Arkansas eSolutions Benchmarking Report -...

StateofArkansaseSolutionsBenchmarkingReport2015

StrategicNetworksGroup,Inc.2015 www.sngroup.com Page1of36

ArkansaseSolutionsBenchmarkingReport

March2015

Preparedfor

StrategicNetworksGroup,Inc.|www.sngroup.com|CONFIDENTIAL



TableofContents

ExecutiveSummary..................................................................................................................4

1 OrganizationalAssessment...............................................................................................81.1 RespondentProfile.................................................................................................................81.2 OrganizationalConnectivityCharacteristics..........................................................................11

1.2.1 InternetSpeeds...................................................................................................................111.2.2 Cost.....................................................................................................................................151.2.3 Satisfaction..........................................................................................................................15

1.3 BroadbandUtilizationandBenefits......................................................................................161.3.1 UtilizationPatterns..............................................................................................................161.3.2 BroadbandandDecidingWheretoLocate.........................................................................201.3.3 BroadbandBenefitsandImpacts........................................................................................21

1.4 BarriersandAdoptionIssues................................................................................................221.4.1 BarrierstoAdoption............................................................................................................221.4.2 ExpertiseandKnowledgeIssues.........................................................................................221.4.3 SkillsAcquisition..................................................................................................................23

1.5 FinancialandEmploymentImpactsfromInternetUse..........................................................24

2 Benchmarks....................................................................................................................262.1 TheDigitalEconomyIndex...................................................................................................262.2 UtilizationBenchmarks.........................................................................................................27

3 ComparativeAnalysis......................................................................................................30



ListofFigures

Figure1–ResponsesbyRegion.....................................................................................................................8Figure2-ResponsesbyLevelofUrbanization..............................................................................................8Figure3-ResponsesbyEmploymentSizeofOrganization(NumberofEmployees)...................................9Figure4-ResponsesbyIndustrySector.....................................................................................................10Figure5–HowBusinessesandNonprofitOrganizationsConnecttotheInternetinArkansas.................11Figure6–Speed-TestResultsforAverageUploadSpeeds(businessesandnonprofitorganizations).......12Figure7-Speed-TestResultsforAverageDownloadSpeeds(businessesandnonprofitorganizations)...12Figure8–AverageUploadSpeedsbySector...............................................................................................13Figure9–Speed-TestResultsbyTypeofConnectivity(allsectors)...........................................................13Figure10–DownloadSpeeds(mbps)byConnectionandLevelofUrbanization(allsectors)....................14Figure11–UploadSpeeds(mbps)byConnectionandLevelofUrbanization(allsectors).........................14Figure12–InternetCostsbyTypeofConnection(allsectors)...................................................................15Figure13–eCommerceUsesofBroadband...............................................................................................16Figure14–eProcessUsesofBroadband....................................................................................................17Figure15–BusinessUtilizationofMobileInternet....................................................................................18Figure16–UseofWeb-enabledMobileDevices.......................................................................................18Figure17–PercentageofBusinessesUsingCloudBasedServices............................................................19Figure18–MotivatingDriversofAdoptionofCloudServices...................................................................19Figure19-Mobileapplicationsusedbybusinesses...................................................................................20Figure20–ImportanceofBroadbandBenefitsforBusinesses..................................................................21Figure21–BarrierstoGreaterBusinessesUseoftheInternet..................................................................22Figure22–PreferredMethodsforAcquiringInternalKnowledge.............................................................23Figure23–AnnualRevenuesandCostSavingsfromInternetUtilization..................................................24Figure24–SummaryofEmploymentImpactsofBusinessResponses(FullandPartTimecombined).....25Figure25–SummaryofEmploymentImpactsSpecifictoInternetUse(FullandPartTimecombined)...25Figure26-SummaryofEmploymentImpactsSpecifictoInternetUse(FullandPartTimecombined)....27Figure27–UtilizationBenchmarks(DEi)forBusinessesbyLevelofUrbanization....................................28Figure28–UtilizationBenchmarks(DEi)forBusinessesbyRegion...........................................................28Figure29–UtilizationBenchmarks(DEi)forBusinessesbySizeofBusiness.............................................29Figure30–UtilizationBenchmarks(DEi)byIndustrySector......................................................................29Figure31-Differentindustrysectorsfrommetropolitanareas.................................................................31Figure32-Differentindustrysectorsfromnon-metropolitanareas.........................................................31Figure33-Businessesfromfivedifferentsizerangesinmetropolitanareas............................................32Figure34-Businessesfromfivedifferentsizerangesinnon-metropolitanareas.....................................32

ArkansaseSolutionsBenchmarkingReport2015

StrategicNetworksGroup.Inc.2015 www.sngroup.com Page4of36

ExecutiveSummaryThiseSolutionsBenchmarking(eSB)ReportisadocumentationofdatacollectedinArkansasbetweenNovember2014andFebruary2015.Thissummaryprovidesanunderstandingofcurrentbroadbandaccess,adoptionandutilizationpatternsaroundthestate.

ResponseLevels:Atotalof1,532organizationscontributedtothebroadbandbenchmarkingeffort.Theorganizationsconsistedof1,236commercialbusinesses,95governmententitiesand201non-profitorganizations.BusinessesandOrganizationsConnectivity:Whileonly1.5%ofrespondentsfailedtomeettheoriginalFCCdefinitionofbroadband(768kbpsormoreinatleastonedirection),speedtestresultsduringtheassessmentshowedthatahighpercentageofrespondentsweresignificantlybelowtherecentlyannouncedFCCstandardforbroadband1.Ofthosetakingthespeedtest,63.1%haduploadspeedsoflessthanthenewstandardof3mbps,while80%failedtomeetthenewdownloadstandardof25mbps.Inrecentyears,wirelessnetworksandmobiledeviceshaveincreasinglybecomeafactorinhowpeoplecommunicate,andhowbusinessesandorganizationsbringefficiencytotheiroperations.Over83%ofbusinessesuseasmartphoneand76.8%useaweb-enabledlaptopcomputer.Lookingtocapitalizeonthesenewerchannelsofcommunications,47.6%ofbusinesseshavenonethelessrecognizedtheimportanceofmobilesappsandhavetailoredtheirexistingwebsitestomobiledevices.Further,26.9%percentofbusinessesareplanningtooptimizetheirwebsitesformobilebrowsers.InternetUtilizationPatterns:Almost80%ofbusinessesusetheInternettopurchasegoodsandservicesonline.Incontrast,only40.3%ofbusinessessellgoodsandservicesonlineandjustover36.8%deliverservicesandcontentonline.Section1.3looksatthelevelofadoptionofdifferenttypesofInternetapplications,aswellascloudsolutions,useofmobileservices,andwhichimpactsofInternetusearemostvaluedbytheirusers.Barriers:SecurityandprivacyconcernsarethetwobarrierstoInternetutilizationthatratethehighestinimportance,with40%and29%ofbusinesses,respectively,ratingthemasveryimportantbarriers.FinancialandEmploymentImpactsofInternetUse:Whileover1,682newpositionswerecreatedbyrespondingbusinessesinthepreceding12months,thesebusinessesalsoexperiencedsizeablejobreductions,resultinginanetjobincreaseof1,290positions.ThenetjobincreaseattributedtousingtheInternetwas461positionsor29.4%ofallnewjobs.Section1.5outlinesemploymentimpacts,aswellasreportedimpactsonrevenuesandcostsinrespondingorganizations.

1http://www.washingtonpost.com/blogs/the-switch/wp/2015/01/29/the-fcc-has-set-a-new-faster-definition-for-broadband/



BenchmarksforOrganizations:Section2providesstatewidebenchmarkingtocomparehowdifferentregionsandindustrysectorsutilizetheInternet.KeyconclusionsarethatsizeofbusinessandgeographiclocationarekeyfactorsinthelevelofInternetutilization.LargerandmoremetropolitanbusinessesutilizetheInternetmorethansmallerandmoreruralbusinesses.Inessence,thereisadigitaldivideorutilizationgap,betweensmallandlargebusinesses.



IntroductionThiseSolutionsBenchmarking(eSB)ReportisasummaryreportthatprovidesinsightsintocurrentInternetaccess,adoptionandutilizationpatternsacrossArkansas.OnbehalfofConnectArkansas,SNGreachedouttocommercialandnon-commercialorganizationsacrossthestatetoencourageparticipationintheonlineassessment.Businesses,non-profitorganizationsandsomegovernmententitieswereaskedtocompleteaself-assessmentintheformofanonlinesurveythatcollectedinformationontheavailabilityofbroadband(high-speedInternetaccess),howbroadbandisbeingusedintheorganization,alongwithquestionsthatwouldhelpidentifybenefits,driversandbarrierstoadoptionandutilization.Whileitisnotpossibletoincludeeveryquestionandresponsefromtheassessmenthere,thiseSBreportprovidesinsightsintokeyfindingsthatpointtogapsandopportunitiesforincreasingbroadbandutilization.Inadditiontotheinformationpresentedinthisreport,allthedatacollectedthroughthisinitiativeisavailablethroughanonlineplatformcalledtheDigitalEconomyAnalyticsPlatform(DEAP),whichthestaffofConnectArkansascanaccess.TheinsightscontainedwithinthiseSBreportshouldbeusedasaguidefordevelopinganoverallbroadbandutilizationstrategy.Thereportisorganizedintothefollowingsections:

• IntroductionandMethodologyOverview–Abriefdescriptionofthebenchmarkinginitiative,anoverviewofthekeymethodsused,andscopeofresearchandanalysis.

• KeyFindings–SummaryandhighlightsfromdataprovidedbyArkansasbusinesses.

• BenchmarksforAnalysisofInternetUtilization–Asabenchmarkingprocess,SNGhascreated

theDigitalEconomyIndex(DEi)tocompareInternetusebetweengroupsbyvariouscharacteristics,suchasindustry,businesssize,andgeographiclocation.Benchmarkscreatereferencepointsagainstwhichtheperformanceofanyestablishmentorgroupcanbecompared.

• MethodologyOverview–Thecoremethodologyisfoundedonprimaryresearchconsistingof

datacollectionthroughanonlineself-assessmentofbothcommercialandnon-commercialorganizations.InformationwascollecteddirectlyfromInternetusersinthefollowingcategories:userprofile,Internetutilization,InternetbenefitsandbarrierstoInternetuse.

Theorganizationalassessmentsweremadeavailableforonlineaccessthroughoneoftwomeans:

• Individualbusinessesandnon-commercialorganizations2wereinvitedtoparticipateviadirectemailinvitationssentfromalarge,statewidecontactlist.

2Thisreportcategorizesorganizationsintofourareas:businesses,non-profitorganizations,andgovernmententities.Theterm“non-commercialorganizations”includesbothnon-profitorganizationsandgovernmententities.



• Businessesandnon-commercialorganizationswereencouragedthroughavarietyofcommunicationschannelstoaccessaweblinktotheonlineassessment.

Emailinvitationsweresentdirectlyto34,300organizationsacrossArkansas,providingaccesstotheonlineassessment.TheinitialemailinvitationwassentonNovember20th,2014andreminderemailsweresentroughlyeverysevendayswiththeassessmentsprocessclosingonFebruary18th,2015.Atotalof1,532organizationscontributedtothebroadbandbenchmarkingeffort.Theorganizationsconsistedof1,236commercialbusinesses,95governmententitiesand201non-profitorganizations.ThiseSolutionsBenchmarkingReportprovidesaveryusefuloverviewofInternetconnectivityandutilizationcharacteristicsinArkansas.AdditionaldatafromtheassessmentandbenchmarkingeffortisprovidedthroughtheArkansasDEAPwebsite,whichisdescribedinAppendixB.Themajorityofrespondentsfullycompletedtheassessments.However,partiallycompletedassessmentsareincludedintheanalysisonthebasisthattheresponsesprovidedarevalidandusefuleveniftherespondentchosenottocompletetheentireassessment.Therefore,everydatachartinthisreportindicatestheN=valuethatprovidesthenumberofdatapointsincludedtogenerateeachparticularfigure.FurtherdetailsonthemethodologyareprovidedinAppendixAwithabriefGlossaryofreportterminologyinAppendixB.



IsolatedSmallTown8%

Metropolitan59%

Micropolitan22%

SmallTown11%

1 OrganizationalAssessmentAccesstoandeffectiveuseoftheInternethasbecomeanessentialelementinthesurvivalandsuccessofbothcommercialandnon-commercialorganizationsintoday’seconomyaswellassocietyasawhole.ThissectionidentifieskeyfindingsrelatedtohoworganizationsandbusinessesusetheInternet,whattypesofbenefitstheyvaluemost,andwhichbarrierspreventmoreeffectiveuse.ThereportpaysspecialattentiontoInternetusebybusinesses.Thefindingsarebrokendownbykeyrespondentcharacteristicssuchasindustrysector,employmentsizeandconnectivitytype.

1.1 RespondentProfileThesamplesetoutlinedinthissectionincludesdatafromorganizationsacrossthestate.Figure1identifiesthenumberandpercentageofresponsesfromeachofeightregionswithinArkansas.Figure2identifiesthepercentageofresponsesbylevelofurbanization3.Thesegeographiccategoriesshowthedegreetowhichdifferentgeographicareasandtypesofcommunitiesarecapturedintheassessmentdata.ThesegeographiccategoriesarealsousedlaterinthereporttocomparelevelsofInternetutilizationacrossthestate.

Figure1–ResponsesbyRegion

Region #Responses Pct.OfAllResponses

Central 510 33.3%Northwest 337 22.0%

East 145 9.5%WestCentral 131 8.6%WhiteRiver 114 7.4%Western 113 7.4%Southwest 91 5.9%Southeast 91 5.9%

ResponsestotheassessmentandthecompleteddatasetarecloselyalignedtoUSCensusBureaudataintermsofgeographicdistributionofbusinesses.Thedata(Figure2)fellamongMetropolitanwas59%(58%CensusBureau),Micropolitan22%(19%CensusBureau),SmallTown,11%(15%CensusBureau),IsolatedSmallTown,8%(8%CensusBureau).

Figure2-ResponsesbyLevelofUrbanization

3AmetropolitanareaisdefinedbytheCensusBureauashavingacoreurbanareaofover50,000withapopulationdensitygreaterthan1,000peoplepersquaremile.Amicropolitanareahasapopulationof10,000to49,999.Asmalltownhasapopulationof2,500to9,999.Thecategoryof“isolatedsmalltown”includestheremainder.



