Bendel's small business is at the edge of a big trend: Every day, high-speed data transmission, and the Internet in particular, is changing the way Florida companies, government offices, academic institutions and private individuals operate. Fort Lauderdale auto retailer AutoNation sells cars online, while St. Petersburg's Catalina Marketing lets Internet users print out grocery store coupons. Governor Jeb Bush communicates with Floridians via e-mail and webcasts executive appointments and bill signings. Florida universities offer an increasing number and variety of distance-learning programs online. And individuals use the Internet to buy stocks, pay bills, find jobs and read hometown newspapers.
For MedLite and other Florida companies, keeping up with the demands posed by the information economy depends heavily on what's called "bandwidth" -- simply put, how fast data can flow through a given communications channel such as fiber optic cable or copper telephone line. And the need for speed grows every day: While the telephone service-speed of 56 Kbps (kilobits per second) still may be fast enough for Net surfers who dial in via America Online, Prodigy or a local service, the real action today is in the competition for broadband, or high-speed, data transmission.
High-Speed Options
The fastest service now comes via broadband wireless service, which can operate at speeds up to 100 Mbps (megabits per second), although it isn't yet widely available. Fuzion Wireless in Boca Raton, which has rolled out broadband wireless in South Florida and plans service throughout the U.S. and Canada this year, says it can offer Internet access up to 25 Mbps, which is 400 times faster than dial-up service with a 56 Kbps modem. A file that takes 24 minutes to send over a 56K phone line gets from here to there in as little as three seconds with broadband wireless.
Next fastest is cable modem service and ADSL, both of which can transmit at up to 1.5 Mbps. Competitors in the cable modem arena include Road Runner and Excite@Home. In the ADSL arena, Bell South's Fast Access and GTE Digital Subscriber Line service compete with national players such as Covad Communications and small, competitive local carriers.
All the competition and concern over bandwidth isn't about helping sixth-graders finish their Internet research projects quicker: The availability of high-speed data transmission is vital for Florida economic developers pitching their cities to potential business relocations and high-tech entrepreneurs. In central Florida, for example, the build-out of a technology infrastructure is one goal of the region's new Central Florida Technology Partnership, a group comprised of the Economic Development Commission of Mid-Florida, Orlando Regional Chamber of Commerce, Florida High-Technology Corridor Council and the Central Florida Innovation Corporation.
How critical is bandwidth to the state? "To participate in the new economy, bandwidth is as important as electricity," says Julia Johnson, appointed in August by Gov. Jeb Bush to lead Florida's new Information Service Technology Development Task Force, often called the Governor's Internet Task Force.
What to Do?
Florida's high-speed landscape -- and the nation's -- is changing so rapidly that it's difficult to tell how wired the state is compared to the rest of the U.S. It's clear, though, that Florida's cities aren't in the top tier in terms of bandwidth availability. As of late 1998, Miami had only about one-tenth the bandwidth of what's available in San Francisco, Chicago and Washington, D.C., according to research by University of Florida geography professor Ed Malecki and graduate student Sean Gorman. Orlando, Jacksonville and Tampa are even further behind.
And while the availability of high-speed Internet access grew dramatically in Florida last year, the growth was uneven, with particular problems in rural and low-income areas. Making sure that all parts of the state are wired is a key concern for the Internet Task Force, which will assess Florida's cyber-status and recommend what to do to move the state's technological infrastructure toward the cutting edge. "Being able to make sure technology is accessible to everybody is a legitimate goal for state and local governments," says Bush.
The availability of high-speed data transmission in Florida depends on two components. The first requirement is an inter-city "backbone" of fiber optic cables that connects Florida's cities with each other and the rest of the nation. By most accounts, Florida has done a good job in attracting companies to build the fiber backbone. The traditional long-distance players, AT&T, MCI Worldcom and Sprint are here. In addition, newer competitors such as Williams Communications, Qwest, Level 3 and IXC Communications have built or are building thousands of fiber optic route miles in the state.
