A Poorly Understood Challenge of Building Rural Internet in First World Countries

Passive Infrastructure Tower

We all want more internet in more places. A logical person would assume that the stage is set to make this happen. Well, it’s not. As an internet builder myself, I can say yes, funding is an issue but that a bigger issue is there is no market to help build the internet. What do I mean?

I’ll use an analogy because it simplifies things and takes the industry specific terminology off the table. We want to build a house. We have nails but where do we find the wood? There is no equivalent of a home hardware store to go to. Instead what we have are wood piles placed all over the country sitting unused. How do we find the wood piles? Who owns them? What kind of lumber is it specifically? (2×4? 2×6? Length? etc.)

Most first world governments do supply funding but it is typically for building more of these hidden wood piles.

What exactly are these “wood piles”? They are “passive infrastructure” needed to build the internet. Things like towers and cables (like fiber). And this infrastructure is shareable; meaning they are more like a 40-story office tower than a single-family home. The nails are active infrastructure like radio and cable transceivers which are readily available. But where do you install these things if you don’t have any passive infrastructure to install them on? That is the challenge of rural internet builders.

There is TONS of empty infrastructure across the nation but it is hard to find, figure out who owns it and then to strike a deal in which to share it. Canada has a partial database of passive infrastructure for towers called “Spectrum Direct” but adding information about the towers is an afterthought. That is, it’s intended use is to track wireless (spectrum) licenses and only collects data on where the radio is as an afterthought. This doesn’t track any unlicensed wireless or “free” wireless (which would you use?). Which means it doesn’t have data on towers for 10s of thousands of towers. Further, the database doesn’t validate the passive infrastructure information and does not indicate ownership. 

Sure, we could drive around aimlessly in rural Canada but not all infrastructure is located along roads. And even if you do find something, often times the infrastructure is physically unmarked with ownership information.

I’ve located a partial commercial database, but again, it doesn’t capture everything and plus, it costs money. Consumers and businesses do not want to spend a lot of money on internet, so there isn’t a lot of money to pay for extras like this when building rural internet.

USA has a bit better database but it only tracks towers above 100’, nothing about smaller infrastructure, private infrastructure or accessing cable. So I’ve come to the conclusion that the situation is similar in most first world countries (with 2nd and 3rd just having bigger problems to solve).  

What we need is a marketplace for passive infrastructure and policy to make sure everyone registers. Like a “rentfaster” site for building the internet.

Some sort of sharing policy that would apply to private passive infrastructure would also be nice but I’d settle for a marketplace. Beggars can’t be choosers.

The Gender Pay Gap Explained

Education and Experience explained only 8% of the gender pay gap according to the “Progress on the Gender Pay Gap 2019” study. Occupational differences, e.g. the career that was chosen, explains 56%. Not “who you know” or specifically targeting women. “I think what’s important to recognize there is that women and men don’t randomly sort into occupations, partly because of influences early on: what kind of jobs get taught to people as being a male job or a female job. And some jobs, frankly, just aren’t friendly to family lifestyles.”

The kind of jobs with a large part-time pay gap are generally in areas where it’s harder to divide up hours and be flexible. Any job where relationships need to be maintained with clients are especially bad; e.g. careers in sales, lawyer, banker, etc. There are jobs that pay a part-time premium and these tend to be jobs where it’s easy for people to swap shifts or work as a team. E.g. Nursing, waiters/waitresses

“When an occupation pays less money per hour to its part-time workers than to its full-time ones, it’s known as the part-time penalty. That penalty tends to be higher when occupations have less flexible hours. Here’s the catch: the jobs that tend to be more flexible — and ones that many women and mothers gravitate towards — pay less.”

So how can the gap be reduced? “…[E]ither men would also have to increasingly choose those flexible occupations or the rigid, inflexible occupations would have to become less rigid and inflexible so that women and mothers could join them, perhaps by, you know, embracing more of a team approach at work.”

