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?
Most first world governments do
supply funding but it is typically for building more of these hidden wood
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
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.
It’s terribly confusing that these terms are used interchangeably. Unfortunately, they don’t have much to do with each other. Bandwidth is the number of “lanes” available to your computer. It is typically measured in Megabits/second of Mbps or Gigabits/second or Gbps. Do the number of lanes affect the speed of your car? Typically no, unless it’s rush hour.
What matters is how fast you can drive right? That’s “latency” in the internet/networking world. It is dependent on a lot of different factors, including but not limited to, the speed of your computer, the speed of your network card, the speed/how busy your local modem/router is, the speed/how busy your local internet provider’s infrastructure is and then all these factors on the other end of the connection as well. The “bottleneck” in the equation defines your latency at that particular time to whatever particular service.
So how do your measure your internet connection? Well, take those “bandwidth” sites with a grain of salt – they are best for measuring the bandwidth received to match up with the internet plan your paying for. The best measurement test I’ve found to determine “quality of experience” is the Cisco Webex Network test: https://mediatest.webex.com.
It measures a bunch of different things for a video call, which is the most demanding application for most people. If you get all green, then you’re in good shape. It means you could run all applications from that location without issues (as long as the opposite party doesn’t have a bad connection of course).
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.
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….
There 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).
I 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”
Great to see jurisdictions taking action with the digital divide economic problem: this is clearly a data communications (broadband) delivery issue or we wouldn’t need a United Nations Broadband Commission to educate countries about this. Mexican government’s digital divide initiative is delivering 1500 base stations to service 64,000 sqr km (25,000 sqr miles) using Redline’s product. Redline won the bid by demonstrating that Redline’s product needed less total base stations and has better longevity. A total cost of ownership (TCO) calculation. Job well done! http://yourcommunicationnews.com/redline+communications+awarded+%241.7m+contract+for+major+wireless+network+in+mexico_129241.html
Karin Williams shares her founding story. Karin has been my primary and enduring mentor since starting my own business and her wisdom has rung true more times than I can count. Her brand of honest, respectful business conduct I truly cherish as I have found that it’s in less abundance than I had hoped. Congratulations Karin for navigating RioTel through 17 years. A true accomplishment!