increase in quality of life, service quality and networking quality

f iber optic netw ork access

incentive

exchange

enthusiasm

services

facilitation

save money

speed

comfort

complexity

added

value

packages

connection of

peripheral areas

quality

security

location factor

start-up diff iculties

fantastic

makes a

difference

video

save time

immigration

idea

comunication

possibilities

problem

solution

projects

advertising

cooperation

competence &

responsibility

civil w orks

connection fee

television

telephone

internet

mobile applications

e-health

retail

tourism

smart metering

e-government

information

regional development

place of

residence

innovation

Quality of life

Development

quality Innovation

quality

Service quality

Costs/risks

Networking

quality

Selected results

Semantic network based

on qualitative interviews

in the 11 case study

municipalities; each

connection is based on 2

to 3 mentions by

respondents.

Method GABEK (Holistic

handling of complexity)

(Zelger 1999; 2000)

Qualitative study

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Realization of the “last mile” may lead to an increase of quality of life and

competitiveness of peripheral areas

Degree of urbanization

seems to have an

effect on the perceived

economic effects of the

“last mile”

Quantification based on qualitative interviews; method QCA (qualitative comparative analysis) (Ragin, 1987; 2000)

Qualitative study

Perc

eiv

ed p

osi

tive e

conom

ic e

ffects

Low urbanization

Points above the bisecting line (the points represent the case study

municipalities) suggest that the variable on the horizontal axis is a

“sufficient condition”

Legend: 0 … does (rather) not apply

0,33 … partly applies

0,66 … mostly applies

1 … (almost) completely applies

Selected results

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Quantitative study

Online survey in South Tyrol 2012; n = 837, missing = 61

Parallels between physical and digital reachability: Reliability as most important factor

Basic quality is crucial

Reliability is perceived to be the most important attribute of an optical

fiber connection

Selected results

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The surveyed South Tyrolean citizens and firms show a substantial demand

for optical fiber connections

Willingness to switch is consistently high and largely independent of several socio-economic variables

• no significant influence of:

- age

- sex

- monthly net income

- type of previous internet access

- industry sector (businesses)

- firm size measured in employees (businesses)

- firm size measured in sales (businesses)

Online survey in South Tyrol 2012; n = 818, missing = 19

Quantitative study

Selected results

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The surveyed citizens and firms show willingness to pay for optical fiber

connections

South Tyrolean citizens and firms show a willingness to pay an extra charge from 15 to 30%: this willingness is mostly independent of

socioeconomic variables (however: men, businesses – especially in rural municipalities – show a higher willingness to pay)

Willigness to pay a monthly extra charge (max)

(online survey in South Tyrol 2012; n = 812, missing = 25)

In absolut terms:

- Arithmetic mean: 9,0 € (Median: 5,0 €)

In relative terms:

- Arithmetic mean: 31% (Median: 14%)

Monthly costs for the current

internet connection (n = 837)

- Arithmetic mean: 34,57 €

- Median: 29 €

Currently In future

Selected results

Quantitative study

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Online survey in South Tyrol 2012; n = 837, missing = 76

Comparable importance of investments in physical and digital reachability

Investments in the optical fiber infrastructure are considered as more important than investments in the mobile

phone network

Selected results

Quantitative study

The surveyed citizens and firms consider public-sector investments in

optical fiber infrastructure as relatively important

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f iber optic netw ork access

pressure

pow er station

expertise

district heating plant

municipality

today

laying the empty

conduit

planning

restructuring

electric supply

telecom

providers

thinking ahead

vision and

farsightedness

involvement

discussions

decision

excavation

w ork

idea

investment

younger

people

contemporary

lifestyle

necessity

netw orkingeconomy

future

cooperation

support combination

18

Cooperation and finance as two crucial, critical elements for the

realization of the last mile

External factors:

Time spirit

Relational factors:

Cooperation

Internal factors:

Finance

Human factors:

Competences

Semantic network based on qualitative interviews in the 11 case study municipalities; each connection is based on at least 4 mentions by respondents.

