Matthew Young entered Little Rock's tech economy in 2011 when he launched Desk Agent, a software development and design startup company. Business has been good to him and his two employees, but the growth of his company and others like it continues to be mired by one limiting factor: slow Internet speeds.
"It is a gigantic problem sometimes," Young said. "We're moving around large data sets, so it can be prohibitive."
It's not just Young whom the bandwidth deficit is affecting. Broadband infrastructure across the state has been slow to evolve in the digital age, and it's beginning to cause some growing pains to the state's burgeoning tech scene.
Arkansas' average peak connection speeds have ranked second-to-last in the nation for several years, according to a recent State of the Internet report from the online hosting company Akamai Technologies. Current data collected by the National Telecommunications and Information Administration also shows that the state ranks near the bottom for percentage of population with access to Internet speeds greater than old-fashioned dial-up.
The tech communities in central and Northwest Arkansas are acutely aware of these limitations as their startup ecosystems continue to grow.
For many data-intensive businesses like Young's, what the telecom and cable goliaths -- like Comcast, AT&T, and Cox Communications -- are offering is barely cutting it. The majority of the state is left with what Federal Communications Commission Chairman Tom Wheeler has called "yesterday's broadband."
In an age when reliable Internet is necessary to run a business, find employment, access online education or access remote health care services, high-speed Internet is seen as a necessary infrastructure of the 21st century.
The significance of growing tech businesses to the state's economy, and how their continued growth is inextricably tied to the continued expansion of broadband Internet, is not lost on state lawmakers. State Rep. Warwick Sabin, D-Little Rock, was appointed last year to lead an effort aimed at providing universal broadband access to every Arkansan.
"At some point, if people can't do what they need to do here, they'll find somewhere else to do it," Sabin said. In the long run, the economic viability of Arkansas may be at stake if homegrown tech companies migrate elsewhere.
"There's definitely a connection between increased accessible and affordable broadband service and economic development, especially through tech startups," Sabin said. "We'll either need to build infrastructure to support this, or we're going to have to cede it to some other area. My hope is that this is the future of economic development, that this is how we keep our most talented people in the state."
Little Rock-based Web developer David Hudson has had his share of dismay with limited and cost-prohibitive broadband access. Even in the downtown lounge-like office where he and his startup collective Few operates, he's been bogged down by limited options in Internet providers.
Hudson moved his company downtown two years ago and, being a data-intensive service using cloud-based technologies, he needed dependability. Comcast was his only option for the kinds of speeds his projects needed, and to get his building wired, it would cost him either $12,000 or a two-year service contract with the company, he said. He chose the latter, which was feasible on a shoestring budget common among startup businesses.
"We said fine, because we had no other options. And that's really the key here, there's no choices," Hudson said.
As anyone who has shopped for Internet in Arkansas knows, there are few options, if any, for Internet or cable providers. National Telecommunication numbers show that 21 percent of the population has one option when buying wired Internet, and only 6 percent of the population has more than two options, compared with a national average of 56 percent. Five percent of the state has no providers for wireline service.
To business leaders in the tech community, that lack of competition is the crux of the issue.
But Hudson's fortune changed last August when the high-speed broadband service Hyperleap arose from Little Rock's own startup ecosystem. Established in February of 2015, the Little Rock-based Broadband Development Group launched its nascent Hyperleap service offering gigabit speeds to a handful of local businesses and residences last summer.
Hudson and his company were early adopters, and now he pays a fraction of what he was paying Comcast for triple the speeds.
Young, who lives in a downtown loft, canceled his 12-year-long Comcast cable and Internet subscription at his home as soon as Hyperleap began servicing his complex. It was a move that has been such a reprieve to his monthly bills and data needs that, if Hyperleap doesn't begin offering its service to his office, "I'll find another building that will have it," Young said. "It's that important."
Ensconced in a single-room office in downtown's Union Plaza building, Hyperleap's co-founder Lou McAlister explains the motivation behind his business.
"Everybody's service is slow, everybody's service is expensive, and everybody's business model is painful to the consumer," he said, referencing the contracts, data caps, and extra fees cable companies often expect consumers to bear. "Then if the only thing that's in the market is slow and expensive and painful, then it doesn't matter how many participants are in the market, in my mind that's no competition."
