Economic development

Broadband and Power is the new Water and Sewer

Submitted by acohill on Thu, 11/08/2007 - 08:09

I was in another meeting with economic developers, and there was a growing recognition that broadband and power are the new water and sewer. In the Manufacturing Economy, it was water and sewer capacity that often made the difference when trying to attract manufacturing plants to a region.

Today, it is redundant broadband cable routes, multiple broadband service providers, redundant electric service, and reliable backup electric power that is driving relocation decisions. Medium and large companies are decentralizing their back office and server farm operations, moving them into more rural areas with good quality of life and a lower cost of living. But they are looking for business parks with electric power coming from two different substations, so one electric line could go down and there would still be power available. A single medium-sized server farm building may require 30 megawatts of power, and needs a substantial backup diesel or natural gas generator.

Companies also want broadband access not just from two or three different firms but also two or even three different cable routes. And they want all these facilities in place--they can't wait twelve to eighteen months while they are built. Relocation decisions are often made in as little as two to three months.

Can your economic developers answer all these questions? Does your region have an economic development strategy to address the broadband and power needs of Knowledge Economy businesses?

Location, location, connectivity

Submitted by acohill on Tue, 11/06/2007 - 09:23

I spent a good part of the day with a group of economic developers in a major northeastern state. We had some businesspeople in the meeting as well, and listened as two business owners described their frustration with the lack of connectivity outside of major metropolitan areas. In one case, the business owner had moved his staff and business headquarters from the New York metro area to a small city with a lower cost of living and great recreational opportunities near by (relocation based on quality of life issues, not water and sewer availability). The other business was moving many of its operations centers into rural areas for much the same reason.

But both had broadband horror stories. One business, located in a downtown area, said they needed a fiber connection to service provider facilities a block away, but thought that the city permitting process might take as much as a year. The other business, which had moved from the New York area, had to leave their data servers there because they could not get redundant data connections to an appropriate facility in the more rural small city.

Both stories illustrate the shift in economic development. The old real estate truism about the three most important issues for a business ("Location, location, location") has changed to "Location, location, connectivity." There is a growing trend among medium and large businesses, after 9/11 and Katrina, to decentralize operations and to have multiple data centers to ensure that the business can keep running after a local emergency. Communities that have the right connectivity options and good quality of life will have lots of opportunities.

Rural Telecon: "Industrial" development is dead

Submitted by acohill on Tue, 10/16/2007 - 10:25

Morning keynote speaker Rex Nelson, who is the alternate Federal Co-chair of the Delta Regional Authority, delivered a lively, tough love talk this morning at the 10th Annual Rural Telecommunications Congress. Nelson said that too many rural communities have economic development programs that are "stuck in the fifties and sixties," with strategies that amount to little more than trying to sell "pastures....with water and sewer."

Nelson calls for programs similar to the ones undertaken in the first half of the twentieth century, when state and Federal officials invested heavily in essential infrastructure like roads and levees. Nelson drew heavily on the history of the Mississippi River region and the profound effect that levees had on taming the river, controlling flooding, and thereby enabling more stable local economies all up and down the river.

Today, Nelson said that telecom is an essential infrastructure for rural region that is the only hope of holding back "...a flood of poverty, poor health, and despair."

Marketing a community

Submitted by acohill on Tue, 10/02/2007 - 08:19

The Northwest region of Pennsylvania has started a great blog on broadband. And some folks in Roanoke, Virginia have started a terrific blog on news and issues of interest to business people in the area.

Efforts like these move a community up in the rankings of search engines, help promote and support local economic development initiatives, and project a "modern" image to the rest of the world, where there are always businesses and entrepreneurs looking for a great place to relocate.

How to start a business

Submitted by acohill on Mon, 09/17/2007 - 13:20

In a great example of collaboration, a wide range of economic development groups and two local governments are sponsoring a workshop on starting a business or expanding an existing business. Part of a series of entrepreneur workshops being held around southwest Virginia, the October 5th workshop includes advice and materials from local, state, and national resources, a panel discussion led by successful entrepreneurs, and personalized break out sessions.

It is great to see that some regions are beginning to realize the economic development potential of small and start up businesses (where 90% of new jobs come from).