AnotherkeyvariablefactorinunderstandingInternetuseisthesizeofanorganization.SNGresearchconsistentlyshowsthatonaverage,thelargeranorganizationis,thehighertheirutilizationofInternet-enabledservices.Ourassessmentsample,asshowninFigure3,showsthatthebreakdownofresponsesbysizeofestablishmentissimilartothestateprofileasreportedbytheCensusBureau,withaslightunder-representationofmicrobusinesses(thosewithlessthan10employees).Thisinspiteofanover-samplingofthesebusinessesbeinginvitedtoparticipate.

Figure3-ResponsesbyEmploymentSizeofOrganization(NumberofEmployees)

HowbusinessesandorganizationsaccessandusetheInternetalsovariesbyindustrysector.Thesampleincludesassessmentsoforganizationsacrossall20industriesclassifiedbyNAICS.4Figure4providesacomparisonofrespondentstotheindustrialprofileofArkansas,includingbothbusinessesandnon-profitorganizations,butnotgovernmententities(whicharenotincludedinCensusBureaudata).

4NorthAmericanIndustryClassificationSystem.Industrybreakdownsareatthe2-digitNAICScodelevel.Someresponsesdidnothaveanindustryclassification.

2.0%

2.2%

4.0%

4.8%

11.8%

13.3%

18.1%

43.9%

0.2%

0.4%

1.5%

2.7%

13.3%

8.9%

21.0%

51.9%

0% 10% 20% 30% 40% 50% 60%

500ormore

250-499

100-249

50-99

10-19

20-49

5-9

1-4

StateProfile SurveySample N=1,009



Figure4-ResponsesbyIndustrySector

Thesampleresultingfromtheassessmentsisunder-representedinretailtrade,healthcare,manufacturing,agriculture,andadministrationservices.Respondentswereover-representedinprofessionalandtechnicalservices,information,andrealestate.Theover-orunder-representationofspecificsectorsismitigatedinsofarasthereportprovidesdataonutilizationwithineachoftheseindustrysectors.StateprofiledatadoesnotincludedataonPublicAdministration.5 5Statedatasource:USCensusBureauCountyBusinessPatterns2011–NumberofestablishmentsshownforsampledonotincludePublicAdministrationinthetotalsforcomparativepurposes.

0.1%

0.5%

0.5%

1.0%

1.3%

2.7%

2.9%

3.1%

3.5%

3.8%

4.1%

5.7%

5.7%

6.5%

6.5%

7.2%

7.9%

9.9%

10.6%

16.0%

1.4%

0.9%

0.9%

5.3%

0.4%

0.9%

5.0%

0.0%

1.7%

0.4%

10.4%

4.6%

4.8%

1.3%

4.0%

15.4%

4.6%

19.0%

15.4%

3.6%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

ManagementofCompanies

Mining

EducaionalServices

Agriculture/Forestry/Fishing

Uiliies

Arts,EntertainmentandRecreaion

TransportaionandWarehousing

UnclassifiedEstablishments

Informaion

AccommodaionandFoodServices

AdministraiveandSupportServices

Construcion

WholesaleTrade

RealEstate

FinanceandInsurance

Manufacturing/Processing

Otherservices(expublicadministraion)

HealthCareandSocialAssistance

RetailTrade

Professional,Technical&ScienificServices

StateProfile SurveySampleN=1,525



1.2 OrganizationalConnectivityCharacteristics ThespeedandqualityofInternetconnectionsstronglyimpactsmanyorganizationalusesoftheInternet,suchasvideoconferencingandreal-timecollaboration.AsseeninFigure5,cable,DSL,andfiberarethepredominanttechnologiesforconnectivity.Asmallpercentageofbusinessesandorganizationsusedial-up(0.7%)andsatellite(2.1%)connectionsastheirprimaryconnection.6

Figure5–HowBusinessesandNonprofitOrganizationsConnecttotheInternetinArkansas

1.2.1 InternetSpeedsTheuseofbroadbandisveryhighacrossalltypesandlocationsoforganizations.Whilealmost96%ofbusinessesandnon-profitorganizationshaveconnectivityotherthandial-uporsatellite,manystilllackbroadbandlevelconnectionsinatleastonedirection(uploadand/ordownload).Theassessmentsincludedanopportunityforrespondentstotakealivespeedtestthatassessedtheiractualuploadanddownloadspeeds.Thenumberofassessmentresponses,indicatedbyNineachchart,varybecausecompletionofthespeedtestportionwasoptional.Figures6through11summarizetheresultsofthespeedtestportionoftheassessment.

6Someofthetablesinthissectionexcludedatafromgovernmententitiesasthereisamarkedlydifferentprofileofconnectivitycharacteristicsamongtheseintheformofadisproportionatepresenceoffiber(23.2%)andT1(14.7%)Internetservices.

.6%

.6%

3.0%

3.5%

7.9%

9.3%

10.4%

28.2%

28.7%

0% 5% 10% 15% 20% 25% 30% 35%

Dial-up

NoInternet

Satellite

MobileWireless

FixedWireless

T1

Fiber

Cable

DSL

%ofRespondentsN=1,437



Whileonly1.5%ofrespondentsfailedtomeettheoriginalFCCdefinitionofbroadband(768kbpsormoreinatleastonedirection),speedtestresults(Figures6and7)showedthatahighpercentageofrespondentsweresignificantlybelowtherecentlyannouncedFCCstandardforbroadband7.Ofthosetakingthespeedtest,63.1%haduploadspeedsoflessthanthenewstandardof3mbps,while80%failedtomeetthedownloadstandardof25mbps.

Figure6–Speed-TestResultsforAverageUploadSpeeds(businessesandnonprofitorganizations)

Figure7-Speed-TestResultsforAverageDownloadSpeeds(businessesandnonprofitorganizations)


.7%

2.8%

1.9%

12.3%

7.9%

11.2%

17.9%

20.7%

22.6%

1.9%

0% 5% 10% 15% 20% 25%

100mbpsormore

50mbpsupto100mbps

25mbpsupto50mbps

10mbpsupto25mbps

6mbpsupto10mbps

3mbpsupto6mbps

1.5mbpsupto3mbps

768kbpsupto1.5mbps

200kbpsupto768kbps

Lessthan200kbps

Pct.ofUsers N=535

1.7%

11.1%

8.2%

29.5%

14.5%

17.6%

9.8%

6.1%

1.5%

0% 5% 10% 15% 20% 25% 30% 35%

100mbpsupto1

50mbpsupto100

25mbpsupto50

10mbpsupto25

6mbpsupto10mbps

3mbpsupto6mbps

1.5mbpsupto3

768kbpsupto1.5

Lessthan768kbps

Pct.ofUsersN=539



SNG’sinternalanalysisshowsastrongercorrelationwithInternetutilizationanduploadspeedsthanwithdownloadspeeds.Thus,forbusinessesandotherorganizationstogetthemostoutofbroadband,uploadspeedisprovingtobethecriticaldirection.Figure8showsthatbusinessesandnon-profitorganizationsarefarmorelikelytohavesloweruploadspeedsthangovernmententities.

Figure8–AverageUploadSpeedsbySector

UploadSpeedRange Businesses Nonprofits Gov'tEntities

Lowerspeeds Lessthan200kbps 1.4% 3.3% 5.3% 200kbpsupto768kbps 22.0% 31.1% 15.8% 768kbpsupto1.5mbps 22.2% 18.0% 7.9% Sub-totalUnder1.5mbps 45.6% 52.4% 29.0%

Higherspeeds 25mbpsupto50mbps 2.1% 0.0% 2.6% 50mbpsupto100mbps 1.4% 9.8% 18.4% 100mbpsormore 0.9% 0.0% 0.0% Sub-totalOver25mbps 4.4% 9.8% 21.0%AsseeninFigure9,thespeedtestresultsvariedsignificantlybetweendifferenttechnologies,withfiberleadingbyawidemargin.T1,cable,fixedwireless,andmobilewirelessformthesecondfastesttierofservice,whileDSLandsatelliterecordedtheslowestspeeds.ItisworthnotingthatbasedonSNGdatacollectedsince2010;speedsareincreasingrapidlyforfiber,cable,andbothfixedandmobilewireless.

Figure9–Speed-TestResultsbyTypeofConnectivity(allsectors)

1.3

2.8

5.6

5.7

6.5

7.2

41.2

7.4

12.1

25.7

13.2

14.4

17.0

53.0

0.0 10.0 20.0 30.0 40.0 50.0 60.0

DSL

Satellite

Cable

MobileWireless

FixedWireless

T1

Fiber

Megabitspersecond

Ave.DownloadSpeed(Mbps) Ave.UploadSpeed(Mbps)N=535



Figures10and11showthatconnectivityspeedsforbothdownloadsanduploadsvariesbetweenmetropolitanandnon-metropolitanareas8.Withacoupleofexceptions,metropolitanareashavesignificantlyfasterconnectivitythannon-metroareas,evenwhencontrollingfortypesoftechnology.OtherthanT1andsatellite,metroareashavefasterdownloadspeedsthannon-metroareas.Foruploads,metropolitanareashaveconsistentlyfasterconnectivityacrossalltechnologies.

Figure10–DownloadSpeeds(mbps)byConnectionandLevelofUrbanization(allsectors)

Figure11–UploadSpeeds(mbps)byConnectionandLevelofUrbanization(allsectors)


6.9

12.6

16.2

9.9

10.7

17.0

29.4

8.1

14.2

17.8

18.9

19.6

30.1

63.3

0 10 20 30 40 50 60 70

DSL

MobileWireless

T1

FixedWireless

Satellite

Cable

Fiber

Metro Non-MetroN=306Metropolitan,227Non-Metro

1.0

3.0

2.9

7.9

4.5

3.3

19.2

1.7

1.9

6.9

7.2

7.6

9.6

50.9

0 10 20 30 40 50 60

DSL

Satellite

Cable

T1

MobileWireless

FixedWireless

Fiber

Metro Non-MetroN=306Metropolitan,227Non-Metro



1.2.2 CostCostforInternetservicesvarygreatly,rangingfromamedianof$60forfixedwirelessandDSL,tobetween$80and$100forsatellite,mobilewireless,andcable.Dial-upcostsarebasedonasmallsampleoffourrespondentsandaremostlikelynotrepresentative(basedondatafromotherSNGassessmentsandbenchmarkingefforts).

Figure12–InternetCostsbyTypeofConnection(allsectors)

ThemonthlyexpendituresofInternetconnectivitygenerallyincreasewithorganizationsize.Over50%ofsmallbusinesseswith1-9employeesspendlessthan$85permonth,while50%ofestablishmentswith20ormoreemployeesspend$200ormorepermonth.

1.2.3 SatisfactionRespondentswereaskedabouttheirlevelofsatisfactionwiththeirexistingInternetservice.Intermsofreliability,fiberwasclearlythebestratedoftheavailabletechnologies,withonly8.8%offiberusersstatingthattheyhadoccasionalorfrequentproblems.Cable,T1andfixedwirelessformedthenexttierwithapproximately27%ofusersreportingoccasionalorfrequentproblemswithreliability.SatelliteandDSLweretheworstratedwith42to44%ofrespondentsreportingfrequentoroccasionalproblems.While21.3%ofallrespondentsfeltthevalueoftheirInternetservicewaspoororbelowexpectations,thisnumberincreasedformobilewirelessandsatelliteusers(32%and48.9%respectively).Fiberwastheleastlikelytoberatedaspoorvalueorbelowexpectations(5.7%).

$400

$400

$100

$149

$100

$83

$60

$60

$0 $50 $100 $150 $200 $250 $300 $350 $400 $450

Fiber

T1

Cable

Dial-up

MobileWireless

Satellite

FixedWireless

DSL

MedianMonthlyCost N=828



1.3 BroadbandUtilizationandBenefits1.3.1 UtilizationPatternsTheextenttowhichbusinessesuseesolutions(Internet-enabledapplications9)providesanindicationoftheirdegreeofengagementinthedigitaleconomyandtheirleveragingofbroadbandcapacity.Thefollowingfindingssummarizethebusinessusesofbroadbandcategorizedbyorganizationalcharacteristics.Sections1.3,1.4and1.5focusoncommercialbusinessesonly.Theassessmentofbusinessesexplorestheusesofesolutionsintwomajorcategories:eCommerce,whichincludesactivitiesrelatedtothesales,marketinganddeliveryofproductsandservices;andeProcess,whichincludeinternaloperationaluses,suchassuppliercoordination,trainingandteleworking.Figures13and14provideasummaryoftheresults.Section2.1providesbenchmarkanalysisofesolutions.

Figure13–eCommerceUsesofBroadband

9Theterm“esolutions”referstotheintegrationofInternettechnologieswiththecomputer-basedsystemsandapplicationswithinandamongorganizationsforavarietyofoperationalprocesses.eSolutionsencompassnotonlyproductdeliveryandpaymenttransactions(eCommerce)butalsoallprocessesthatmaybefacilitatedbycomputer-mediatedcommunicationsovertheInternet.

40.3%

45.9%

58.5%

65.2%

66.4%

81.0%

79.9%

84.8%

14.3%

15.0%

7.3%

13.8%

11.8%

8.4%

5.7%

4.8%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Deliverservicesandcontent

Mulimedia&interacivewebcontent

Sellinggoodsorservices

Adverisingandpromoion

Customerserviceandsupport

Websitefororganizaion

Purchasinggoodsorservices

Researchbystaff

Currentlyuse Plantouse N=1,087



Figure14–eProcessUsesofBroadband

UtilizationofInternet-enabledapplicationsandoperationsisstillevolving.Simplerprocessesthathavelongbeenavailable,suchasemail,areheavilyaccessedbyallusertypes.Differentiationemergesinutilizationpatternsasmorecomplexbusinessandtransactionalprocessescome“online,”andmorecurrenttechnologiesspawnenhancedornewcapabilities.Thetwomostsignificantfactorsinbroadbandutilizationlevelsaresizeoforganizationandindustrialclassificationtowhichanorganizationbelongs.10Broadbandoffersprocessesandapplicationsthatcantransformthewaybusinessesconducttheiroperations.Nearly4in5(79%)businessesusebroadbandforcoordinationwithsuppliers,while66%usebroadbandforemployeetrainingandanother66%forimprovingcustomerservice.Likewise,79.9%ofbusinessesusetheInternettopurchasegoodsandservicesonline.Incontrast,only40.3%ofbusinessessellgoodsandservicesonlineandjustover36.8%deliverservicesandcontentonline.

1.3.1.1 UtilizationofMobilityServicesBusinessesreportaveryhighutilizationofmobiledevicesforInternetaccess,whichhighlightstheimportanceformobilityfunctionsandservicesinternaltotheirorganizationforusewhenawayfromtheofficeorplaceofbusiness.Mobilityservicesallowremoteworkerstoaccessbusinessresourceswhenworkingatoff-sitelocations,suchasataclient’slocation.Thesehighutilizationpercentagesareexpectedtoincreaseasmoremobileaccessisavailable,moredevicesareadopted,andmorebusinessapplicationsaredeveloped.Differentindustrysectorsfromnon-metropolitan

10ThisfindingcanbeseeninthedatafromArkansasanditsconsistentwithassessmentscarriedoutbyStrategicNetworksGroupinsixotherstates.