Sources:

“Where The Gender Pay Gap Is Widest”

https://www.npr.org/sections/money/2019/04/29/718389455/where-the-gender-pay-gap-is-widest

“Progress On The Gender Pay Gap 2019” study

https://www.glassdoor.com/research/studies/gender-pay-gap-2019/

Source: “Jobs Friday: The Part-Time Penalty”

https://www.npr.org/2019/05/03/720122267/jobs-friday-the-part-time-penalty

Planet Money Talks Trade Wars And The Batman Problem

https://blog.forumias.com/protectionism-and-trade-war/Instead of a trade-war which impacts the global economy and hurts everybody, why not just use anti-currency manipulation to address the trade deficit? As explained by Planet Money’s “indicator” podcast it’s practically free. What it doesn’t do is buy politicians votes… The world economy just might be suffering in order for a politician to get re-elected…

https://www.npr.org/sections/money/2018/07/18/630265851/trade-wars-and-the-batman-problem

Published in Reader’s Digest “11 Hidden Reasons Your Internet Is So Slow”

Yes, the Reader’s Digest. Access their article here:

11 Hidden Reasons Your Internet Is So Slow (Oct 1, 2018)

They quoted a popular post I wrote in 2015:

Forget a bandwidth upgrade! Try these 4 things to make the home internet experience better

Note: Reader’s Digest is owned by “Trusted Media Brands, Inc.” and the article may also be displayed on other sister sites such as Family Handyman: https://www.familyhandyman.com/smart-homeowner/diy-home-improvement/hidden-reasons-your-internet-is-so-slow/

Regulatory Capture is to Blame – Reducing RC starts with Education

What’s to blame for slower growth and rising inequality? Regulatory capture. And who practices Regulatory Capture? EVERYONE “Regulatory capture is a form of government failure which occurs when a regulatory agency, created to act in the public interest, instead advances the commercial or political concerns of special interest groups that dominate the industry or sector it is charged with regulating. When regulatory capture occurs, the interests of firms or political groups are prioritized over the interests of the public, leading to a net loss for society. Government agencies suffering regulatory capture are called “captured agencies””. This is an issue that is a “bipartisan blind spot” and affects politicians from any political view.

“…[I]t’s ultimately the duty of the governors to make sure that the rules are in the public interest, rather than in the narrow interests of the various clamoring claimants who come before them.” The first step to eliminating regulatory capture is to recognize that it happens.

One of the reasons the public tolerates regulatory capture is that special interest groups use a positive policy image which creates a natural blind spot in the public’s eyes. An example used by Planet Money is teeth whitening and North Carolina’s Dental Board. The public feels that dentists help people so when the NC Dental Board lobbied to get a regulation to stop non-dentists from offering simple tooth whitening services the dentists initially won. Teeth whitening is more like a pedicure for your teeth rather than a dental procedure and anyone can do one. In fact, these days, people can buy teeth whitening kits at the grocery store. It had to go to the supreme court for the regulation to be removed. While waiting for all the legal trials to settle the issue stifled competition (natural market forces): teeth whitening service costs were artificially inflated (bad for consumers) and non-dentists were put out of business. Planet Money explains a few more examples and including one where homeowners practice regulatory capture.

 

Sources:

Planet Money’s story called “Rigging The Economy” https://www.npr.org/templates/transcript/transcript.php?storyId=592376568

https://en.wikipedia.org/wiki/Regulatory_capture

https://www.washingtonpost.com/outlook/whats-to-blame-for-slower-growth-and-rising-inequality/2017/11/22/97bb9e6c-b805-11e7-a908-a3470754bbb9_story.html?noredirect=on&utm_term=.dddf9ae2c60b

https://marketbusinessnews.com/financial-glossary/regulatory-capture-definition-meaning/

The Value of Second Opinions

Just 12% of diagnosis by Doctor is correct. See Mayo study for more details on the study – click here.

Don’t forget doctors are just one expert on your team. Value 2nd, 3rd and fourth opinions and hopefully those include other disciplines. General practitioners favor dispensing drugs, surgeons favor surgery, etc…. there are alternative therapies that don’t include drugs (and side effects).

More on my posts about doctor / patient relationships here.

Planet Money Talks About Organ Donations And How To Increase Them

Empathy is not an effective way to encourage people to be on an organ registry. But simply asking them when they are not thinking about it (via DMV registry) is extremely effective. It works because we are annoyed and distracted and not thinking about death. Interestingly, Alberta recently made this change, to ask the question at the registry, just this year.

http://www.npr.org/blogs/money/2014/02/19/279664019/episode-518-how-to-bore-someone-into-donating-an-organ

How North American Energy Can Compete – Enablement of a Digital Oilfield with a “Connected Field”

Did you know that accountants were hesitant to adopt spreadsheet programs like excel? Or that it took us decades to fully adopt trains, automobiles and computers? Do you think these things changed our lives? Of course! How could we conceive where we are today without them? But it took a while for them to gain “steam” (pun intended).