Quality of life continues to influence relocation

Submitted by acohill on Tue, 09/11/2007 - 07:07

This article from the New York Times (registration required, link may disappear) is an excellent discussion of how quality of life is, more and more, driving relocation decisions not just of businesses but of workers, especially younger workers.

Everywhere I go, smaller towns and communities are worried that young people are not staying and living in their communities, but at the same time, many of these communities are not making the kinds of investments that are going to attract young people. This article identifies some of the things workers looking for a better quality of life want.

Hat to Stuart Mease.

Broadband does not replace the basics

Submitted by acohill on Thu, 07/05/2007 - 06:23

Affordable, high capacity broadband does not replace the basics. Roanoke has a small regional airport with the second highest landing fees in the country; lousy, overpriced coffee; poor food service; and extremely high ticket prices. That's not a formula for attracting businesses to the Roanoke and New River Valley regions.

With the focus on broadband, it may be easy to forget that the in the global Knowledge Economy, we still have to travel. When HD quality business videoconference systems like HP's Halo Studio are commonplace, we may see a slight reduction in travel, but what is more likely is that HD conference systems will replace telephone conference calls, not face to face meetings.

Skeptics of the importance of broadband should take a look at the off the shelf HD conference systems already being sold. It takes anywhere from twenty to forty megabits of bandwidth just to have a single two way meeting, and you have to add another ten to twenty megabits of bandwidth for each additional location. Try that with DSL, cable modem, or wireless (Hint: it won't work).

Communities and regions that can show they understand the full range of business needs--affordable aire travel options, affordable broadband, affordable, high quality office space, and the right mix of business services have a winning combination.

Electricity and economic development

Submitted by acohill on Wed, 07/04/2007 - 07:33

If I was an economic developer in any state but California, I would be preparing a new marketing strategy that includes touting my region's reliable and affordable electric power. And I would be talking to my local electric utility about making sure every business park in my region has redundant electric feeds from two different substations.

If you missed it, California is having electric supply woes again in the midst of a heat wave. This is bad for California businesses that use lots of electricity (many high tech firms, among others), but good for other regions of the country that have done a better job of providing for electric needs.

Not sure what the electric situation is in your region? It's time to put that on the short list of essential infrastructure, along with broadband. Expect relocating companies to be asking lots of questions about both.

Does your state have the slowest broadband?

Submitted by acohill on Tue, 06/26/2007 - 06:59

It is every economic developer's nightmare. On the front page of today's USA Today (no link online), there is a list of the five states with the slowest broadband in the country. Who wants to be on that list?

In Australia, slow broadband has been recognized as a major economic development issue. Officials there have said that slow broadband hinders the ability of commercial, manufacturing, and agricultural businesses to be fully integrated into international supply chains. In other words, if your businesses don't have the right kind of affordable broadband services available to them, they are going to lose business.

Long commutes are good news for rural towns

Submitted by acohill on Mon, 04/09/2007 - 09:09

The Wall Street Journal (page B5) reports today that the number of workers who have to commute 90 minutes or more each way to work has doubled since 1990. That adds up to three hours or more in the car every day. It takes a toll on job satisfaction, personal life, and family life.

Some of those commuters are looking for a place to work where commutes are not as long and not as stressful. When we lived in Craig County, I had a thirty minute "commute" back and forth to work, but the drive was so easy (no traffic) and so beautiful (down a highly rated Virginia Byway) that I looked forward to it at the end of the day as a way of unwinding on the way home.

For rural communities that have a plan, these millions of commuters are potential residents that can stop the flow of people moving away. What's in the plan?

How about your community? Do you have an economic development plan that is carefully targeted at attracting businesspeople tired of long commutes? Are you making the right investments to get them to take a close look at your region?

The Internet and airports

Submitted by acohill on Mon, 03/26/2007 - 06:51

The Internet has not made travel obsolete. Despite the eventual ability to make high quality video "phone" calls as often as we make voice calls today, the need to travel for business is not going away.

Three trends are converging that could be very good news for rural regions that are far-sighted enough to take advantage of them.

Rural regions of the country that have invested in smaller, regional airports (smaller than what the commercial airlines will use) will have a key economic development advantage in the Knowledge Economy. Commercial flights are beginning to nudge $800 to $1000 for business travel, because it is usually difficult to schedule travel weeks in advance to take advantage of bargain fares.