45.6%

63.1%

63.8%

66.0%

71.9%

74.6%

75.3%

79.4%

85.9%

7.3%

11.0%

6.1%

10.2%

7.9%

6.0%

4.7%

5.0%

4.7%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Teleworking

Accesscollaboraivetools

Governmenttransacions

Stafftraining

Socialnetworking

Accessgov'tinformaion

Bankingandfinancial

Suppliercommunicaion

Electronicdocumenttransfer

Currentlyuse PlantouseN=1,087



Figure15–BusinessUtilizationofMobileInternet

AsseeninFigure16,83%ofbusinessesuseasmartphoneand76.8%useaweb-enabledlaptopcomputer.Tabletsshowthegreatestplannedgrowth,anexpectedfindingastheotherdeviceshavelongbeenaroundlongerandarenearingmarketsaturation.Manymobileanalystsbelievethattheceilingfortabletsandlaptopcomputersisaround93%,withsmartphonespotentiallyashighas96%adoption.

Figure16–UseofWeb-enabledMobileDevices

1.3.1.2 CloudServicesWiththerecentrapidgrowthincloud-basedservices,theInternetutilizationassessmentaskedhowmanybusinesseswereusingcloudservicesandforwhatpurposes.AsseeninFigure17below,lessthanhalf(46.2%)ofrespondentsindicatedtheywerealreadyusingcloud-basedservices,withanother10.5%activelyconsideringthemasapossiblesolutionforinternalandexternalservicesandcollaboration.

30.8%

42.0%

46.1%

46.9%

73.5%

75.1%

9.4%

16.7%

17.1%

16.5%

8.3%

9.0%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

VPNaccess

Training

Remotedataentry

Applicaions

Research

Workcommunicaion

Currentlyuse Plantouse N=759

17.3%

25.0%

60.3%

76.8%

83.0%

9.1%

5.5%

11.2%

4.9%

4.2%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Othermobiledevices

Otherweb-enabledmobilephones

Tablets

Laptopcomputers

Smartphones

Currentlyuse PlantouseN=849



Figure17–PercentageofBusinessesUsingCloudBasedServices

Basicapplications(likeemail,wordprocessing,sharingspreadsheetsandofficedocuments)andcollaborativeplatforms11werethetwomostusedcloud-basedservicesat63.8%.Motivationsforutilizingcloud-basedservicesarevaried,withsixpossiblemotivatingfactorsbeingidentifiedasveryimportantorsomewhatimportantbyover75%ofcloudservicesusers.AsFigure18shows,themostimportantdriversweremobileaccesstotheInternetandaffordability,withtheabilitytofacilitateoffsitedisasterrecoveryataclosethird.

Figure18–MotivatingDriversofAdoptionofCloudServices

1.3.1.3 MobileApplicationsandtheMobileWebWiththerapidgrowthinmobileapplications(apps)andmobile-optimizedwebsites,thebusinessassessmentprobedhowbusinesseswereusingmobileapps.Figure19looksatapplication-specific

11Collaborationplatformsintegratearangeofsoftwarecomponentsthatenablegroupsofindividualsandorganizationstoworktogetheroncommontasksorprojects.Typicalcomponentsaremessaging(email,scheduling,andcalendars),filesharingwithversioncontrol,andreal-timecommunication(instantmessagingandInternetconferencing).

Yes46.2%

Notusingandnotunderconsideradon

31.3%

Notsure12.0%

Acdvelyconsidering10.5%

N=961

46.3%

48.6%

59.6%

65.0%

68.3%

72.2%

30.3%

28.1%

28.1%

19.9%

19.5%

17.3%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Cloudservicescalability

Avoidin-houseskills

Accesstonewcapabiliies

Disasterrecovery

Cloudserviceaffordability

Accessfromanylocaion

VeryImportant SomewhatImportant N=508



utilizationbycategorytoofferaninsightfullookintohowbusinessesinArkansastodayareusingmobileapplications.

Figure19-Mobileapplicationsusedbybusinesses

Evenifabusinessdidnothaveastand-aloneapplicationfortheirbusiness,47.6%ofthesehavenonethelessrecognizedtheimportanceofmobileapplicationsandhavetailoredtheirexistingwebsitestomobiledevices.Further,26.9%percentofbusinessesareplanningtooptimizetheirwebsitesformobilebrowsers.Typically,amobile-optimizedwebsitewillcontainmostofthesamecontentandinformationthatatraditionalbrowser-basedwebsitehas,onlyorganizedandpresentedinaformatsuitableforsmallerscreens,touchcontrols,andintuitivenavigation.Anapplicationwouldalsointegrateinteractivemapfunctionalityformobilecustomerstodrivedirectlytothebusinesslocation,andclicktocallfunctionforquickermeansofcommunication,asopposedtoatraditionalwebsitethatwouldperhapsofferastaticmapgraphicwithlinkstoemailthebusiness.1.3.2 BroadbandandDecidingWheretoLocateTobetterdeterminetheimpactofbroadbandonphysicalbusinesslocations,businesseswereaskedabouttheimportanceofbroadbandforbothselectingtheirlocationandforremainingintheircurrentlocation.Responsestotheassessmentprocessclearlyindicatethatavailabilityandsuitabilityofbroadbandplayanimportantroleincorporatedecisionstoremaininacommunity,andifabusinessismoving,whichareasitiswillingtoconsider.

• Almost40%ofbusinessessaythatbroadbandservicewas“essential”inselectingtheirbusinesslocation,and

• Over58%saybroadbandis“essential”forremainingintheircurrentlocation.

7.1%

21.5%

28.9%

31.9%

32.7%

47.2%

54.0%

66.2%

4.4%

22.4%

26.0%

22.7%

28.0%

17.7%

17.4%

22.7%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Other

Inventoryorproducionmanagement

Expensemanagement

Customerrelaionsmanagement

Teamcollaboraion

Travelplanningandbooking

Communicaion(VoIPortextchat)

Schedulingandcalendars

Currentlyuse PlantouseN=339



1.3.3 BroadbandBenefitsandImpactsOverall,themajorityofbusinessesrecognizebroadbandasimportantacrossallbenefitsdimensions,excepttelework12.Themostgenerallyrecognizedbenefitsarerelatedtoimprovedefficiencyandproductivity,aswellasimprovingservicetocustomers.Productivity-relatedbenefitsareslightlymorevaluedbybusinessesthantherevenue-relatedbenefits,suchasmarketreach,competitiveness,increasingrevenues,andintroducingnewproducts.Theneteffectofthesebenefitsistoincreasecompetitiveness,productivityandrevenues,whilereducingcostsandimprovingprofitability.Understandingbroadband’simportanceincontributingspecificbenefitsallowsforamorecompleteunderstandofbroadband’simpact.FurtherdocumentationoffinancialandemploymentimpactscanbefoundinSection1.5.

Figure20–ImportanceofBroadbandBenefitsforBusinesses

12Therelativelylowimportanceofteleworkasabenefitisimpactedbythelargepercentageofsmallbusinesses(1-19employees)thatmakeupthesampleandtheirlowuseoftelework(42.5%).

25.0%

37.4%

43.1%

43.3%

43.3%

45.8%

46.3%

49.0%

50.1%

60.8%

61.0%

62.4%

64.2%

64.5%

19.2%

26.1%

30.6%

29.2%

24.9%

20.9%

26.0%

26.8%

28.1%

23.9%

27.0%

23.2%

23.0%

23.0%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Increaseteleworking

Introducenewproductsorservices

Adoptnewoperaionalprocesses

Improvestaffskills

Reducecostofproducts&services

Reduceimetomarket

Coordinaionwithsuppliers

Keeppacewithcompeitors

Loweroperaingcosts

Increaserevenues

Useresourcesmoreeffecively

Reachnewcustomersandclients

Makedailyoperaionseasier

Improveservicetocustomers

VeryImportant SomewhatImportantN=712



1.4 BarriersandAdoptionIssues1.4.1 BarrierstoAdoptionBusinesseswereaskedtoratethesignificanceofanumberofbarrierstoeffectivelyusingbroadbandInternetintheiroperations.Thesebarriersinhibittheadoptionofesolutionsandneedtoberecognizedandovercomeifbroadbandutilizationanditsbenefitsaretobeachieved.

1.4.2 ExpertiseandKnowledgeIssuesExpertiseisneededtoimplementanduseesolutions.Businessesmayencounterseveralinterrelatedissuesinadoptingesolutions:

• Lackofinternalresourcewithnecessaryskills• Timeandeffortrequiredtodevelopexpertise• Lackoflocalexternalsupportresources• Affordabilityoflocalexternalsupportresources• Toomuchinformation–notenoughtimetoresearchoptions• Higherprioritiestofocuson

Businesseswereaskedtoidentifywhichoftheseissuesarecriticalbarrierstoprogress.Competingprioritiesandalackoftime/toomuchinformationrepresentthelargestbarriers,followedbythecostofexternalsupports,lackofinternalresourcesandthehigheffortrequiredtodevelopinternalexpertise.TheassessmentalsoaskedbusinessestoidentifymorespecificallywhichissuespresentedabarriertogreaterInternetutilization(Figure21).

Figure21–BarrierstoGreaterBusinessesUseoftheInternet

6.0%

8.4%

10.4%

17.6%

17.9%

18.2%

21.7%

25.9%

29.4%

40.8%

16.4%

17.8%

21.0%

23.7%

18.2%

28.2%

19.1%

27.0%

21.3%

25.3%

0% 10% 20% 30% 40% 50% 60% 70%

Suppliersnotready

Internalorganizaionresistance

Uncertainaboutbenefits

Highcostofdevelopment/maintenance

AvailableInternetistooslow

Lackofinternalexperiseandknowledge

ProductsnotsuitedtoInternetsales

Lossofpersonalcontactwithclients

Privacyconcerns

Securityconcerns




Securityandprivacyconcernsarethetwobarriersthatratethehighestinimportance,withmorethan40%and29%ofbusinesses,respectively,ratingthemasveryimportantbarriers.Itisworthnotingthatthesetwostrongestperceivedthreatsareexternalinnature,perhapsconsideredevenmoreofathreatbecausethesearesomewhatoutofthebusiness’control.Itisinterestingtonotethatwhiletheemphasisatapolicylevelcontinuestobetheneedtoobtainhigherconnectivityspeeds,“slowInternet”isnotatop5-businessbarriertoutilization.1.4.3 SkillsAcquisitionBusinesseswereaskedaboutwhichmethodstheyaremostlikelytousefortheinternaldevelopmentofknowledgeandexpertiseforresearching,planningorimplementingesolutions.

Figure22–PreferredMethodsforAcquiringInternalKnowledge

Self-directedmethodsofknowledgedevelopment,suchasonlineresearchandwebinars,arethemostlikelyeducationmethodstobeusedbythemajorityofbusinesses.Notably,formaltrainingmethodsarelesslikelytobeused,withclassroomtrainingtheleastlikelytobeusedby46.8%ofbusinesses.

10.2%

15.6%

16.3%

17.6%

23.4%

27.7%

40.8%

17.6%

26.0%

21.9%

23.4%

28.6%

26.0%

27.0%

25.4%

24.4%

22.4%

23.2%

17.6%

19.5%

13.9%

28.3%

18.0%

21.8%

21.6%

17.5%

15.2%

8.1%

18.5%

16.0%

17.6%

14.1%

13.0%

11.7%

10.2%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Formalclassroomtraining

Formalonlinetraining

One-on-oneonlocaion

In-personinfosessions

Directwithservicevendors

Livewebinarswithexperts

Onlinereferencematerials

VeryLikely Likely Undecided Unlikely VeryUnlikelyN=693



1.5 FinancialandEmploymentImpactsfromInternetUseToassesstheimpactsofInternetuseontheoperations,businesseswereaskedtoquantifyhowusingtheInternethasaffectedrevenuegeneration,operatingcostsavings,andemployment.Duetotheproprietaryandsensitivenatureofthisinformation,thesequestionswereoptionalforrespondentsinordertomaximizeparticipationintheassessmentprocess.Asaresult,thesamplesizesforusabledataintheseareasissignificantlylessthanforthetotalsetofresponses.ThelargestamountofimpactdatacollectedwasinrelationtoemploymentimpactsoftheInternet,onwhich281establishmentsreporteddata.Forfinancialimpacts,124and63businessesreporteddataforrevenuesandoperatingcostsavingsrelatedtotheInternet,respectively.Thesedata,asreportedbyindividualbusinesses,suggestthetypesofimpactsthatotherbusinessescouldalsorealize.Businesseswereaskedtoprovidetheirtotalannual13revenues,operatingcosts,andcurrentemploymenttoprovideabaselineforassessmentofimpacts.TheywerealsoaskedtoprovidethechangesasaresultofusingtheInternet,specifically:

• TotalAnnualRevenuefromtheInternetoverthepast12-monthperiod.o Example:ThismayincludedirectInternet(online)andincomeenabledbyusingthe

Internettointeractwithcustomers.• TotalAnnualCostSavingsfromusingtheInternetoverthesameperiod.

o Example:Thismayincludedirectlaborcostsandotheroperatingcostsavingsthroughefficienciesinpurchasingandnewoperatingprocesses.

• Numberofnewjobscreatedinthepast12-monthperiodandthenumberofnewjobscreatedthatcanbeattributedtousingtheInternet.

o Example:ConsiderthedifferencetojobcreationifyourorganizationdidnotusetheInternet.

IntermsoftheimpactoftheInternetonbothrevenuesandcostsavings,124Arkansasbusinessesreportedthat24.7%of12-monthrevenuesweregeneratedthroughtheInternet,and63businessesinthestatereporteda12-monthoperatingcostsavingsof6.6%duetotheiruseoftheInternet.

Figure23–AnnualRevenuesandCostSavingsfromInternetUtilization

AnnualRevenueImpactsNumberof

EstablishmentsTotalAnnualRevenue

($M)AnnualRevenuefrom

Internet($M)PercentInternet

Revenue

124 $784 $193 24.7%

AnnualOperatingCostImpacts

NumberofEstablishments

TotalAnnualOperatingCost($M)

CostSavingfromInternet($M) PercentCostSaving

63 $120 $8.5 6.6%

13Annualfigureswererequestedforthepast12-monthreportingperiod.



