10/25/2002

Why Broadband Access
May Drive Development

Broadband Internet access is rapidly being perceived by governments and business as an essential utility which will soon be as important as water or electricity to economic development. Cities or regions that embrace this concept and make this new utility widely available are variously described as being "intelligent, smart or wired."

One organization which monitors global developments in this evolving arena is the New York-based World Teleport Association (WTA). A recent conference held in Pine Mountain, Ga., by WTA's Intelligent Communities Forum (ICF) division offered a cut-away view of development issues in this ever-important field by convening some of its recognized authorities. ICF, which focuses on use of broadband technology for economic development, capped the proceedings by naming its Top Seven Intelligent Communities for 2002.

The U.S. has fallen behind some countries in broadband development, says Robert Bell, WTA executive director. In fact, Mr. Bell believes Canada is "18 to 24 months" ahead of the U.S. in broadband development.

He defines intelligent communities as cities or multi-city regions that:

View bandwidth as the next essential utility.

Make conscious public-policy decisions to seize control of their broadband destiny.

Work to create or foster creation of broadband infrastructure.

Work to position all of their businesses and citizens to prosper from and have equitable access to the digital economy.

Mr. Bell says critical success factors for a city or region to achieve "intelligent" status include: strong leadership from the private, public or academic sectors; vision; and community colleges for work-force development.

One stumbling block to the broadband movement is a lack of venture capital, according to Lee McKnight, associate professor of international telecommunications at The Fletcher School at Tufts University. Mr. McKnight, author of Creative Destruction: Business Survival Strategies in the Global Internet Economy, was among the conference speakers.

"Either you do it yourself or through some time of public-private partnership," Mr. McKnight says. "Communities can't count on venture capital alone for these kinds of investments."

Mr. McKnight says firms and communities must exploit the "creative destruction" theory, a term coined by noted Austrian economist Joseph Schumpeter in the 1930s that refers to the way new technologies and industries arise and disrupt or even destroy pre-existing industries and obsolesce older technologies.

"The implication is both that broadband networks can and will obsolesce older and less capable network technologies, but also that as a new infrastructure, many other industries, firms and technologies may be threatened by new industries, firms and technologies which rely on that new infrastructure. Many retailers, small and medium enterprises, as well as local governments will need to rethink and reinvent themselves or risk being swept away, as many have been before them, by technological change."

K. Dane Snowden, chief of the Federal Communication Commission's Consumer & Governmental Affairs Bureau, says broadband deployment is the most important issue before the FCC today and it must be made available to everyone.

"People who have used dial-up Internet access are starting to want more and faster access as they use the Internet more and more," Mr. Snowden says. "They want broadband. The 'see-want-have' cycle is common to the deployment and adoption of all new technologies. When people have advanced services and see what they can do, they want more. This drives development and round and round we go, spiraling upward to new and better things.

"One thing is clear," he continues. "There are plenty of broadband applications waiting to happen, not just in the area of entertainment or business. A great example is telemedicine, which is bringing many of the benefits of health care in urban areas out to less populated areas with few or no health-care services available. With broadband, doctors today can transmit X-rays and other diagnostic material by the Internet to major medical centers for review and consultation, and discuss their findings by phone or e-mail."

Mr. Bell says his organization tracks broadband developments throughout the year in assembling documentation for selecting the top communities. He admits the process is subjective, but says ICF looks for communities that are exemplars in five areas:

Significant deployment of broadband communications to businesses, government facilities and residences.

Effective education aimed a building a work force of "knowledge workers."

Government and private-sector programs to overcome the "digital divide."

Local or regional access to venture capital to fund development of new businesses.

Effective economic-development marketing.

Following is a look at this year's top seven intelligent communities and reasons cited by ICF for their inclusion. The list includes three repeaters from 2001: Singapore, LaGrange, Ga., and Sunderland, U.K.

Bangalore, India

A city of six million in the southern Indian State of Karnartaka, Bangalore is a major center of technology development. About 80,000 people work in its high-tech industries. Many are graduates of Bangalore's more than 100 research universities or technical colleges.