For example, Williams, based in Tulsa, Okla., has a 1,300-mile system with spots for local network connections at Pensacola, Tallahassee, Orlando, Tampa, Fort Myers, Miami, Fort Lauderdale, West Palm Beach, Melbourne, Daytona Beach and Jacksonville. A home-grown company, Orlando-based FEC Telecom, controls a 787-mile fiber optic loop that runs in part along the Jacksonville to Miami railroad right-of-way owned by its parent company, Florida East Coast Industries.
The state wants more, though: The Florida Department of Transportation is soliciting proposals from private-sector partners to design, build and maintain the Florida Fiber Network, a public network that will run along 2,000 miles of the state's limited access highways, such as the interstates and the Florida Turnpike. More than 60 representatives of telecom, construction, engineering and technology companies showed up for a pre-proposal meeting in Tallahassee in early November. In return for the right-of-way use, the state will get 36 fibers, which will be used for Florida's distance-learning and other technology initiatives. (A pair of fiber optic strands can carry the equivalent of 129,000 simultaneous telephone calls.) "We think there's some commercial opportunity and also a benefit to the state," says Tom Barry, Florida secretary of transportation. "We continue to see the demand side growing."
Missing Links
The second major component of Florida's technology infrastructure involves the local cable, telephone or wireless networks that tie homes and businesses to the primary fiber optic backbone. It's commonly referred to as "the last mile" -- think of it as technology at the neighborhood level, the ties that link the big fiber backbone with suburban residential areas, downtown business cores, and homes and businesses in rural areas.
While Florida's fiber optic backbone is in good shape, building "the last mile" is a bigger challenge. So far, high-speed Internet service via cable dominates "last mile" technology. Cable companies have the lead because companies such as Time Warner and Media One have spent millions of dollars upgrading their systems to accommodate digital cable TV along with high-speed Internet service. Much of the cable activity is in residential areas. "Our primary focus at this point is residential, and we're pushing that as far as we can," says John Rigsby, president of Time Warner Communications in central Florida.
Time Warner and other cable operators have a much smaller presence in business settings since many commercial office buildings aren't wired for cable. "We realize there's a business opportunity," says Rigsby. He adds, "We're in a lot of business parks already with our wiring." But laying more fiber optic cable in business centers won't be cheap. Installation typically runs from $25,000 per fiber mile to as much as $1 million per mile in congested urban areas.
The huge demand for the cable companies' high-speed Internet service has prompted telephone companies such as GTE and Bell South, and several hundred local carriers to step up the rollout of their high-speed alternative: digital subscriber lines, called ADSL or DSL. Costs begin at about $50 per month for service that is about five times faster than a 56 Kbps dial-up modem, but typically slower than a cable modem, which costs about $40 a month. (For faster DSL service, up to 1.5 Mbps, the cost goes up.)
DSL uses copper telephone lines and doesn't require fancy fiber optic upgrades -- the technology has been available since the late 1980s. But local telephone companies have often focused on offering more expensive high-speed options such as ISDN or T-1 lines, which cost subscribers $1,000 or more a month. "It is my assessment that the incumbent local telephone carriers in Florida have not been as aggressive in promoting" DSL services as in other states, says former Massachusetts resident John McClellan, president of FEC Telecom, an Orlando-based wholesaler of inter-city fiber optic lines.
A November ruling by the Federal Communications Commission is likely to increase competition and availability of DSL service. The FCC ruled that local telephone companies such as GTE and Bell South must share their copper lines with rivals who want to offer high-speed DSL service. (Until the ruling, a customer of one of the competitive carriers had to buy a separate phone line, typically about $20 a month for the DSL service.)
GTE, Bell South and other "incumbent" phone companies aren't happy because the ruling is likely to give a boost to the hundreds of "competitive," or alternative, local carriers that sprouted up in Florida after the Telecommunications Act of 1996. Network Telephone, for example, began offering DSL technology in its hometown of Pensacola in November. The company plans to expand DSL to 11 additional Florida cities. National high-speed providers Covad Communications, Rhythms NetConections and NorthPoint Communications also are adding more Florida locations, targeting small and medium-size businesses. Covad already operates in Miami and plans service in Tampa, Orlando and Jacksonville; Rhythms is in Miami and last month added Tampa and St. Petersburg; and NorthPoint serves Orlando, Tampa/St. Petersburg and Miami/Fort Lauderdale. "Covad is so interested in the state of Florida," says the Internet Task Force's Johnson. "They see Florida as a rich market."