AsseeninFigure24,whileover1,682newpositionswerecreatedbyrespondingbusinessesinthepreceding12months,thesebusinessesalsoexperiencedsizeablejobreductions,resultinginanetjobincreaseof1,290positions.ThenetjobincreaseattributedtousingtheInternet(Figure25)was461positions,or29.4%ofallnewjobs.

Figure24–SummaryofEmploymentImpactsofBusinessResponses(FullandPartTimecombined)

SizeofEmployer

NumberofBusinesses

CurrentEmployees

NewJobsCreatedinLast12Months LostJobs NetJobs

0to19 165 1,266 327 141 18620to49 62 1,980 257 48 20950to99 19 1,245 123 54 69

100to499 30 6,847 699 98 601500ormore 5 3,543 276 51 225

Totals 281 14,881 1,682 392 1,290

Figure25–SummaryofEmploymentImpactsSpecifictoInternetUse(FullandPartTimecombined)

SizeofEmployer NewJobsfromInternetUse

LostJobsfromInternetUse

NetJobsfromInternetUse

NewJobsfromInternetUseasPercentageofNewJobs

0to19 92 18 74 28.1%20to49 46 6 40 17.9%50to99 48 8 40 39.0%

100to499 206 1 205 29.5%500ormore 102 0 102 37.0%

Totals 494 33 461 29.4%Lookingatthesizeofreportingbusinesses,Internetusefacilitated28.1%netjobscreatedbyfirmswith0-19employees,17.9%netjobsfromfirmsof20-49employees,39%ofnetjobsforfirmsof50-99employees,29.5%netjobsfor100-499employees,and37%netjobsfor500andmoreemployees.



2 BenchmarksThisreportincludescomparisonsofInternetusebetweenregionsbyvariouscharacteristics,suchasindustryandbusinesssize.Toassistintheprocessofmakingcomparisons,amechanismwasdevelopedforestablishingbenchmarks.Benchmarksareusefulincreatingreferencepointsagainstwhichtheperformanceofanyindividualorgroupcanbecompared.StrategicNetworksGrouphasdevelopedabenchmarkingprocessbasedonitsDigitalEconomyindex(DEi).

2.1 TheDigitalEconomyIndexTheDigitalEconomyindex(DEi)reflectsabusiness’ororganization’sutilizationof17differentInternetapplicationsandprocess.Theseapplicationsandprocesses(eSolutions)arelistedonthefollowingpage.Basedonthenumberofapplicationscurrentlybeingusedbyanorganization,acompositescoreiscalculatedthatsummarizeshowcomprehensivelyeachbusinessorganizationusesInternet-enabledeSolutions.TheDEicanbeusedtocompareorganizations,regions,orindustrysectors.Anorganization’sDEiscore(from0to10)capturestheirutilizationofeSolutions,with10beingthehighestpossibleuse.DEiscoresareaveragedacrossgroupsofusersbyvariouscategories:e.g.asector’sDEiistheaverageforallorganizationsinthatsector.TheDEiisusedasabasisforcomparisonofutilizationlevelsacrossvariousdimensions.IdentifyingvariationsinDEiassistsinfocusingonareaswhereadeeperassessmentiswarranted.InareaswhereDEiislowerthanaverage,indicatinglowerutilization,anopportunitytoincreaseutilizationandbenefitstobusinessesandnon-commercialentitiesexists.Onthefollowingpageisalistoftheutilizationcategories(esolutions)usedtotrackhoworganizationsusetheirInternetandbroadbandconnections.

Theterm“esolutions”referstotheintegrationofInternettechnologieswiththecomputer-basedsystemsandapplicationswithinandamongorganizationsforavarietyofoperationalprocesses.

eSolutionsencompassnotonlyproductdeliveryandpaymenttransactions(eCommerce)butalsoallprocessesthatmaybefacilitatedbycomputer-mediatedcommunicationsovertheInternet.

Average DEI Score Sample Size Median DEi Score

6.58 6.89 1,236



eSolutionsCategoriesforBusinessesandnon-commercialentities

eCommerceRelated eProcessRelated

Sellinggoodsorservices Purchasinggoodsorservices

Deliverservicesandcontent Suppliercommunicationandcoordination

Richmediaorservicecreation Electronicdocumenttransfer

Customerserviceandsupport Stafftrainingandskillsdevelopment

Advertisingandpromotion Teleworking

Socialnetworking Accessingcollaborativetools

Websitefororganization Bankingandfinancial

Researchbystaff Governmenttransactions

Accessgovernmentinformation

2.2 UtilizationBenchmarksThisreportusesbothaverage(mean)andmedianasbenchmarks.ForbusinessesinArkansas,theaverageDEiwas6.42whilethemedianaveragewas6.70.14Thesescoresindicateamiddle-of-the-road(median)businessinArkansaswasusingjustlessthan12ofthe17eSolutionsnotedabove.AscanbeseeninFigure26,utilizationslevelsasmeasuredbytheDEididnotvarymuchbetweenbusinesses,non-profitorganizationsandgovernmententities.

Figure26-SummaryofEmploymentImpactsSpecifictoInternetUse(FullandPartTimecombined)

Utilization(DEi)bySector

Region MedianDEi AverageDEIScore NumberofRespondents

Business 6.89 6.58 1236Non-profitorganization 6.89 6.54 201Governmententity 6.8 6.37 95

14Thetermsmeanandaveragerefertothesumofallvaluesdividedbythetotalnumberofvalues.Themedianisthecentralpointofadataset.Tofindthemedian,listalldatapointsinascendingorderandsimplypicktheentryinthemiddleofthatlist.



LookingatthedifferencesinInternetutilizationbetweengeographicareas,Figure27showsthatmoreurbanareashavehigherInternetutilizationlevelsthanlessurbanareas(asmeasuredbyDEi).UsingUSCensusBureaucategories,thedatashowsthatbusinessesinisolatedsmalltowns15haveamedianDEIscorethatis.9lessthanbusinessesinMetropolitanareas(equaltoapproximately1.5eSolutions).

Figure27–UtilizationBenchmarks(DEi)forBusinessesbyLevelofUrbanization

Utilization(DEi)byLevelofUrbanization

Region MedianDEi AverageDEIScore NumberofFirms

Metropolitan 7.2 6.8 741Micropolitan 6.6 6.6 257SmallTown 6.6 6.2 257IsolatedSmallTown 6.3 5.9 96Whengeographyisexaminedfromaregionalperspective(Figure28),theSouthwestregionstandsoutashavingthelowestlevelofutilization.Someofthedifferencesinutilizationbetweenregionsareprobablyrelatedtotheirlevelofurbanization.

Figure28–UtilizationBenchmarks(DEi)forBusinessesbyRegion

Utilization(DEi)byRegion

Region MedianDEi AverageDEIScore NumberofFirms

Central 7.3 6.9 411Western 7.1 6.8 94WhiteRiver 7.0 6.9 85Northwest 6.8 6.3 288East 6.6 6.2 112WestCentral 6.6 6.4 106Southeast 6.5 6.1 69Southwest 6.2 6.4 71Thebenchmarkingprocessalsorevealsthatsmallerbusinessesconsistentlyperformatlowerlevelsthanlargerorganizations(Figure29),whichisnotasurprisegiventheiraccesstogreaterresources.ThegapinInternetutilizationismostpronouncedamongmicrobusinesseswith4orlessemployees.TheDEiresultsforbusinesseswithover250employeesshouldbeusedwithgreatcaregiventhesmallsamplesizeforthatgroup.




Figure29–UtilizationBenchmarks(DEi)forBusinessesbySizeofBusiness

Utilization(DEi)bySize

EmploymentRange MedianDEiScore AverageDEIScore NumberofFirms

1-4employees 6.5 6.1 3705to9 7.0 6.6 15810to19 7.2 7.0 9020-49 7.8 7.3 10550-99 8.1 7.4 37100-249 7.8 7.7 31250-499 6.9 7.1 17500ormore 8.6 7.6 7

Lastly,thebenchmarkingprocessidentifiesdifferencesinInternetutilizationamongindustrysectors(bothcommercialandnon-commercialentities).AsseeninFigure30,theleadingadoptersofInternetsolutionsareInformationServices,ProfessionalandTechnical,andFinancialServicesindustrysectors.Thisisconsistentwithsimilardataobtainedinotherjurisdictionsoverthelastfewyears.ThelowestlevelofInternetutilizationisfoundwithintheRetail,HealthCare,andConstructionindustrysectors(thoughitshouldbenotedthatSNGresearchhasshowntheconstructionsectortobeintenseusersoftheinternet,thoughtheytendtouseasmallersetofapplicationsorprocesses).TheAgricultureandUtilitiesindustrysectorshadthelowestlevelsofutilization,buttheirsmallsamplesizemakesitdifficulttodrawconclusionsinArkansas.

Figure30–UtilizationBenchmarks(DEi)byIndustrySector

Utilization(DEi)bySector

MajorIndustry MedianDEiScore

Ave.DEIScore

NumberofFirms

Information 8.1 7.5 49Professional,TechnicalandScientificServices 7.8 7.1 223FinanceandInsurance 7.3 6.7 84AccommodationandFoodServices 7.0 6.4 53Otherservices(exceptpublicadministration) 6.9 6.4 108WholesaleTrade 6.8 6.7 78Manufacturing/Processing 6.7 6.6 97RealEstate 6.6 6.6 83AdministrativeandSupportServices 6.6 6.2 58TransportationandWarehousing 6.3 6.2 36RetailTrade 6.2 6.2 142HealthCareandSocialAssistance 6.1 6.1 126Construction 6.0 6.0 71Agriculture/Forestry/Fishing 5.6 4.7 15Utilities 5.4 5.9 19 1,242



3 ComparativeAnalysisThissectionprovidesacomparativeanalysisofthelevelsofInternetutilizationbybusinessesandorganizationsinArkansasascomparedtofivebenchmarkstates.ThetablesinthisdocumentincluderesultsfromanassessmentcarriedoutacrossArkansasfromNovember2014toFebruary2015.Theseresultsarecomparedtoresultsfromstatewideassessmentscarriedoutinfivestatesbetween2012andJanuary2015.Thesefivestatesarereferredtoas“benchmarkstates”andincludeoneeasternseaboardstateandfourmid-westernstates.Resultsfromthesecomparisonsneedtobeusedcautiously.Eachstatewillhaveadifferentsocio-economicprofile,whichstronglyinfluencesInternetuse.Moreover,datacollectedinArkansasismorerecentthanthatfromthebenchmarkstates.Allthingsbeingotherwiseequal,onewouldexpectresultsfromArkansastoshowhigherlevelsofInternetutilizationasSNGanalysisshowsthatInternetutilizationincreaseswithtime.ThetablesinthissectionaredesignedtocompareresultsfromArkansasandthebenchmarkstates.Thefourtableswerechosenbecausetheycontrolforandisolatethekeyfactorsofsize,location,andindustrysector,therebycomparing“applestoapples”,asmuchaspossible.Withtheprecedingdesignconsiderationsinmind,thissectioncontainsfourtableswithcomparisonsof:

1. Differentindustrysectors16frommetropolitanareas(populationsover50,000);2. Differentindustrysectorsfromnon-metropolitanareas(populationsunder50,000);3. Businessesfromfivedifferentsizeranges(numberofemployees)inmetropolitanareas;and4. Businessesfromfivedifferentsizerangesinnon-metropolitanareas.

InordertomakecomparisonsofInternetutilization,thisaddendumusestheDigitalEconomyindex(DEi)asdescribedinSection2.KeepinginmindthatutilizationlevelswouldhaveincreasedbetweenwhendatawascollectedinArkansasandtheBenchmarkStates(2012–2015),thefollowingobservationscanbemade:

• Inbothmetropolitanandnon-metropolitanareas,benchmarkstateshadsimilaroverallDEiscorestoArkansas.(Note:anumberofindustrysectorsareascontainedsamplesizestoosmallforcomparisons).

• Inmetropolitanareas,mostindustrysectorsinArkansas:o hadutilizationlevelssimilartotheirpeersininformation,finance,professional&

technical,manufacturingo performedwellbelowtheirpeersinretail,realestate,andtransport&warehousing

• Innon-metropolitanareas,Arkansasindustrysectorsthat:

16Industriesarebasedon2-digitNAICScodeleveldatafromUSCBCountyBusinessPatterns2011.FullnamesofindustriesfromNAICSdefinitionsareabbreviatedforthistable.



o showedwellincomparisontotheirpeersincludedprofessional&technicalservicesandrealestate

o performedwellbelowtheirpeersincludedfinance,wholesaletrade,health&socialservices,andmanufacturing

Figure31-Differentindustrysectorsfrommetropolitanareas

BenchmarkStates Arkansas

MajorIndustry-Metropolitan SampleSize MedianDEi MedianDEi Sample

Size Variance

Information 458 7.8 8.1 25 0.29Finance&Insurance 478 7.6 7.8 47 0.15Professional&TechnicalServices 1,467 7.4 7.7 159 0.29RealEstate 308 7.3 6.4 44 -0.87RetailTrade 693 7.2 6.1 73 -1.06Administrative&SupportServices 323 7.0 7.0 40 0Manufacturing/Processing 692 7.0 6.8 50 -0.19Otherservices(exc.publicadmin) 616 7.0 7.2 61 0.19WholesaleTrade 444 6.9 7.3 52 0.39Transportation&Warehousing 168 6.8 6.0 21 -0.78HealthCare&SocialAssistance 645 6.6 6.6 73 0Construction 443 6.3 6.5 47 0.16Allsectors 9,797 7.1 7.1 881 0

Figure32-Differentindustrysectorsfromnon-metropolitanareas

BenchmarkStates Arkansas

MajorIndustry-Non-Metropolitan SampleSize MedianDEi MedianDEi Sample

Size Variance

Finance&Insurance 395 7.28 5.34 37 -1.94Information 330 7.18 7.28 24 0.10Manufacturing/Processing 321 7.09 6.5 47 -0.59WholesaleTrade 164 7.04 5.64 26 -1.40RealEstate 190 6.6 7.77 39 1.17Professional&TechnicalServices 424 6.5 7.77 63 1.27RetailTrade 462 6.46 6.21 69 -0.25Otherservices(exc.publicadmin) 378 6.31 6.7 47 0.39HealthCare&SocialAssistance 410 6.21 5.53 53 -0.68Construction 243 5.92 5.92 24 0Allsectors 6,094 6.5 6.5 589 0Figures3and4demonstratehowcommercialbusinessesinArkansascomparetotheirpeersandcompetitorsofasimilarsizeandlocationinthebenchmarkstates.Thefollowingobservationsarehighlighted:



• Inmetropolitanareas,ArkansasorganizationshadslightlyhigherlevelsofInternetutilizationthanthebenchmarkstates,thoughtheslightdifferencecanprobablybeattributedtoArkansasdatabeingmorerecent(i.e.2015vs2013and2012data).