International Business Machines Corp., Intel Corp., Microsoft Corp., Oracle Corp. and Sun Microsystems Inc. are among hundreds of international companies that have established software-development centers or contracted with local firms to take advantage of the city's ample supply of highly trained English-speaking computer graduates.

Since the mid-1990s, Bangalore has seen rapid development of an affluent community of professionals. ICF attributes Bangalore's advancement to effective economic-development marketing of a government agency, Software Technology Parks of India; efforts by Indian software engineers and entrepreneurs in the U.S. who realize their native country's potential; and Bangalore's commitment to education and training.

Calgary, Alberta, Canada

A major center of Canada's oil industry, Calgary has a large pool of telecommunications and wireless manufacturing, too. The city boasts more than 1,300 software companies with expertise in geomatic and image processing. Calgary has more miles of optic fiber than any city in Canada and broadband Internet is accessible to 99% of residences.

Calgary Technologies, a public-private corporation, is leading the effort to build a digital economy in the city. Its projects include Calgary Infoport, which has helped build a local information and communications industry, and the Calgary Innovation Center, which acts as a catalyst between life-science innovators and the venture-capital community.

In 2001, Calgary Technologies launched the ConnectCalgary project, which helps provide online services for "at-risk" individuals. This program demonstrates Calgary's leadership in closing the Digital Divide, ICF says.

Florida High-Tech Corridor Council

This region encompasses 21 counties stretching across the center of the state from Cape Canaveral to Tampa Bay. In 1996, a group of Florida educators, business owners and economic developers teamed to create the Council in an effort to make the state a viable place for high-tech industries. This region now contains 6,800 high-tech companies employing more than 158,000 workers in optics and photonics, medical technology, aviation and aerospace and microelectronics.

The corridor is among the best-served regions in the U.S. in terms of broadband. The local carrier, Verizon Communications Inc., has invested more than $1.7 billion in the last five years. ICF cites the corridor as an "outstanding" example of a public-private partnership that aims to solve work force development problems for the broadband economy.

LaGrange, Ga.

A city of 26,000, 60 miles southwest of Atlanta, LaGrange has pioneered in developing public-private ventures for broadband-based economic development. Through partnerships with companies including ITC Holding and Charter Communications Inc., the city has funded and constructed four broadband networks serving businesses, institutions and residents.

Using this infrastructure, the city introduced in 2000 a free high-speed Internet access service for all residents with free installation and training delivered through the cable TV network.

Seoul, South Korea

Many consider South Korea to be the world's leader in broadband deployment. The number of subscribers grew 59% from 2000 to 2001. There were an estimated 23 million broadband users in Korea by the end of 2001, 50% of the online population. In 1999, the Ministry of Information and Communications made broadband infrastructure a high priority. The government began to invest in networks for its agencies, schools and universities and offered $400 million in loans to carriers for infrastructure construction.

This led first Korea Telecom and then its competitors to invest an estimated $10 billion in network development. Today, there are more than 70 broadband service providers, led by Korea Telecom, Hanaro Telecom and Korea Thrunet.

Singapore

This city-state launched an ambitious broadband initiative, Singapore One, in 1998. The aim was to provide every citizen and business with a high-speed Internet connection and to foster development of an online economy. An annual survey of Internet activities reveals that Singapore's online procurement activity by business alone grew from $3 billion in 1998 to $10 billion in 2000.

In April 2002, Singapore's government announced that broadband was available to 98% of homes and that one in three was a subscriber.

Sunderland, United Kingdom

In 1991, this depressed former shipbuilding and mining city in the north of England launched a multi-pronged initiative to create a knowledge-based economy. The city persuaded a real-estate developer to build the first building of what is now Doxford International, an office park that is home to the European headquarters of Nike Inc. The city used funding from the European Community and the national government to rebuild its waterfront and create a new home for Sunderland University.

The city created a telematics strategy to ensure that citizens benefited from the New Economy. The strategy included training programs in digital-age skills for the unemployed, public-access Internet terminals and a government-funded high-speed network.

ICF says Sunderland stands out for its transformation, which includes broadband deployment, work-force development, outreach across the digital divide and effective economic-development marketing.

-- Site Selection Magazine is the official publication of the Atlanta-based Industrial Asset Management Council.