Because DSL uses regular copper phone lines, which are available everywhere, it seems like the perfect way to provide high-speed Internet access to rural areas. But there's a big problem. A technical requirement of DSL is that a user, business or residential, must be within three miles of one of the phone company's "central offices," which contain the sophisticated DSL electronics.
For example: In GTE's Florida service area, which runs along the Florida Gulf Coast from Pasco County to Sarasota County and east to Polk County, there are 85 central office locations. In sparsely populated rural areas, it probably won't make economic sense to put in a central office. "There are going to be pockets" where ADSL service isn't available, says Lucy Huang, g roup product manager for DSL and ISDN for GTE in Dallas.
Longer term, competition is likely to shift out of the ground into the sky. Wireless data transmission systems operate by radio-wave technology. A series of units are mounted on buildings and, at about $60,000 per mile, it is less costly than laying fiber optic cable in urban areas but more expensive than other high-speed options in rural and suburban areas. "I'm not sure that this has an application in suburban and rural areas," says Douglas R.B. Campbell, vice president of Orlando wireless company, Triton Network Systems.
Looking Forward
Over the next year, the Governor's Internet Task Force will wrestle with how to make sure that rural and economically depressed areas don't get left behind in the technology revolution. As a first step, the task force is working with the University of Florida and other state universities to construct a "bandwidth map" that spells out, county-by-county, the availability of high-speed data transmission.
Once the task force determines who's wired and who isn't, the debate will shift to how to make sure every part of the state has the necessary bandwidth to make existing businesses competitive, spawn new cutting-edge technology ventures and win corporate relocations of tech companies. Johnson, leader of the task force, is hopeful that there can be an "open market" solution. Bush says he'll wait for the task force's recommendations, but says he's open to the idea of tax incentives. "The marketplace doesn't drive the services out to the areas that are more costly to serve, so you develop a strategy of ensuring access." Ultimately, says Bush, technology amounts to a "tidal wave of change, and you're either going to be on the surfboard with the tools to be able to ride it, or you're going to be overwhelmed by it."
Wireless: "Invisible Fiber"
In a congested city center, the cost to lay new fiber optic cable or more copper telephone lines can be prohibitive -- sometimes as much as $1 million per mile.
But Orlando's Triton Network Systems has found a way to put a high-speed network in place at less than one-tenth of the cost -- and without the hassle of tearing up city streets. Triton has developed a wireless system that uses radio-wave technology and devices perched atop city buildings. "Our product is called invisible fiber," says Douglas R.B. Campbell, vice president, international sales and marketing.
Triton's product is based on a Lockheed Martin technology used in military applications. What sets it apart from other commercial wireless applications is a very strong signal, making it less susceptible to interference from rain and physical barriers.
Bellevue, Wash.-based Advanced Radio Telecom used Triton's product in its launch last summer of a broadband fixed wireless fiber network designed for businesses in the San Jose, Calif., area. It offers 100 Mbps (megabits per second) Internet access for $1,250 per month. Another company, BroadStream Communications, is using the technology in Las Vegas. Triton does not sell directly to consumers.
Founded in 1997 by Brian Andrew, Triton funded its initial growth with a $1.6-million investment from Orlando's Military Commercial Technologies (MILCOM), a company that helps form start-up companies by providing financial and management assistance. Triton has grown from six employees to 175 and projects a workforce of 400 within three years. Skip Speaks, a veteran of Sprint and telephone maker Ericsson, joined Triton as president and CEO last fall. Fueling growth is $97.7 million in venture capital raised over two years. It appears poised for an initial public offering -- although the company declines to comment on the possibility of an IPO.
Looking forward, Triton is focusing on new products, higher bandwidth products and bringing the design of its components in-house. Says Campbell, "We're growing in three dimensions."