• Innon-metro(“rural”)areas,whileoverallutilizationlevelsweresimilar,microbusinesses(lessthan5employees)performedmarkedlybetterthantheirpeersinbenchmarkstates.

Figure33-Businessesfromfivedifferentsizerangesinmetropolitanareas

MetropolitanBusinesses BenchmarkStates Arkansas

SizeofBusinessby#ofEmployees SampleSize MedianDEi MedianDEi SampleSize

1–4 3,263 6.41 6.41 2515–9 1,633 7.09 7.38 11310–19 1,369 7.18 7.38 7520–49 1,372 7.28 8.06 8450ormore 1,741 7.77 7.86 86

9,696* 7.09 7.18 908

Figure34-Businessesfromfivedifferentsizerangesinnon-metropolitanareas

Non-MetroBusinesses BenchmarkStates ArkansasSizeofBusinessby#of

Employees SampleSize MedianDEi MedianDEi SampleSize

1-4 1,914 5.73 6.36 1905-9 940 6.41 6.21 7010-19 755 6.80 6.31 4420-49 744 6.99 7.18 4950ormore 1,060 7.38 7.86 44 6,094* 6.5 6.55 620Concludingnote:amorecompleteanalysisonInternetutilizationandconnectivityisincludedinthetworeportsnotedbelow.Thesereportsalsoincludeadescriptionofthemethodologyusedcollectdata.

• ArkansaseSolutionsBenchmarking,February2015–ThisreportprovidesbasicdataonhowbusinessesandotherorganizationsacrossArkansasutilizetheInternet.ThereporthighlightsdifferencesinInternetutilizationthatprovideallowbusinessesandorganizationstoidentifywheretheymaybelaggingtheirpeersandhowtheycanimprovetheirproductivityandprofitability.

• ArkansaseStrategiesReport,February2015–Thisreportbuildsontheprecedingreportby

identifyingkeystrategiesandrecommendationsforcommunitiesandindividualbusinessesacrossArkansas.



AppendixA- DataCollectionMethodsandResultsThecoremethodologyisfoundedonprimaryresearchviadatacollectionthroughonlineassessmentsofbusinessesandnon-commercialorganizations.TheassessmentcollectsinformationdirectlyfromInternetusersinthefollowingcategories:UserProfile–informationthatcharacterizeeachrespondentforpurposesofstatisticalanalysisbasedonusercharacteristics,e.g.organizationsizebyemployment,timeofInternetuse;orlocation.InternetUtilization–thecurrentandplannedusesoftheInternetacrossmultiplecategoriesrelevanttohowbusinessesandnon-commercialentitiesmayusetheInternet.TheprimarytypeofInternetconnectionusedisalsoidentifiedforselectedcrosstabulationswithotherresponsedata.InternetBenefits–informationonhowbusinessesandnon-commercialentitiesassessthebenefitsofusingtheInternet.Barriers-informationontheimportanceoffactorsthatpreventorinhibitbusinessesandnon-commercialentitiesfromtakingfulladvantageoftheInternet.Theassessmentsaremadeavailableforonlineaccessthroughoneoftwomeans:

• Individualbusinessesandnon-commercialorganizationswereinvitedtoparticipateviadirectemailinvitationssentfromalarge,statewidecontactlist.

• Inaddition,businessesandnon-commercialorganizationswereencouragedthroughavarietyofothercommunicationschannelstoaccessalinktotheassessment.

Theoverallerrormarginforstatisticalanalysisis+/-2.9%(witha95%ConfidenceInterval).17Thesampleerrormarginindicatestheaccuracyofthestatisticsderivedinrelationtohowtheyrepresentthelargerpopulation.Usinga95%ConfidenceInterval,astatisticshouldfallwithintheerrormarginfor95%ofanyrandomsamplesofthepopulation.Thesampleerrormarginiscalculatedbasedonthesamplesize,thepopulationsize,andtheconfidenceinterval.For95%confidenceintervalandforpopulationsmuchlargerthanthesample,thesamplingerroris0.98dividedbythesquarerootofN,whereNisthesamplesize.Forthisreportallpopulationsizesaremuchlargerthanthesamplesizes.Thefollowingisanexampleforinterpretationofstatisticsprovidedinthisreport:

• 61.9%oforganizationsusetheInternetforsellinggoodsorservicesonline.• ThesamplesizefororganizationsreportingInternetutilizationis745,providingasampleerror

marginof+/-3.6%witha95%confidenceinterval.Thismeansthatanysimilarsampleofthepopulationoforganizationsacrossthestatewillresultinastatisticforsellinggoodsorservicesonebetween58.3%and65.5%(61.9%+/-3.6%)95%ofthetime.Thestatisticwouldfalloutsidethisrange5%ofthetimeforotherrandomsamplesofthepopulation.Inpracticaltermsthesamplingerrorcanbetakenastheaccuracyofthestatisticasitappliestotheentirepopulation.

17Theerrormarginat95%ConfidenceIntervalisoftenreferredtoas+/-X%accuracy,19timesoutof20.Errormarginsincreasefordetailedanalysisthatusessubsetsoftheoverallsample.Whereapplicable,samplesizesandsampleerrormarginsareindicated–example:N=1,428[2.6%].



Smallersamplesizesresultinlargersamplingerrors.Whencomparingstatisticsbetweentwoindependentsamples,thesampleerrorsforeachsamplemustbeconsideredtodetermineifthedifferenceissignificant.Wherethehigherendofastatistic(X%+errormargin)forsampleAislessthanthelowerendofthesamestatistic(Y%–errormargin)forsampleB,thedifferencecanbeconsideredstatisticallysignificant.Wherethedifferencebetweenstatisticsiswithinthesamplingerrormarginranges,thensuchdifferencesmaynotberealorsignificantforotherrandomsamplesofthesamesizes.Forsimplicityofreportingthestatisticsarestatedasgivenwithsamplesizesandsamplingerrormarginsprovidedforinterpretation.



AppendixB- GlossaryArkansaseSolutionsBenchmarkingReport:ThisreportpresentstheresultsofassessmentsofInternetusecarriedoutfortheStateofArkansas.Theassessmentscollectedinformationfrombusinessesandnon-commercialorganizationsregardingtheavailabilityofbroadband(highspeedInternetaccess)anditsuses,benefits,driversandbarriers.Thislargelydescriptivereportresultsprovideinsightintogapsandopportunitiesforincreasingbroadbandutilizationbybusinessesandnon-commercialentities.DigitalEconomyAnalysisPlatform(DEAP):TheDEAPhasbeendevelopedasanonlineresourcethatprovidesclientswithaccesstothedatacollectionresultsandtheabilitytocustomizetheiranalysisacrossarangeofvariables,includingindustrysectororgeographicregion.TheDEAPisaccessedonlinebyauthorizedusers.UsersarepresentedwithdashboardsforbusinessesandCAIs.Eachdashboardisorganizedaroundaseriesofpagesfocusedonspecifictopics,e.g.Connectivity,Utilization,DEi,Impacts,etc.Withineachpageisasetofpredefinedreportsthatpresentachartand/ortableofprocessedresultsfromthedatasets.eSolutions:referstotheintegrationofInternettechnologieswiththeinternalcomputer-basedsystemsandapplicationswithinoramongorganizationsforavarietyofoperationalprocesses.eSolutionsencompassnotonlyproductdeliveryandpaymenttransactions(e-commerce)butalsoallprocessesthatmaybefacilitatedbycomputer-mediatedcommunicationsovertheInternet.eProcess:usesoftheInternetwhichincludeinternaloperationaluses,suchassuppliercoordination,trainingandteleworking.eCommerce:usesoftheInternetwhichincludeactivitiesrelatedtothesales,marketinganddeliveryofproductsandservices;and,ArkansasDigitalEconomyIndex:TheDigitalEconomyindex(DEi)ispartofthebenchmarkingprocessandprovidesreferencepointsagainstwhichtheperformanceofanyindividualorgroupcanbecompared.TheDEisummarizesanorganization’sutilizationof17Internetapplicationsandprocess.BasedonthenumberofapplicationscurrentlybeingusedbyabusinessesorCAI,acompositescoreiscalculatedthatsummarizeshowcomprehensivelyeachorganizationusesInternet-enabledeSolutions.TheDEicanbeusedtocompareorganizations,regions,orindustrysectors.Utilizationreferstothethirdstageinthebroadbanddevelopmentprocess.Thefirststageisprovidingacommunityororganizationwithaccess(availability)totheInternet.ThesecondstageisadoptionortheprocesswherebyapersonororganizationstartstoactuallyusetheInternet.ThethirdstageisutilizationwherebyapersonororganizationusestheirInternetconnectiontocreatevalue.ManypeopleandorganizationshaveaccessandhaveadoptedtheInternet,butarerelativelyineffectiveinhowtheyuseandderivebenefitsfromtheInternet.Thefieldofanalysislabeled“utilization”explorespatternsofInternetuseandhowthesepatternscanbeenhanced.

ArkansaseStrategyReport

March2015

Preparedfor

StrategicNetworksGroup,Inc.|www.sngroup.com|CONFIDENTIAL

Arkansase-StrategyReport2015


TableofContents

TableofFigures.....................................................................................................2

SummaryandRecommendations..........................................................................3

1. StartingPoints.................................................................................................91.1 OrganizationandObjectivesoftheReport............................................................................91.2 WhatisBroadband?............................................................................................................101.3 TheDigitalEconomyindex(DEi)..........................................................................................11

2. BroadbandUtilizationbyOrganizations.........................................................132.1.1 InternetConnectivity..........................................................................................................132.1.2 UtilizationbyIndustry........................................................................................................142.1.3 DifferencesinUtilization:GapsandOpportunities............................................................15

2.2 WhatContributestotheDifferentLevelsofUtilization?......................................................152.3 IdentifyingPriorityInternetApplications.............................................................................172.4 TheAdoptionProcess..........................................................................................................192.5 BarrierstoImprovedUtilization..........................................................................................20

3. SummaryandNextSteps...............................................................................22

Appendix1:Glossary..........................................................................................23

TableofFiguresFigure1:TopIndustrySectorsInArkansas...............................................................................................14Figure2:AverageInternetUtilizationbyIndustrySector........................................................................14Figure3:BusinessInternetUsagebyLevelofUrbanization......................................................................16Figure4:BusinessInternetUsagebyRegion.............................................................................................16Figure5:Utilization(medianDEiScore)byOrganizationalSize................................................................16Figure6:ImpactofLocationonUtilization,bySizeofOrganization.......................................................17Figure7:DifferenceinUtilizationofSpecificeSolutionsbySizeofOrganization...................................18Figure8:PlannedAdoptionofSpecificeSolutionsbySmallBusinesses.................................................19Figure9:BarrierstoAdoptionofeSolutionsamongBusinesseswithlessthan50Employees..............21



SummaryandRecommendationsManycommunitiesandcountiesacrossArkansasaredealingwitheconomicdislocationandanagingpopulation1.Mostruralareasfacetheadditionalchallengeofthesteadyshiftofpopulationfromruraltourbanareas2.Inthefaceofthesechallenges,howcancommunitiesandbusinessesmaximizetheircompetitiveness,whileimprovingtheirqualityoflife?Oneareawithsignificantpotentialisbroadband(seeSection2.2foradefinition),whichcanbeleveragedintotangiblebenefitsforcommunitiesandbothcommercialandnon-commercialorganizations.Thisreportanditscompaniondocument,ArkansaseSolutionsBenchmarking3,demonstrateshowbusinessescanbecomemoreproductive,competitive,andreachintonewmarkets.ThefirststepinbenefitingfrombroadbandisacquiringconnectivityoraccesstotheInternet.Andonceaccessisacquired,thesecondstepisadoption,wherebybusinessesandotherorganizationsbegintousetheirhigh-speedInternetaccessonaregularbasis.Thethird(andsometimesmostdifficulttoachieve)stageinbroadbanddevelopmentisutilization.ThismeansusingtheInternetinincreasinglyproductivewaysthatbringconcretebenefits,suchasjobs,newsavingsandrevenues,andimprovedqualityoflife.Thisreportfocusesonutilizationasthethirdstageofbroadbanddevelopment.

UtilizingBroadbandThisreportrevealsthattheabilitytoutilizeorleveragebroadbandvariessignificantlyacrosscommercialandnon-commercialorganizations.Notallcommunitieshavebeenabletoturnthepotentialofbroadbandintomeasurablesuccessintermsofjobs,companyattractionandretention,anincreasedtaxbaseandmoreefficientandeffectivecitizenservices.ManybusinessesandorganizationsstruggleintheireffortstousetheInternettogenerateincreasedrevenues.Turningpotentialintorealityrequiresskills,training,andbothformalandinformalsupport.Incommunitiesthatalreadyhavealarge,diverse,andmoderneconomyandworkforce,buildingbroadbandinfrastructuremaybesufficienttorealizethepotentialofbroadband.However,manyindustrysectors,communities,andbusinesseshavelimitedInternetrelatedskillsandcapacity.Benchmarkingdatashowthatformanycommunities,especiallyinnon-metropolitanareas,utilizing

1RuralProfileofArkansas2013–Social&EconomicTrendsAffectingRuralArkansas:UniversityofArkansas,DivisionofAgriculture,ResearchandExtension.2SeevariouspublicationsofDavidMcGranahanfromtheUSDA:http://www.ers.usda.gov/ers-staff-directory/david-mcgranahan.aspx.3Asummaryofthefindingsfromthe2015benchmarkingeffortcanbefoundintheArkansaseSolutionsBenchmarkingReport(February2015)whichislargelydescriptiveanddoesnotincludesomeoftheanalysisnortherecommendationsinthisreport.



broadbandoftenlags(Section2.2),evenwithstate-of-the-artconnectivity4available.Theresultisthatthesecommunitiesandbusinessesmissoutonmanyofthebenefitsofbroadband.Moreimportantly,overtime,thesecommunitiesareatriskofbecomingeconomicallylesscompetitiveandgenerallylessattractivetohouseholdsandbusinesses5.Itisautilizationgapthatcancreatebothaneconomicdivideaswellasopportunitiesforunder-utilizers.Thisreportexamineshowbusinessesandnon-commercialorganizationsinArkansasdifferintheirutilizationofbroadbandandwheretheycanlooktomakeimprovements.Thereportshowsindetailhowdifferentindustrysectorsandbusinesstypescomparetoeachother,especiallybetweenandwithinregions.Thereportprovidesinsightsanddatathatallowcommunitiesandorganizationstoassesswheretheystandandidentifywhatkindsofactionswillimprovetheirperformanceandbenefits.ThereportincludesrecommendationsforhowtheStateofArkansasanditscommunitiescanimproveutilizationofbroadbandbyitsbusinessesandnon-commercialorganizations,therebyimprovingtheireconomiesandqualityoflife.Recommendationsarebrokendownintothreeareas:

1. GapsandopportunitiesinuseoftheInternetandbroadband;2. KeybarrierstoimprovingtheuseandbenefitsoftheInternetandbroadband;and3. Thebestwaystobuildskillsandabilities.