The situation with the Digital Oilfield in North America follows these familiar lines. It is a transformation that I cannot adequately explain since I only know how to build the enabling technology. How it’s going to be used is up to each person acting individually and resulting in a collective connected effect. Sure, I can give some examples or find people who have done this or that. But that’s the tip of the iceberg. The “killer example” is going to be different for every team in an energy company.

The enabling technology for the Digital Oilfield is called a “Connected Field”. It takes the Oilfield improvement areas listed below and binds them together. It’s the enablement of seamless intercommunication and coordination that truly leverages a Digital Oilfield. Without it, it’s an Oilfield that uses new Oilfield technology – not the exciting “Digital Oilfield” that truly propels the energy business to the next level.

There are so many ways to get a Connected Field wrong for a Digital Oilfield. Even with the right telecom vendors, it’s so easy to say “we don’t need QoS (Quality of Service)” – simply because the decision maker doesn’t know what it is. The fallacy is that there is a belief we already have a Digital Oilfield. There are already real world examples of a true Digital Oilfield using a Connected Field. And they are all in the Middle East; lowering their costs and increasing their supply. I cover a real world example later, so it will be easy to see the difference.

But let’s go back to the beginning. What is a “Digital Oilfield”?  The concept was first presented in the seminal study: “The Digital Oilfield of the Future: Enabling Next Generation Reservoir Performance”, IHS Cambridge Energy Research Associates, Inc., 2003.

A Digital Oilfield makes the following improvements to the Oil & Gas business – and a Connected Field enables most of them; that is, you need a connected field to truly leverage the benefit to the full extent.

DigitalOilfieldImprovements

So what is a “connected field”? It is a data communications system that has these characteristics:

  • Completely and seamlessly covers the area of interest (like cellular data might cover all of the downtown of a city). This allows users to just turn on a device (sensor, video, etc.) reducing or eliminating the need to involve IT to justify a business case to obtain capital to expand the network. It just works. Technicians are not required to tune antennas at the user level. A rig can just move itself and still have full connectivity to all its services while it is moving and when it reaches its destination.
  • It is a committed That is, it is not a “best effort” network, shared with other companies and people in the area (like cellular data).
  • It allows full control – that is, it has quality of service (QoS) capabilities to prioritize business critical applications or applications requiring better service to function correctly (voice, video).

Let’s examine what is not a connected field:

  • Cellular data from any major telco. The reason why it is not is that it has no QoS and is best effort (no committed bandwidth) and may not cover the entire field without boosters (which are technically illegal according to the Telecommunications Act).
  • MPLS networks – in themselves, they would help if the purchaser buys QoS. If the cost of buying the right networks with QoS was used to price the rent option, it is likely that the system could be built from scratch less expensively. That is, a Digital Oilfield should consider the “rent vs buy” options like any procurement decision.
  • Satellite – the price per Mbps with QoS and dedicated bandwidth is horrendously expensive. Unless the company (including all teams and phases that work in the area) only expects to operate in the area for 6 months or less, it’s frequently the case that it is cheaper to build.
  • SCADA (legacy 450 & 900Mhz) – really this is only for “tin can on a string” SCADA data – that is monitoring / telemetry. There are now new SCADA radios that can supply QoS and bandwidth rates at 18Mbps or above but most Oil & Gas companies, especially in North America are not using them. Most of the SCADA radios in use today use technology that was developed during World War II and they have not been updated. We’re talking punch card era technology.

And of course, I hear all the skeptics. So what does a Digital Oilfield do  in practice? Here’s an example:

Petroleum Development Oman (PDO)

  • Connected field coverage: 45,000 sq. km (17,000 sq. miles)
  • Increased a mature (brownfield) oilfield’s production by 100K barrels/day. At $90/barrel this is $3.2 Billion/year in additional revenue within one year. (Ok, yes, price of oil… but this was done in 2012 – even at $30 that’s $1 Billion)
  • Reduced drilling & completion days to online from 39 days to 14 days ($1M per drill saved). Including completions, saved $5M per well.
  • 10 month payback.

What does the Connected Field network look like for PDO?

