Gateshead's Baltic Business Quarter Goes for Economic Growth

In order to create economic growth locally, a high speed broadband infrastructure was needed for Gateshead’s Baltic Business Quarter. But with private investors nervous of committing the funds, Gateshead Council took the bold decision to create its own state of the art network. But how could it justify the expense?

All regions can benefit from the efficiencies that broadband brings to a local economy, but often an instant return on investment is not possible, as the timeline for effects of the fiscal stimulus cannot be quantified.

In these cases, the private sector is reluctant to invest as impatient shareholders want payback within a few years.  

In the northeast Gateshead Council took the initiative and collaborated with technology provider Alcatel-Lucent to build its own broadband infrastructure. The resulting Open Access Broadband Network (OABN) could provide the communications technology for local industry that could catalyse economic regeneration of the area, the council argued.

“We wanted to attract sophisticated users of IT who could create high quality jobs for local people,” says Councilor Mick Henry, leader of Gateshead Council. “The firms that use the latest technology will offer good quality sustainable employment. They will want access to high-speed broadband infrastructure,” he says. But first, in order to gain the funds, it needed help from its partner to make the business case.

To get funding for big infrastructure projects, councils must prove the investment is in the best interests of their communities they serve. Building a watertight business case for the deployment, with projected returns of economics stimulation and social inclusion, is complex. Alcatel-Lucent’s Bell Labs business modeling team helped assess all the variables involved, such as capital investment (CAPEX) needed, the cost of all civil works required for fibre installation, the expected take up of services over time (based on analysis of the market and the local communities) and the cost of operating the network year on year.

Now built, the OABN is a fibre optic network offering 10 Gigabytes of bandwidth with a capacity that could scale up to 40 gigabytes as and when needed.

This is the sort of capacity needed by high tech companies who deal in services like video conferencing, media streaming and disaster recovery. Attracting these sorts of companies will attract employers who provide skilled jobs and a sustainable high value economy.

The openness of the new OABN infrastructure enables local service providers to join and deliver next-generation services over the network with minimal investment. If it was funded by a private investor, they would need to charge as much as £40,000 for a connection, in order to get back the money they spent on construction. The publicly funded network will promote competition between service providers locally, potentially pushing down communications costs for businesses working at Baltic Business Quarter and helping them compete more effectively in national and global markets.

The new infrastructure means the council can offer better services for local people. As the network extends into a nearby residential area it will support rich multimedia services, distance learning and a range of electronic healthcare services for local people.

The Baltic Business Quarter could only attract the new business if it offered something no-one else in the local area could offer. Not just broadband but a state-of-the-art, fibre-optic broadband infrastructure. In addition to connecting the businesses in Baltic Business Quarter, this new network would enable any service provider to deliver broadband to local businesses with minimal investment.

The G-TI network has delivered future-proof fibre optic infrastructure to Baltic Place, argues says Stuart Hopley development manager at Robertson Spaceworks. “As the fibre is already installed it makes it easy for service providers to target new customers and easy for occupiers to access the latest applications and technologies,” says Hopley. “This is great for ISPs, great for occupiers who have maximum choice and maximum flexibility and great for us, because it makes Baltic Place attractive to world class businesses who need world class communications," says Hopley.

Now the site for the new £39 million Gateshead College, and the regional HQ of the Open University, Baltic Business Quarter could boost sustainable economic growth locally by creating skilled jobs in digital industries with a solid long term future.

Broadband widens the number of skills available to local employers and makes the local workforce more scope too. It helps connect employees seamlessly in distant locations and, vice versa, helps local employees to work for remote employers. This helps boost local employment and gives local businesses better access to specialist skills.

Technology can streamline a range of business processes. It makes sourcing products easier; fine tunes the supply chain management and improves customer service. It opens up new channels for online buying and ordering and gives companies the insurance of a disaster recovery service.

As a result, Gateshead businesses will be able to compete effectively on the international business stage and the local economy will attract more inward investment.

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