Analysisandrecommendationsfocusprimarilyonbusinesses,althoughtherecommendationsmayalsobeappliedtonon-profitorganizationsandgovernmententities.AmoredetaileddescriptionoftheimpactsofInternetutilizationonbusinessrevenuesandemploymentcanbefoundintheArkansaseSolutionsBenchmarkingReport(February2015)whichisamorecompleteanddescriptivepresentationoftheassessment/surveyresults,whereasthisdocumentismorestrategicandprescriptive.

4ThisstatementissupportedbydatafromeSolutionsBenchmarkingeffortsundertakenbyStrategicNetworksGroups(SNG)innon-metropolitancommunitiesthathavehadbroadbandforanextendedperiodoftime.ThestatementisalsosupportedbycommentsmadebyInternetServiceProvidersduringruralbroadbandplanningworkshopsfacilitatedbySNG.5Almost40%ofbusinessesparticipatinginthebroadbandbenchmarkingeffortinArkansasstatedthatbroadbandservicewas“essential”inselectingtheirbusinesslocation,andover58%saybroadbandis“essential”forremainingintheircurrentlocation.ArkansaseSolutionsBenchmarkingReport(February2015),page20.

ThisreportusesdatacollectedbetweenNovember2014andFebruary2015acrossArkansas.Atotalof1,532organizationscontributedtothebroadbandbenchmarkingeffort.Theorganizationsconsistedof1,236businesses,95governmententitiesand201nonprofits.



RecommendationsTohelpstakeholdersandcommunitiesbetterunderstandandusethisreport,recommendationshavebeenstructuredaroundfundamentalquestionsthatleadersanddecision-makersfaceintermsofleveragingbroadbandforthesocio-economicbenefitoftheircommunitiesandconstituents.ThebasisfortheserecommendationscanbefoundinSection2ofthisReport.1.Howimportantishigh-speedInternetaccesstoArkansas,itscommunities,anditsresidents?Inthe21stcentury,broadbandaccesshasbecomeanessentialpartofacommunity’sinfrastructure,abusiness’internalandexternaloperations,andahousehold’sparticipationintheircommunitylife.Availabilityandmeaningfuluseofhigh-speedInternetaccessaredirectlytiedtoacommunity’sviability,competitiveness,andqualityoflife.However,therearesignificantdifferencesbetweencommunitiesinqualityofInternetconnectivityandtheirproductiveuseoftheInternet.CurrentInternetusagevarieswidelyandisexploredinthevarioussectionsofthisreport.Eachcountyorcommunityhasitsownuniquecharacteristics,assets,andchallenges.Consequently,eachcountyorcommunityrequiresstrategiesandinitiativesthataddressitsuniquesituation.Recommendation#1:Eachcountyorcommunityshoulddevelopitsownstrategyandinitiativesbased

onitsowncharacteristics,values,andpriorities.Prioritiesandtargetsshouldincludeinfrastructurecoverageandcapabilities,aswellashighlevelsofadoptionofthoseeSolutionsneededtoremaincompetitive.Whilefocustendstorevolvearoundattractingbetteravailabilityandspeed–spendtimetodriveutilizationofwhatisavailable.

2.Istheavailabilityofhigh-speedInternetaccessstillanissueformanyareasofArkansas?Whilethevastmajorityofbusinessesandnon-commercialorganizationsreportthattheyhaveInternetconnectivity,63.1%ofrespondentshaduploadspeedsoflessthantheFCC’snewbroadbandstandardof3mbps,while80%failedtomeettheFCCbroadbanddownloadstandardof25mbps.Moreover,muchofthephysicalInternetinfrastructureinnon-metroareasconsistsofoldertechnologythatprovidesInternetspeedsandcapacitywellbelowthatofmostArkansasmetropolitanareas.Theissue

Broadbandwasalsoconsidered“essential”forselectinglocationby

40%ofbusinesses,aswellas“essential”forremaininginlocation

by58%ofbusinesses.BenchmarkingDataforAransas,

February2015.



ofpoorornoInternetservicesalsoremainsacriticalissueinsomeruralresidentialareas.Toremaincompetitive,communitiesneedrobust6andaffordableconnectivitythatalsosupportsmobiledevices.Theuseofmobiledevicesandapplicationsfor“untetheredaccess”isexpectedtocontinuetogrowandbecomeincreasinglyintegratedintohoworganizationsusetheInternettoenableadditionalopportunitiesforincreasingworkeffectivenessandproductivity.TheavailabilityofeffectivemobileInternetaccesswillbecomeincreasinglyimportantasanadjuncttowiredaccessformanyorganizations,especiallythosewithmobileworkers.Recommendation#2:Undertakeeffortsatthelocalleveltoidentifyareaswithouthigh-speedInternet

andtodeveloplocalsolutionsthataddresstheproblem.LocalandregionalinitiativesshouldencouragemobilewirelessInternetServiceProvidersandtelecommunicationscompaniestoextend4GandLTEcapabilitiestoareascurrentlywithoutsuchservice.

3.WherearethemajorgapsorweaknessesinutilizationoftheInternetanditsapplications?KeygapsinInternetutilizationarerelatedtodegreeof“rurality,”businesssize,andindustrysector.Prioritizingindustrysectorsandothereconomicgroupsmustbedonewithinalocal,orregionalcontext.Localandcountylevelplanningwillneedtoconsideradditionalfactorsandconsiderations,suchasindustrysectorsindecline,orregionalstrategiesfordevelopingspecificsectors.Ingeneral,focusshouldbeonindustrysectorsthatmakethelargestcontributiontotheeconomyandthathavethegreatestgrowthpotential.Recommendation#3: Ratherthanundertakingbroadbutuntargetedefforts,broadbandinitiatives

shouldfocusonindustriesthathavethehighesteconomiccontributionandhighestgrowthpotentialwithineachregion.Threesectorsthatshouldbegivenpriorityarehealthandsocialservices,retail,andconstruction.

4.HowcanweusetheInternet’spotentialtomaximizejobcreation?Smalltomediumsizedorganizationswith1to49employeesshouldbeafocusforallregions.Thissegmentisimportantforthefollowingreasons:

• Itincludes95.2%ofallestablishmentsinArkansas.• Theseorganizationsexperiencetheweakestutilizationlevelscomparedtoorganizationswith

largernumbersofemployees.

6RobustconnectivitycanbedefinedasInternetconnectivitythatisreliable24hoursaday,withconsistenthighuploadanddownloadspeedsthatmeettheFCCdefinitionofbroadband.



eSolutionsisthetermusedinthisreporttorefertotheintegrationof

Internettechnologieswiththeinternalcomputer-basedsystemsandapplicationswithinoramongorganizationsforavarietyof

operationalprocesses.eSolutionsencompassnotonlyproductdelivery

andpaymenttransactions(e-commerce)butalsoallprocesses

thatmaybefacilitatedbycomputer-mediated

communicationsovertheInternet.

• Thissegmentisadynamicengineforpotentialemploymentgrowth,especiallythroughuseoftheInternet.

• IthastheleastinternalcapacityandexpertisetoadoptmoresophisticatedandproductiveInternetapplications.

Recommendation#4: Focusonthesmall-to-mediumenterprise

segment,particularly1-19employees,toincreaseInternetutilization,drivecompetitiveness,revenues,andjobcreation.Particularfocusshouldbeonbusinessesinnon-metropolitanareas.

5.Inwhatspecificareasdosmalltomediumsizedbusinessesneedhelp?TheArkansaseSolutionsBenchmarking(eSB)processidentifieswhichtypesofInternetenabledapplicationsandprocessesareeasiestorhardesttoadopt,asevidencedinthetablesinthelatterpartofSection2.Byusingdataonbarrierstoadoption,actionplanscanbedefinedattheregionalleveltoaddresstargetgroups.Recommendation#5: Initiativesaimedatincreasingutilizationamongthesmalltomediumenterprise

segmentshouldfocusonthefollowing8utilizationcategories:1.Deliveryofservicesandcontent2.Teleworking3.Sellinggoodsorservices4.Accessingcollaborativetools5.Multimedia&interactivewebcontent6.Advertisingandpromotion7.Stafftrainingandskillsdevelopment8.Customerserviceandsupport

6.Theimportanceofdevelopingleadershipforbroadbandinitiatives.Thestrategicframeworkpresentedinthisdocumentreliesoncommunitiesandregionalentitiestoprovideinitiativeinaddressingthedigitaldivideintheirarea.Innon-metropolitanareas,lackofcapacityandleadershiphasthepotentialtolimittheeffectivenessofacommunity-basedapproach.Consequently,astrategicobjectiveforadequatebroadbandserviceisthedevelopmentofmotivatedleadershipandinstitutionalcapacityforbroadbandinitiatives.



“Localchampions”areacriticalcomponentforthesuccessofbroadbandinitiatives.ItisincreasinglyrareforlocalgovernmentleaderstobeunawareoruninterestedinthedesirabilityofhavinggoodInternetaccessthroughouttheirjurisdiction.However,interestandawarenesshasfrequentlynottranslatedintoactionincommunitieswherefinancialresourcesareconstrained,technicalknowledgeismissing,andleadershipisinshortsupply.Recommendation#6:Communitiesandcountiesshouldfacilitatebroadbandleadership.Important

elementsofleadershipandcapacitydevelopmentatthecommunitylevelinclude:• Recruitmentofindividualswiththeinterest,energy,andtimeneededto

provideleadership.• Empowermentofleadersbyprovidingofficialsanctionandsupportfrom

electedofficialsandkeycommunityorganizations.• Amechanismforaccountabilityforleaderstoensuretheyreceivethesupport

neededfromparticipatingorganizations.• Educationalandlearningopportunitiesforleadershipsotheycanacquirethe

knowledgeandskillsfordevelopinggoals,actionsandtasksrelatedtothedigitaldivideintheirarea.

• Institutionalsupportfromorganizationswiththecapacityfororganizingmeetings,ensuringeffectivecommunications,andprovidinglogisticalsupport.

ChecklistforDevelopingCommunityLeadershipIndividualleadership

• Communityleadersandelectedofficialsunderstandingbenefitsandimpactsofbroadband• Atleastthreecommittedleaders.• Leadersthathavetheinfluencetoenlistcommunitysupport.• Leaderscommittedtoobtainingtheresourcesforimplementation.

Organizationalleadershipandcapacity

• Oneormoreleadorganizationshavebeenidentified.• Theleadorganization(s)arewillingtodeveloppartnershipsforimplementationandoperation.• Personnelwithinleadorganizationareidentifiedandavailabletoprovideleadershipandsupport.

SharedVision

• Leadership(individualandorganizational)hasasharedvisionofthebroadbandinitiative.Communitysupport:

• Benefitsofbroadbandareunderstoodandsupportedbylocalbusinessesandkeyorganizations.• Therehasbeencommunityengagementonthebenefitsofbroadbandandinthelevelofsupport

forabroadbandinitiative.



1. StartingPoints

1.1 OrganizationandObjectivesoftheReportThisreportisdesignedtobeacatalystforleveragingbroadbandthroughactionableintelligence.Thechartbelowoutlinesthestepsusedinthisreporttomovefromdescriptivedatatodetailedinformationontargets,priorities,andstrategies.ThegoaloftheregionalanalysisofbroadbandinArkansasisto:

1. IdentifywhichsegmentsoftheeconomyutilizetheInternettoagreaterorlesserdegree.2. Prioritizethesegmentsthatshowutilizationgapsbasedonimportancetotheeconomyand

opportunitytoaddressthegaps.3. IdentifyspecificusesoftheInternetthatshouldbeaddressedtoclosethegaps,resultingin

effectiveactionsthataretargetedwheretheywillhavethemostimpact.4. IdentifythebarrierstoimprovedInternetutilization,aswellasthebestmeanstoovercome

them.

LeveragingBroadbandforEconomicandSocialDevelopment

ComparisonofUtilizationinArkansas

UnderstandingUtilizationbyOrganizationalCharacteristics

IdentifyGapsandOpportunities;prioritizeindustrysectors

Forpriorityindustriesandbusinesses,identifyspecificgapsandopportunities

Identifybarriersandlearningpreferencesspecifictothoseindustriesandbusinesses

Arkansase-Strategy:AFoundationforBroadbandInitiatives

Increasingfocusonpriorityissuesandeffectiveactionplansforgreatestimpact



1.2 WhatisBroadband?Broadbandreferstoahigh-speed,always-onconnectiontotheInternet.Recently,theFCCdefinedbroadbandas25megabitspersecond(mbps)downloadand3mbpsupload7.TheFCCdefinedthefollowing“Internetspeedtiers.”TheprimaryfactorsthatpeopleconsiderwhendecidingwhattypeofbroadbandInternetservicetosubscribetoincludeserviceavailability,connectionspeed,technology,andprice.

FCCSpeedTierDownloadSpeedsBroadband

From To1stGeneration 200Kbps 768KbpsTier1Broadband 768Kbps 1.5MbpsTier2Broadband 1.5Mbps 3MbpsTier3Broadband 3Mbps 6MbpsTier4Broadband 6Mbps 10MbpsTier5Broadband 10Mbps 25MbpsTier6Broadband 25Mbps 100MbpsTier7Broadband Greaterthan100Mbps

FCCActivityMinimumRecommendedDownloadSpeeds(Mbps)

Activity MinimumSpeedRecommended(megabitspersecond)Email 0.5

Webbrowsing 0.5Jobsearching,navigatinggovernmentwebsites 0.5Interactivepagesandshorteducationalvideos 1

Streamingradio Lessthan0.5Phonecalls(VoIP) Lessthan0.5

Standardstreamingvideos 0.7Streamingfeaturemovies 1.5Basicvideoconferencing 1

HD-qualitystreamingmovieoruniversitylecture 4HDvideoconferenceandtele-learning 4

GameconsoleconnectingtotheInternet 1Two-wayonlinegaminginHD 4symmetricalLowerdefinitiontelemedicine 0.6-1symmetrical

HDTelemedicine(diagnosticimaging) 5-10+symmetrical




DEiMeterfromdashboardoftheDigitalEconomyAnalyticsPlatformreflectingbusinessesinKansas.