As of the end of 2013, Petroleum Development Oman field has:

  • 6600 broadband connection points
  • 52 base stations
  • 13 Gbps total capacity, the equivalent of 500 connected homes or the bandwidth provided to a 4000 person office building
  • 130,000 end devices

Compare this to a field of that size in North America; there are maybe 10 cellular base stations covering the entire thing. Everything overloaded to the point that it does not work that well (e.g. “worse than dialup” is what I frequently hear).

Together the Connected Field collects 36 times more data enabling more accurate and improved decisions. It delivers 4 Mbps anywhere within the field of coverage (compared to less than 300kbps in some fields available today). You can drive around in a truck all day long and everything just works.

No messing with devices, changing networks, etc. Need to talk to the engineer in head office and start a video chat about a valve to show him/her the valve? Done! No problems. Want to implement an intelligent video system to monitor the flare stack, look for pipeline leaks, identify personnel not wearing PPE, etc.? Want a “mobile worker”? (Please do not confuse it with a “mobile OS” which is simply an operating system built to enable mobile workers that have a network.) With a Connected Field, you just do it! No need to price in a brand new network to enable the business case.

The cost of all this? Less than 1% of the total injected capital into a greenfield area. And if a true connected field is implemented that is multi-use and multi-team capable, the expenditure is less than what they spend today.

Despite the impressive track record how many Digital Oilfields are there in North America? None. Some are close with partial implementations but it’s localised and not well championed at the executive and board levels. How many in the Middle East? Quite a few. Middle East operations have the direct support of the board of directors/families and executives. Would this situation have any bearing on the current supply / demand and geopolitical climate? Hmm….

Oil & Gas Cost Reduction Projects With 50% IRR Go Undone

Even in today’s poor commodity climate – many cost savings projects with a 2-3 year payback (50% IRR) period go undone. If you don’t recall what the payback period or IRR is, please see my post:

“Who likes making money? Payback, RoI, IRR explained…” https://www.textor.ca/2016/03/who-likes-making-money-payback-roi-irr-explained/

iStock_000013530407SmallThere are two things to note about cost savings projects. They typically:

  • Reduce periodic General and Administrative (G&A) costs – so the savings that impact periodic payments do not “end” and could go on indefinitely.
  • Are beneficial in a good or bad commodity environment. There is no commodity price dependency!

Based on this, a company should always do periodic cost reduction projects – in a good or bad commodity environment since it increases the profit margin in good times and allows a company to survive longer than its competitors in bad times (and survivors always do the best in the long run).

pumpjackI have been in Oil & Gas for over 17 years. And during that time I’ve been aware of more rural connectivity projects that have these characteristics than I could possibly handle… if only they would be approved and added to the queue. To add to the malaise, network costs are a top IT cost. See my article “Top Ongoing IT Costs – Data Centres and… Networks” https://www.linkedin.com/pulse/top-ongoing-costs-data-centres-networks-trevor-textor

Correct me if I’m wrong… but from what I recall from what Oil and Gas executives have told me, any Oil & Gas project with over a 30% IRR is always approved. However, it’s been entirely up-hill trying to convince Oil & Gas to approve these projects.

I’m going out on a limb here though…. Maybe the reason why is that they are connectivity (telecommunications) projects for rural areas? Connectivity usually falls within the IT department and from my interviews with CIOs, there is little focus on connectivity costs. That is, they feel that connectivity is not really an IT role but it gets lumped into IT so they suffer through it. I agree with them – IT is getting dumped on due to poor understanding of connectivity at the leadership levels. After over a decade doing rural connectivity, I believe that connectivity should be an engineering role and connectivity commissioning and operations should be in IT. This arrangement makes the basic procurement management build (engineering) vs rent (off the shelf) calculation possible. Let’s face it, IT is not engineering. IT is only going to rent. But most of the time, it is more effective to build in rural Oil & Gas locations.

The final nail in the coffin for this whole scenario is that connectivity is critical infrastructure (like water, electricity). This basically means you can’t do things that are expected of a company operating in the current economic environment without it. I have had to deliver the bad news to hundreds of promising Oil & Gas projects because the current network they have cannot support anything but the basics (e.g. kilobit per second SCADA – or what I call “tin can on a string” data). The cost of this one fact alone is colossal. I explain more about this in my presentation “Understanding the Remote Field Data Communications Challenge”

http://www.slideshare.net/TrevorTextor/understanding-the-remote-field-data-communications-challenge

Anyone care to chime in? Anybody have an Oil and Gas producer or midstream company (operates rurally with large footprint) who does not focus on connectivity and would love to save money?