Method GABEK (Holistic handling of complexity) (Zelger 1999; 2000)

Selected results

Qualitative study

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“South Tyrolean model”: Many pioneering municipalities in South Tyrol

have opted for a uniform approach on the last mile

19

REALIZATION MODEL LAST MILE Local ownership of

networks

Separation

ownership-providing Specific civil works Hybrid technology 1 1 0 0,33

1 1 0 1

0,66 1 0 0,33

1 0 0 0

1 1 0 0,66

1 1 0 1

0 0 0,33 0,33

0,33 0 0,66 0,66

0,33 0,33 1 0

0,33 0,66 0,33 0

1 0 0 0

Elements of the “South Tyrolean model”:

• Local ownership of the network (fiber network owner tends to have also other network infrastructures)

• Separation of network ownership and providing

• Avoidance of specific civil works exclusively for the realization of the fiber infrastructure

• Recourse to hybrid technologies for particularly remote locations (combination radio – optical fiber cable)

Municipalities in

South Tyrol

Municipalities outside

of South Tyrol

Selected results

Qualitative study

Quantification based on qualitative interviews; method QCA (qualitative comparative analysis) (Ragin, 1987; 2000)

Legend: 0 … does (rather) not apply

0,33 … partly applies

0,66 … mostly applies

1 … (almost) completely applies

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Hierarchy Market

South

Tyrolean

model Dual

model

Cooperative

Model Friedrichshafen

Internalization

model

e.g.

Villnöss,

Taufers i.M.

e.g.

Oberhausen

a.d. Donau,

Pfyn

e.g.

Friedrichshafen

Association

e.g.

Blons

(association),

Storo

(cooperative)

Categorization

Net-

work

“South Tyrolean model” as middle course between internalized and

market-based realization models of the „last mile“

“South Tyrolean model”: inter-organizational collaboration (municipality, provider and in some cases local cooperatives)

Selected results

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Public Private

South

Tyrolean

model Dual

model

Internalization

model

Association

Cooperative

Model Friedrichshafen

Model Friedrichshafen

e.g.

Friedrichshafen

e.g.

Oberhausen

a.d. Donau,

Pfyn

e.g.

Villnöss,

Taufers i.M.

e.g.

Blons

(association),

Storo

(cooperative)

e.g.

Friedrichshafen

„South Tyrolean model“: often collective ownership of the network infrastructure (public or cooperatives) but private providing

Categorization

Selected results

“South Tyrolean model” as middle course between public and private

realization models of the „last mile“

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Local Supra-

regional

South

Tyrolean

model Dual

model

Cooperatives

Model Friedrichshafen

e.g.

Blons

e.g. Storo e.g.

Villnöss,

Taufers i.M.

e.g.

Oberhausen

a.d. Donau,

Pfyn

e.g.

Friedrichshafen

Association

Internalization model

“South Tyrolean model”: often local ownership of the network and regional providing

Categorization

Selected results

“South Tyrolean model” as middle course between local and

regional/supra-regional realization models of the „last mile“

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“South Tyrolean model” seems to be particularly suited for peripheral,

rural areas

Selected results

Qualitative study

Low urbanization and “South Tyrolean model”

Perc

eiv

ed p

osi

tive e

conom

ic e

ffects

Legend: 0 … does (rather) not apply

0,33 … partly applies

0,66 … mostly applies

1 … (almost) completely applies

Points above the bisecting line (the points represent the case study

municipalities) suggest that the variable on the horizontal axis is a

“sufficient condition”

Quantification based on qualitative interviews; method QCA (qualitative comparative analysis) (Ragin, 1987; 2000)

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Specific services

offered

0,33

0,33

0

0

0

0

0,66

1

0,66

0,66

0,66

To increase the value of the last mile for citizens and businesses, it is

necessary to expand the specific services offered

South Tyrol: still low number of services that exploit the potential of an optical fiber connection (e.g. telemedicine)

Selected results

Qualitative study

Legend: 0 … does (rather) not apply

0,33 … partly applies

0,66 … mostly applies

1 … (almost) completely applies

Municipalities in

South Tyrol

Municipalities outside

of South Tyrol

Quantification based on qualitative interviews; method QCA (qualitative comparative analysis) (Ragin, 1987; 2000)

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Contact European Academy of Bozen/Bolzano

Institute for Regional Development and Location Management

Viale Druso 1

39100 Bozen/Bolzano

www.eurac.edu

Mag. Michael Volgger

p 0471-055325

f 0471-055429

michael.volgger@eurac.edu