In the seven months since Hyperleap launched its service it has expanded to four downtown residential buildings with four more in the works and 11 nonresidential buildings -- including the Little Rock Tech Park, the Venture Center and the Innovation Hub in North Little Rock -- using point-to-point wireless technology.
Demand for the service so far has outstripped the pace at which the company's three full-time employees can expand. But even if they achieve their largest ambition for Little Rock, Hyperleap would still be but a freckle in comparison to Comcast or AT&T's local market share, McAlister said. But it's a niche market of consumers they are aiming for -- the tech-savvy, cord cutting, apartment dwelling millennial. And it's McAlister's hope to see customers push the limits of the ultra-fast speeds into innovative realms.
"This is the paved road to the 21st century," he said. "They're going to write new apps, they're going to consume new products, they're going to do new things."
But Hyperleap's three-man team can only move so fast.
Northwest Arkansas, meanwhile, has swiftly become the anchor of Arkansas' tech economy. Last year, Fayetteville was ranked the third best place to found a startup outside of New York and California's "Silicon Valley," thanks to its proximity to a top tier research university and three giant multinational companies, according to Carnegie Mellon University's Center for Innovation and Entrepreneurship.
Despite the activity and would-be demand for 21st century broadband infrastructure, options are again limited and costly -- with AT&T and Cox being the primary providers.
"There's significant interest in making sure that the infrastructure matches the growth," said Jeff Amerine, founding principal of the Fayetteville-based small business consultant group Startup Junkie. "The reality is that it's very hard to build scalable ventures that are relying on tech and good bandwidth capability if you don't have it."
Though the lagging broadband infrastructure puts a drag on the ascendant Northwest Arkansas tech scene, the community's prosperity still rides a strong tailwind, Amerine said, "but we don't want that to become a friction point that gives people pause."
Evidence of an all but causal relationship between modern broadband infrastructure and the cultivation of newfangled startup scenes abounds. Chattanooga, Tenn., has welcomed a growing contingency of young programmers since the city introduced its municipally-owned fiber optic broadband network in 2009, which serves gigabit broadband to its residents and businesses.
Built by the city's electric utility, EPB, the fiber network helped lift Chattanooga's sagging manufacturing economy into the digital marketplace. The city's downtown was rechristened as the "Innovation District," replete with startup incubators and collaborative office spaces. A batch of fledgling companies soon took root.
"The startup economy has been very deliberately cultivated here by the foundations and people who were enthusiastic about the value of a startup community," said Danna Bailey, EPB's Vice President of Corporate Communications. "It was very much top of mind for us when we built it. We weren't sure of what would happen, but we just felt confident that it would bring a benefit economically."
Their vision was, for the most part, realized. Between 2011 and 2015, 2,852 jobs were generated by the fiber network, and at least $865 million in added income and taxes was added to the area, according to a University of Tennessee at Chattanooga study. In 2013, the formerly Chattanooga-based Quickcue was bought by San Francisco's OpenTable for $11.5 million. And in 2010 the home repair company HomeServe USA hired 140 employees to launch a call center in the city, the study said.
But the fiber network only addresses the data needs of the urban population. The surrounding rural communities are still left optionless due to state laws prohibiting EPB's fiber network from branching outside of it's service territory. And it is those people "who are really feeling the pain of not having access to broadband," Bailey said.
An Arkansas law created in 2011 outright restricts any government entity from offering Internet, phone or cable services to its residents. That law, along with similar laws in 20 other states, became the target of plans laid out by President Barack Obama last year directing the FCC to help cities bypass these state laws for enhanced competition.
And to Wheeler, Chattanooga's fiber network is the epitome of this in action. If expanded to America's rural and underserved areas, the increased competition could help many communities get on the right side of the digital divide.
"Rural areas have the most to gain from this kind of broadband service," Sabin said. "This can help be part of a solution to the decline of our small towns, because a lot of people left those small towns to go to the big cities -- that's where the jobs were. Now you can live in a small town and you can start a business and you can do it entirely online. That opportunity exists if the infrastructure is there to support it."
"The people that ought to be screaming the loudest about this are the chambers and municipalities in the rural areas that are not adding 25 people a day like we are up here [in Fayetteville] but are losing their young people," said Amerine. "Because those places will die. They need to have a reason for the young people to come back."
Metro on 04/04/2016