1.3 TheDigitalEconomyindex(DEi)ThisreportincludescomparisonsofInternetusebetweenregionsbyvariouscharacteristics,suchasindustrysectorandbusinesssize.Toassistintheprocessofmakingcomparisons,amechanismwasdevelopedforestablishingbenchmarks.Benchmarksareusefulincreatingreferencepointsagainstwhichtheperformanceofanyindividualorgroupcanbecompared.StrategicNetworksGrouphasdevelopedabenchmarkingprocessbasedonitsDigitalEconomyindex(DEi).TheDigitalEconomyindex(DEi)reflectsanorganization’sutilizationofarangeofInternetapplicationsandprocess:17fororganizations.Theseapplicationsandprocesses(eSolutions)arelistedbelow.Basedonthenumberofapplicationscurrentlybeingusedbyanorganization,acompositescoreiscalculatedthatsummarizeshowcomprehensivelyeachorganizationusesInternet-enabledeSolutions.TheDEicanbeusedtocompareorganizations,regions,orindustrysectors.

Anorganization’sDEiscore(from0to10)capturestheirutilizationofeSolutions,with10beingthehighestpossibleuse.DEiscoresareaveragedacrossgroupsofusersbyvariouscategories:e.g.,asector’sDEiistheaverageforallorganizationsinthatsector.TheDEiisusedasabasisforcomparisonofutilizationlevelsacrossvariousdimensions.IdentifyingdifferencesinDEiassistsinfocusingonareaswhereadeeperassessmentiswarranted.InareaswhereDEi

islowerthanaverage,indicatinglowerutilization,thereisanopportunitytoincreaseutilizationandbenefits.TheColorCodingforDEiScores:Tobettershowhowindustrysectorsperform,theDEitablesinthisreportarecolorcodedfromthehighest(green)tolowest(red)tohighlighthowDEiscorescompare.Thecolor-coding(greentored)allowsonetoquicklycomparegroupsbasedonhowutilizationvaries.DEicomparisonscanbeusefulfordifferentpurposes,forexample:

• BroadbandplannersandeconomicdevelopmentagenciescancompareDEibenchmarksbetweendifferenttypesoforganizations,e.g.,industrysectorsorsizeofbusinesses.Thiscanprovideinsightsintowhichbusinesseshavelowutilizationandcouldbenefitfrom“catchingup”totheirpeers.TheycanalsocompareDEibenchmarksonaregionalbasistoprioritizegeographicareas.

• ProvidersofbroadbandservicesandinfrastructurecanuseDEibenchmarkstogaininsightsintowherehighutilizationlevelsexistandwherelowutilizationlevelneedtobeaddressedinordertopromotethegreatestusefromtheirbroadbandinvestments.

Highest23456

Lowest

Average DEI Score Sample Size Median DEi Score

6.58 6.89 1,236



eSolutionsCategoriesforBusinessesandOrganizations

e-CommerceRelated e-ProcessRelated

Sellinggoodsorservices PurchasinggoodsorservicesDeliverservicesandcontent Suppliercommunicationandcoordination

Multimedia&interactivewebcontent ElectronicdocumenttransferCustomerserviceandsupport StafftrainingandskillsdevelopmentAdvertisingandpromotion Teleworking

Socialnetworking AccessingcollaborativetoolsWebsitefororganization Bankingandfinancial

Researchbystaff Governmenttransactions Accessgovernmentinformation



Recommendation#1:Eachcountyorcommunityshoulddevelopitsownstrategyandinitiativesbasedonitsowncharacteristics,values,andpriorities.Prioritiesandtargetsshouldincludeinfrastructurecoverageandcapabilities,aswellashighlevelsofadoptionofthoseeSolutionsneededtoremaincompetitive.

Recommendation#2:Undertakeeffortsatthelocalleveltoidentifyareaswithouthigh-speedInternetandtodeveloplocalsolutions.LocalandregionalinitiativesshouldencouragemobilewirelessInternetServiceProvidersandtelecommunicationscompaniestoextend4GandLTEcapabilitiestoareascurrentlywithoutsuchservice.

2. BroadbandUtilizationbyOrganizationsAmongbusinessesandnon-commercialorganizationsthereiswiderangeofutilizationofInternetinfrastructure.ThisreportexploreshowproductiveuseoftheInternetandesolutionsisrelatedtothesizeofacommunityorregion,andthetypesofindustrysectorsthatmakeupitseconomy.ThedatapresentedinthissectionshowhowtheeconomiccompositionofArkansasanditscommunitiesimpactsInternetuse,aswellastheabilitytobenefitfromthepotentialthattheInternetofferstocommunitiesandorganizations.TheassessmentofInternetutilizationreviewedinthisreportincludescommercialandnon-commercialorganizationsacrossallindustrysectorsandemploymentsizes.TounderstandwhycommunitiesandregionsdifferintheirInternetutilizationlevels,itisveryinstructivetoexplore:

1. Howutilizationvariesbyindustryandsector.2. Howemploymentsizeaffectsutilization.3. HowthedegreeofurbanizationwithineachregionisrelatedtoInternetutilization.4. TheInternetapplicationsandprocessesslowesttobeadopted.

Becauseeachcommunityandcountryisdistinctinimportantways,animportantstrategicdecisionistodevelopinitiativesatthelocalorregionallevel.Whilestategovernmentresourcescanplayanimportantroleandstatepoliciesandregulationsprovideacommonframework,initiativeshaveproventobemosteffectivewhendrivenbyanddesignbylocalandregionalstakeholders.

2.1.1 InternetConnectivity

Whilethisreportfocusesprimarilyonhowcommercialandnon-commercialorganizationsutilizetheInternettoderiveconcretebenefits,itisimpossibletoignoretheongoingimportanceofthequalityofthebroadbandinfrastructurethatorganizationshaveavailabletothem.AsnotedintheArkansaseSolutionsBenchmarkingReport,broadbandinfrastructureisoftendatedanddoesnotmeettherequirementsoforganizationsinthearea.CurrentlevelsofconnectivityfallwellshortoftheFCCdefinitionofbroadband.AsseeninFigure9laterinthisdocument,17.7%ofbusinessesidentifyinadequateInternetconnectivityasaveryimportantbarriertoimprovingtheirutilizationoftheInternet.



2.1.2 UtilizationbyIndustry

Beforedelvingintothedetailsofhowindustrysectorsperformandvary,itisusefultoreviewthecompositionofthestateeconomyinArkansas.ThisreportusesU.S.CensusBureau(USCB)data8onannualpayrolltogaugetheimportanceofindustrysectorsasthisrepresentsincomethatflowsintotheeconomy.Thetopfourindustrysectorsare:1)healthcareandsocialassistance,2)retailtrade,3)manufacturing,and4)accommodationandfoodservices.ThetopeightsectorslistedinFigure1represent74.2%oftotalpayrollinthestate,62.1%ofallorganizationsandbusinesses,and79.8%ofallemployment.Figure1:TopIndustrySectorsInArkansas

Rank IndustrySector Rank IndustrySector

1 HealthCare&SocialAssistance 5 Administrative&SupportServices2 RetailTrade 6 Transportation&Warehousing3 Manufacturing/Processing 7 WholesaleTrade4 Accommodation&foodservices 8 Construction

Figure2illustrateshowintensivelybusinessesineachindustrysectorutilizetheInternet.Threeindustrysectorsthathaveanotablylowerthanaverageutilizationareretail,healthandsocialservicesandconstruction.Thesearethelargest,secondlargestandeighthlargestindustrysectorsinthestate.Figure2:AverageInternetUtilizationbyIndustrySector

8Industriesarebasedon2-digitNAICScodeleveldatafromUSCBCountyBusinessPatterns2011.FullnamesofindustriesfromNAICSdefinitionsareabbreviatedforthistable.USCBCountyBusinessPatternsdatadoesnotincludePublicAdministration(government).

5.45.6

6.06.16.26.3

6.66.66.76.86.97.0

7.37.8

8.1

4 5 6 7 8 9

UllilesAgriculture/Forestry/Fishing

ConstruclonHealthCareandSocialAssistance

RetailTradeTransportalonandWarehousing

AdministralveandSupportServicesRealEstate

Manufacturing/ProcessingWholesaleTrade

Otherservices(exceptpublicadministralon)AccommodalonandFoodServices

FinanceandInsuranceProfessional,TechnicalandScienlficServices

Informalon

MedianDEiScore

N=1,242



Recommendation#3: Ratherthanundertakingbroadbutuntargetedefforts,broadbandinitiativesshouldfocusonindustriesthathavethehighesteconomiccontributionandhighestgrowthpotentialwithineachregion.Threesectorsthatshouldbegivenpriorityarethehealthandsocialservices,retail,andconstructionsectors.

2.1.3 DifferencesinUtilization:GapsandOpportunities

DifferencesinutilizationofInternetapplicationsandprocesses(referredtointhisreportaseSolutions)indicateareaswithpotentialforimprovement,givenwhatpeers(orcompetitors)aredoingwithinthesameindustrysector.AlowDEiscoresuggestsfirmswouldbenefitfromexploringwhicheSolutionsmightimproveperformance.InArkansas,someoftheindustrysectorsorgroupsexhibitlowlevelsofutilization.Addressinglowlevelsofutilizationshouldbeapriorityiffirmsaretocompeteoutsidetheirownregionalmarkets,orifthereislocalcompetitionfromoutsidefirms.Businessesandnon-commercialorganizationswithlowlevelsofutilizationwillbelesscompetitiveandproductiveiftheyareusingfewereSolutionsthanfirmsandorganizationselsewhere.However,theprocessofprioritizingbusinessorsectorsshouldalsoincludeassessingitspotentialforcreatingnewjobsandprotectingexistingjobs.Acompetitiveandproductivecompanyororganizationismorelikelytoretainexistingjobsandcreatenewjobs,especiallyinanexpandingindustry.

2.2 WhatContributestotheDifferentLevelsofUtilization?Anumberoffactorshelptoexplaindifferencesinutilizationbetweenorganizationsandbetweenregions.Locationofanorganizationinanon-metropolitanareaisonesuchfactor.Organizations(bothcommercialandnon-commercial)outsideofametropolitanareadonotbenefitfromadensenetworkofsupportsandskilledlaborpools.Consequently,asFigures4and5show,businesseslocatedoutsideofametropolitanarea9orinalessdenselypopulatedregionexperienceadistinctdisadvantage,withlowerlevelsofutilizationofeSolutions.Knowingwhichgeographyareasarelikelytohavethelowerutilizationallowsgovernmentsandindustryorganizationtotargettheirbroadbandinitiatives.

9AmetropolitanareaisdefinedbytheCensusBureauashavingacoreurbanareaofover50,000withapopulationdensitygreaterthan1,000peoplepersquaremile.AMicropolitanareahasapopulationof10,000to49,999.Asmalltownhasapopulationof2,500to9,999.Thecategoryof“isolatedsmalltown”includestheremainder.



Figure3:BusinessInternetUsagebyLevelofUrbanization

BusinessDEiScore

Metropolitan 7.2 Micropolitan 6.6 SmallTown 6.6

IsolatedSmallTown 6.3

Figure4:BusinessInternetUsagebyRegion

Region MedianDEi NumberofFirms

Central 7.3 411Western 7.1 94

WhiteRiver 7.0 85Northwest 6.8 288

East 6.6 112WestCentral 6.6 106Southeast 6.5 69Southwest 6.2 71

Figure5highlightsasecondimportantfactor,organizationalsize.Internetutilizationtendstoincreasewiththesizeofanorganization.Thistendencyismostpronouncedattheoneendofthespectrum–verysmallfirmswithlessthan20employees.Thispatternoflowerutilizationbysmallerfirmsappearsrelatedtothegreaterresourcesavailabletolargerentities.TheimportanceoforganizationalsizeasafactorineSolutionsutilizationishighlightedbythefactthatorganizationswith1to19employeesmakeup85percentoforganizationsinArkansas.Lowerutilizationamongthismajorsegmentprovidesastrongargumentformakingthissegmentafocusforpromotingbroadbandutilization.Usingdatafromthe2011U.S.Census,thefollowingtabledemonstratestheimportanceofsmallerorganizationstotheregionalandstateeconomies.

Figure5:Utilization(medianDEiScore)byOrganizationalSize

Numberofemployees 1to19 20to49 50to99 100+

MedianDeiScore 6.6 7.86 8.06 7.67

%ofallOrganizationsinArkansas(Census) 85% 9.4% 2.8% 2.5% Thesmalltomediumenterprise(SME)segmentisasignificantcomponentofstatewideandregionaleconomiesandtendstobeaprimarysourceofnewjobgrowth.Thissegmenthasthesignificantopportunitytoincreaseutilizationlevelsforproductivityandcompetitiveness.Ingeneral,largerbusinesseshavehadaccesstoinformationandcommunicationstechnology(ICT)formuchlonger



Recommendation#4: Focusonthesmall-mediumenterprisesegment,especially1-19employees,toincreaseInternetutilization,drivecompetitiveness,revenues,andjobcreation.Particularfocusshouldbeonbusinessesinnon-metropolitanareas.

periodsandhavetheinternalresourcestotakeadvantageofthesetechnologies,resultinginhigherutilization.Assuch,largerorganizationsalreadyhavehighutilizationlevelsandarelesslikelytobeinfluencedbyexternalbroadbandadoptionandutilizationinitiatives.Takingthetwofactorsofbusinesssizeandgeographiclocation,itbecomesevidentthatsmallerbusinessesinnon-metropolitanareasareatadistinctdisadvantageintheireffortstousetheInternetaspartoftheirbusiness.Figure7graphicallydemonstratestheimpactofsizeandlocationonInternetutilization.Figure6:ImpactofLocationonUtilization,bySizeofOrganization

2.3 IdentifyingPriorityInternetApplicationsSomeprocessesandapplicationsareeasiertoadoptthanothers,suchaselectronicdocumenttransfer,staffresearch,andaccessinggovernmentinformation.Adoptionlevelsoftheseutilizationsarehighandthereisnotmuchdifferencebetweensophisticatedandlesssophisticatedusers.