Backbone: Riding the High-Tech Rails
Henry Flagler's railroad from Jacksonville to Key West was a landmark in Florida history. Today, the company that runs that railroad, St. Augustine-based Florida East Coast Industries (FECI), is changing the face of Florida again. This time, it isn't using trains and tracks, but rather the railroad's real estate -- its rights-of-way.
FECI's transformation began more than a decade ago, when fiber optics revolutionized the long-distance industry. Railroads nationwide, including FECI, began installing conduits, or pipes, for inter-city fiber optic networks along their rail tracks, charging long-distance companies to lay their fiber optic cables. "This, for the railroads, was found money," says Robert Anestis, chairman, president and CEO of FECI.
As demand for fiber optics skyrocketed, FECI stepped up its telecommunications ventures three years ago and, in a series of deals, put together a 787-mile "technology loop" comprised of fiber conduits and 12,600 miles of "dark," or unused fiber. The network stretches along the railroad's Jacksonville to Miami route, plus a link that connects Miami, Naples, Fort Myers, Tampa, Orlando and Daytona Beach.
Last spring, in a nod to the importance of its telecom assets, FECI established FEC Telecom, a new Orlando-based subsidiary. The unit acts as a wholesaler, selling bandwidth to long-distance companies, cable companies and competitive local telephone carriers.
So far, FECI's "found money" from fiber optic leases has been tiny, coming in at only about 2% of the company's overall revenues in the quarter ended September 30, 1999. But while FECI's railroad and real estate units posted only single-digit growth from 1998 to 1999, numbers for the telecommunications unit tripled.
To spur the growth of telecom, FECI is spending $45 million to add more fiber optic cable to its loop, a project scheduled to be complete early this year. And there are plans to expand its geographic reach in and outside of Florida. A recent deal with Houston-based gas pipeline company Enron Corp. gives FEC Telecom access to fiber networks connecting New Orleans, Houston, San Antonio, Austin and Dallas. In Florida, FEC Telecom President John McClellan says, "One of the things we're evaluating right now are our options for getting from Orlando to Tallahassee and into the Panhandle."
Government Regulation: Share and Share Alike?
When Broward County Commissioners voted in July to require broadband cable operators to open their lines to competing Internet Service Providers (ISPs), they put the county in the national spotlight. One of only a handful of communities to vote for "open access," or as the cable companies call it, "forced access," Broward has won high praise from independent ISPs and harsh criticism -- and a lawsuit -- from the cable industry.
Here's the issue: Cable companies are spending billions of dollars upgrading their systems with fiber optic cable so they can offer cable Internet service and digital cable TV. They argue that since they've shelled out the money, they should control access to their network.
Competitor ISPs say that it's unfair for the cable companies to have a monopoly over the cable modem service. The Federal Communications Commission (FCC) has taken a wait-and-see attitude -- in effect siding with the cable companies for now.
In addition to Broward, other areas that have voted for competitive high-speed cable Internet access include Portland, Ore.; St. Louis and communities in Virginia and Massachusetts. "We say it's un-American," says Steve Wilkerson, president of the Florida Cable Telecommunications Association.
In Miami-Dade, which voted in October on the issue, the County Commission rejected a proposal similar to the one in Broward. One not so subtle pressure on communities, including Miami-Dade, is the threat to delay the rollout of high-speed service in areas that vote against cable companies.
Although it's likely that the legal maneuvering will continue for years, AT&T took a conciliatory step in December. After its exclusive contract with Excite@Home expires in 2002, AT&T broadband cable Internet customers will be able to select the ISP of their choice. The telephone giant laid out a framework for access in a letter signed by Mindspring, the nation's second largest ISP, and sent to the FCC. Most ISPs, including Mindspring, want AT&T to share its cable lines earlier, however, and question AT&T's commitment to open access.
In the courtroom, AT&T has appealed a ruling by a U.S. District judge in Portland that upheld the Portland and Multnomah County ordinances. And apart from the municipal actions, a group of Los Angeles consumers filed a nationwide class-action suit against AT&T, Time Warner and other cable companies, alleging that the consumers have been deprived of the right to choose their ISP.