6.46 6.31

6.997.28

7.91

7.23

6.60

7.33 7.28

7.868.16

7.81

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

1-4employees 5-9 10-19 20-49 50-99 100ormore

Med

ianDE

iScore

UblizabonLevelsby#ofEmployeesandUrbanizabon

Non-Metro MetropolitanN=1,236



Whilesometypesofutilizationmaybelessappropriateforsmallbusinesses,itisinstructivetoobservewheredifferencesexistinutilizationbetweensmallandlargebusinesses.Thehigherutilizationlevelsoflargerbusinessescanprovidemotivationandpotentialtargetsforsmallerbusinessestoachieve.Figure7showsutilizationlevelsofdifferenteSolutionsfordifferentsizesofbusinesses:1-19employees,20to99employees,and100ormoreemployees.In14outofthe17eSolutionssmallerbusinessesgenerallyhavelowerutilizationofeSolutionsthanlargerbusinesses(theexceptionsarebankingandfinancialtransactions,socialnetworking,andpurchasinggoodsandservices).Figure7:DifferenceinUtilizationofSpecificeSolutionsbySizeofOrganization

CurrentlyUsedApplicationsandProcesses 0to19 20to99 100+ LevelofVariance*

Electronicdocumenttransfer 84.8% 93.0% 92.3% 7.5%Researchbystaff 83.8% 90.8% 92.3% 8.5%

Suppliercoordination 77.7% 87.5% 90.4% 12.7%Accessingcollaborativetools 60.1% 73.4% 86.5% 26.4%Websitefororganization 78.7% 90.6% 96.2% 17.5%

Accessgovernmentinformation 74.2% 78.9% 86.5% 12.3%Stafftrainingandskills 61.8% 78.1% 82.7% 20.9%

Purchasinggoodsorservices 79.1% 82.8% 78.8% -0.3%Customerserviceandsupport 62.8% 71.9% 78.8% 16.0%

Socialnetworking 71.7% 74.2% 69.2% -2.5%Teleworking 42.5% 60.9% 73.1% 30.6%

Governmenttransactions 61.8% 70.3% 67.3% 5.5%Bankingandfinancialtransactions 77.1% 77.3% 65.4% -11.7%

Multimedia&interactivewebcontent 42.7% 53.5% 59.6% 16.9%Advertisingandpromotion 62.2% 67.2% 59.6% -2.6%Sellinggoodsorservices 57.3% 60.2% 61.5% 4.2%

Deliverservicesandcontent 38.2% 52.3% 46.2% 8.0%*Varianceiscalculatedasthedifferencebetweensmallfirms(0-19employees)comparedtofirmswith100+

employees.Itisveryinstructivetonotewherethedifferencesaregreatest,fortheserepresentareaswheresmallbusinessescouldpotentiallymakethegreatestgains.Asthetableaboveshows,areasofnoteinclude:teleworking;accessingcollaborativetools;multimedia&interactivewebcontent;stafftraining;websitefororganization;customerserviceandsupport;andsuppliercoordination.Whileonaverage,smallerbusinessesusetheInternetlessthanlargerones,manysmallerbusinessesarealreadyplanningtoaddressthesegaps,asseeninTable8,whichshowswhicheSolutionssmallbusinesseswereplanningtoadoptwithinthenext12months.ThereisastrongcorrelationbetweenwheresmallbusinessesarelaggingandareaswheretheyplantoadopteSolutions.



Figure8:PlannedAdoptionofSpecificeSolutionsbySmallBusinesses

PlannedUseofeSolutionsbySmallBusinesseswith0to19Employees

UtilizationCategory %ofBusinessesAdvertisingandpromotion 16.2%Multimedia&interactivewebcontent 15.1%Deliverservicesandcontent 13.2%Customerserviceandsupport 12.2%Accessingcollaborativetools 11.4%Stafftrainingandskillsdevelopment 9.9%Socialnetworking 9.4%Websitefororganization 9.4%Teleworking 8.9%Sellinggoodsorservices 8.2%Accessgovernmentinformation 6.4%Purchasinggoodsorservices 6.2%Governmenttransactions 5.7%Suppliercommunicationandcoordination 5.2%Researchbystaff 5.0%Electronicdocumenttransfer 5.0%Bankingandfinancial 4.9%Bycombiningdatafromthetwoprevioustables,anassessmentcanbemadeofwhichopportunitiesofferthegreatestpotentialforsmallbusinesses.Itisalsopossibletoidentifywhichoftheseopportunitiesarealreadyevidenttosmallerbusinessesandwhichopportunitiesremainunderappreciated.Areaswithhighdifferenceinutilizationandlowplanneduseindicateareaswheregreaterawarenessraisingmaybeneeded.Teleworkingandsuppliercoordinationfallintothiscategory.

2.4 TheAdoptionProcessManytypesofutilizationaremorecomplexandsophisticated,makingtheprocessofadoptionslowerbyorganizationsingeneralandbysmallerorganizationsinparticular.ThechartonthenextpageshowstheratethateachtypeofutilizationisadoptedbyorganizationsrelativetoDEiscores.Forexample,70to90percentof“average”smallbusinessesarecurrentlyusingthe“quicktoadopt”applicationsandprocessesnotedbelow.Incontrast,only35to62percentof“average”userswillbecurrentlyusingthe“slowtoadopt”eSolutions.



QuicktoadopteSolutions SlowtoadopteSolutions

Accessgovernmentinformation DeliverservicesorcontentElectronicdocumenttransfer Multimedia&interactivewebcontentPurchasingGoodsandServices TeleworkingResearchbystaff SellinggoodsorservicesWebsite AdvertiseandpromoteonlineSocialnetworking Accesscollaborativetools

2.5 BarrierstoImprovedUtilizationTheprecedinganalysishasidentifiedwhichsectorsinwhichgeographicareashavethegreatestgapsinInternetutilization.Aswell,additionalinformationhasbeenprovidedonfactorsthatcanaidinprioritizingindustrysectors,suchasthesizeoforganization.Evidencehasalsobeenprovidedonwhichspecificareas(applicationsandprocesses)theseindustrysectorsandprioritygroupsarelagging.BeforeaplancanbedesignedtosupporttheseprioritygroupsitisimportanttounderstandthebarrierstoadoptionofeSolutions.Figure9thatfollowsidentifiestheimportanceofarangeoffactorsthatinhibittheadoptionanduseofeSolutionsbybusinesseswithlessthan50employees–aprioritytargetgroup.Althoughbroadbandnetworkinvestmentsarejustifiedforspeedandmarketedthatway,slowInternetisa‘veryimportant’barriertoonly17.9%ofbusinesses.Thetop5barriersthatareveryimportantfactorsformorethan40percentoforganizationsare:

1. Securityconcerns2. Privacyconcerns3. Lossofpersonalcontactwithclients4. ProductsnotsuitedtotheInternet5. Lackofinternalexpertiseandknowledge

Recommendation#5:Initiativesaimedatincreasingutilizationamongthesmalltomediumenterprisesegmentshouldfocusonthefollowing8utilizationcategories:

1.Deliveryofservicesandcontent2.Multimedia&interactivewebcontent3.Teleworking4.Accessingcollaborativetools5.Advertisingandpromotion6.Stafftrainingandskillsdevelopment7.Customerserviceandsupport8.Sellinggoodsorservices



Figure9:BarrierstoAdoptionofeSolutionsamongBusinesseswithlessthan50Employees

6.0%

8.4%

10.4%

17.6%

17.9%

18.2%

21.7%

25.9%

29.4%

40.8%

16.4%

17.8%

21.0%

23.7%

18.2%

28.2%

19.1%

27.0%

21.3%

25.3%

0% 10% 20% 30% 40% 50% 60% 70%

Suppliersnotready

Internalorganizalonresistance

Uncertainaboutbenefits

Highcostofdevelopment/maintenance

AvailableInternetistooslow

Lackofinternalexperlseandknowledge

ProductsnotsuitedtoInternetsales

Lossofpersonalcontactwithclients

Privacyconcerns

Securityconcerns




3. SummaryandNextStepsThisreportanalyzeshoworganizationsinArkansasutilizebroadband.Itconsidersdifferentindustrysectors,organizationalsizeandregionaldifferences.Italsoconsiderswhatkindsofactionswillimprovetheirperformanceandhowtheycouldbenefitfurtherfrombroadband.Theobjectiveofbenchmarkingutilizationofesolutions(Internet-enabledapplications)istoprovide“actionableintelligence”togovernments,stakeholders,andindividualsongaps,barriersandopportunitiesforgrowth.TakingactionontherecommendationsincludedinthisreportwillenableArkansastomovetowardstherealizationoffurtherbenefitsfrombroadband.However,thestrategicframeworkpresentedinthisdocumentreliesoncommunitiesandregionalentitiestoprovideinitiativeinaddressingthedigitaldivideintheirarea.Innon-metropolitanareas,lackofcapacityandleadershiphasthepotentialtolimittheeffectivenessofacommunity-basedapproach.Consequently,astrategicobjectiveforadequatebroadbandserviceisthedevelopmentofmotivatedleadershipandinstitutionalcapacityforbroadbandinitiatives.10.“Localchampions”areacriticalcomponentforthesuccessofbroadbandinitiatives.ItisincreasinglyrareforlocalgovernmentleaderstobeunawareoruninterestedinthedesirabilityofhavinggoodInternetaccessthroughouttheirjurisdiction.However,interestandawarenesshasfrequentlynottranslatedintoactionincommunitieswherefinancialresourcesareconstrained,technicalknowledgeismissing,andleadershipisinshortsupply

10Thecommentsinthissectionregardingpossiblelackofcapacityinnon-metropolitanareasandtheimportanceofleadershiparebasedonSNG’sexperienceinbroadbandplanninginruralareasacrosstheUSandCanada.Recognitionoftheseissuescanalsobefoundinbroadbandplanningreportsfromanumberofstates,includingVirginia,KentuckyandNorthCarolinawhereSNGhasworked.Aparticularlywell-articulatedstatementcomesfromastateleaderinVirginia:“OnecommoncharacteristicofallVirginia’scurrentbroadbandprojectsisthepresenceofstrong,dedicatedleadership(individualand/orcommittee)whounderstandthebroadbandimperativeandarewillingtocommittime,energyandscarceresourcestoinsurethattheircommunityisnotleftbehind.”AsquotedinCommunityBroadbandPlanningStrategies,developedfortheCenterforInnovativeTechnologybyStrategicNetworksGroup,January2013,page5.

Recommendation#6:communitiesandcountiesshouldfacilitatebroadbandleadership.Importantelementsofleadershipandcapacitydevelopmentatthecommunitylevelinclude:

• Recruitmentofindividualswiththeinterest,energy,andtimeneededtoprovideleadership.• Empowermentofleadersbyprovidingofficialsanctionandsupportfromelectedofficialsand

keycommunityorganizations.• Amechanismforaccountabilityforleadersbacktoorganizationsprovidingsupportand

sanction.• Educationalandlearningopportunitiesforleadershipsotheycanacquiretheknowledgeand

skillsfordevelopinggoals,actionsandtasksrelatedtothedigitaldivideintheirarea.• Institutionalsupportfromorganizationswiththecapacityfororganizingmeetings,ensuring

effectivecommunications,andprovidinglogisticalsupport.

Appendix1:Glossarye-StrategyReport:ThisreportexamineshoworganizationsinArkansasdifferintheirutilizationofbroadbandandwheretheycanlooktomakeimprovements.Thereportshowsindetailhowdifferentindustrysectorsandorganizationaltypescomparetoeachother,especiallybetweenandwithinregions.Thereportprovidesinsightsandhardevidencethatallowsregionsandorganizationstoassesswheretheystand.ThereportprovidesrecommendationsonstrategiesforimprovingtheirInternetperformanceandbenefits.eSolutionsBenchmarkingTechnicalReport:Thisreportpresentstheresultsofsurvey-basedresearchcarriedoutfortheStateofArkansas.Thesurveyscollectedinformationfrombusinessesandorganizationsontheavailabilityofbroadband(highspeedInternetaccess)anditsuses,benefits,driversandbarriers.Thislargelydescriptivereportresultsprovideinsightintogapsandopportunitiesforincreasingbroadbandutilizationbyorganizations.Thepolicy,planningandprogramimplicationsforArkansasanditsregionsaredealtwithinaseparatereport:theArkansase-StrategyReport.DigitalEconomyAnalysisPlatform(DEAP):TheDEAPhasbeendevelopedasanonlineresourcethatprovidesclientswithaccesstothedatacollectionresultsandtheabilitytocustomizetheiranalysisacrossarangeofvariables,includingindustrysectororgeographicregion.TheDEAPisaccessedonlinebyauthorizedusers.Usersarepresentedwithdashboards.Eachdashboardisorganizedaroundaseriesofpagesfocusedonspecifictopics,e.g.Connectivity,Utilization,DEi,Impacts,etc.Withineachpageisasetofpredefinedreportsthatpresentachartand/ortableofprocessedresultsfromthedatasets.eStrategies:e-StrategiesarehighlevelplansforachievingoneormoregoalsrelatedtoimprovedaccesstoandutilizationofbroadbandInternet.eStrategiesdefineacourseofactionthatismostlikelytosuccessfuladdressopportunities,challengesorbarriersrelated.Strategiesareusuallyseenasdistinctfromdetailedactionplanswhichdealwithspecificissuesof“who,what,whenandhow”.eSolutions:referstotheintegrationofInternettechnologieswiththeinternalcomputer-basedsystemsandapplicationswithinoramongorganizationsforavarietyofoperationalprocesses.eSolutionsencompassnotonlyproductdeliveryandpaymenttransactions(e-commerce)butalsoallprocessesthatmaybefacilitatedbycomputer-mediatedcommunicationsovertheInternet.e-Process:usesoftheInternetwhichincludeinternaloperationaluses,suchassuppliercoordination,trainingandteleworking.e-Commerce:usesoftheInternetwhichincludeactivitiesrelatedtothesales,marketinganddeliveryofproductsandservices;and,ArkansasDigitalEconomyIndex(DEi):TheDigitalEconomyindex(DEi)ispartofthebenchmarkingprocessandprovidesreferencepointsagainstwhichtheperformanceofanyindividualorgroupcanbecompared.TheDEisummarizesanorganization’sutilizationofarangeof17Internetapplicationsandprocess.Basedonthenumberofapplicationscurrentlybeingusedbyanorganization,acompositescoreiscalculatedthatsummarizeshowcomprehensivelyeachorganizationusesInternet-enabledeSolutions.TheDEicanbeusedtocompareorganizations,regions,orindustrysectors.Utilizationreferstothethirdstageinthebroadbanddevelopmentprocess.Thefirststageisprovidingacommunity,householdororganizationwithaccess(availability)totheInternet.Thesecondstageisadoption



ortheprocesswherebyapersonororganizationstartstoactuallyusetheInternet.ThethirdstageisutilizationwherebyapersonororganizationusestheirInternetconnectiontocreatevalue.ManypeopleandorganizationshaveaccessandhaveadoptedtheInternet,butarerelativelyineffectiveinhowtheyuseandderivebenefitsfromtheInternet.Thefieldofanalysislabeled“utilization”explorespatternsofInternetuseandhowthesepatternscanbeenhanced.

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