At those price points, air taxi service begins to look attractive, especially if you can save a full day of meals and an overnight stay. Time is also money, and point to point nonstop air taxi flights can save many wasted hours of travel time. Rural regions that have both affordable broadband AND a well run and well maintained small airport with air taxi service will have a hard to beat competitive advantage.

Here in the New River Valley, communities are debating whether we need one or two small, local airports (they are located about 30 minutes apart). Both serve important business and economic development needs, and both should be maintained and improved. In the end, it is all about attracting new businesses and keeping the ones you have. Small airports are going to become more important than excess water and sewer capacity, and at least as important as high performance, open access digital road systems.

Greenways can make money for a community

Submitted by acohill on Tue, 02/06/2007 - 09:36

Greenways, bikeways, and rails to trails projects can be a money maker for a community or region when combined with a long range plan to build open service provider broadband roadways throughout a community. Greenways and trails not only provide recreational opportunities for existing residents, but they also help attract younger people to a community. By combining recreation with economic development, these greenways can be a net generator of revenue for a town or region. Design Nine can put together a team of broadband architects and transportation/land use planners to energize and connect your community. Call us if you would like more information.

Food: Fuel for the Knowledge Economy

Submitted by acohill on Fri, 01/26/2007 - 09:14

Broadband is not the only fuel of the Knowledge Economy. Rural leaders often discount the importance of having good places to eat in smaller towns. Microbusinesses and entrepreneurial start ups do a lot of business over breakfast and lunch, and one of the key quality of life factors that drive relocation decisions for enterpreneurs is the right kinds of restaurants--along with good coffee. Small town restaurants don't have to be fancy, but they have to be clean and comfortable, with excellent food and great service. Those are easily achievable goals, but small town restaurant owners may need coaching to bring their food, service, and decor up to the standards needed to attract Knowledge Economy business people. One small town that has the right kind of place is Quechee, Vermont, which has The Farmer's Diner. The Farmer's Diner has great food in a friendly, casual atmosphere, but the establishment also serves up locally grown food whenever possible--leveraging the interest in fresh and organic food, while providing a local sales opportunity for nearby farmers-a nice synergy.

American cities not very intelligent

Submitted by acohill on Thu, 01/25/2007 - 09:23

For the second year in a row, no American city made the list of the world's "Intelligent Cities," which is compiled by the Intelligent Community Forum. This highlights the longstanding regulatory and leadership problems we have in the U.S. when it comes to telecom. Some state and Federal regulators and legislators still think re-monopolizing the telecom industry (well under way with the re-forming of AT&T) is the answer to the country's long term economic development challenges. Other elected officials just keep hoping that the problem will go away, even though each passing year makes the businesses in their regions less and less competitive globally.

Outsourcing: The good and the bad

Submitted by acohill on Tue, 12/12/2006 - 09:34

BusinessWeek has an article on outsourcing that has some useful insights in it. The good: Outsourcing does not always save time or money. As many of knew when the outsourcing craze began to heat up, it is a lot of work to manage workers on the other side of the world who are 10 or 12 hours out of sync with your own office hours. In India, where IT outsourcing has helped fuel the economy, rapidly rising salaries and very high turnover (often above 50% a year) is driving U.S. businesses away. Some of that work is coming back to the United States, and there are opportunities in low cost of living rural areas to capitalize--if you have a tech-savvy workforce and affordable broadband.

The bad news is that even though some outsourcing is moving out of India, some jobs are being moved to other low wage countries. What that means for the U.S. is that IT salaries are flat, and are likely to stay flat for some time. But I have maintained that many IT jobs have been priced too high for years--an artifact of the rapid growth in IT in the nineties. Some adjustments are not necessarily bad. But overall, we are in a world economy, like it or not, and your community is competing with other countries, not just the next county or the next state. And no matter how much local leaders may not see that or deny it, it is a fact. Every community in America has to be looking over its shoulder at the world economy now. We aren't in Kansas anymore.

U.S. may be sliding downhill economically

Submitted by acohill on Tue, 12/05/2006 - 09:57

Although I meet more economic developers these days who are beginning to understand the world is changing (a good thing), I usually find after a brief conversation with them that many of them are determined to keep doing the same old thing--they just expect different results now (one definition of insanity). Part of the problem is a belief that nothing much has really changed, but articles like this one in the Wall Street Journal suggest otherwise. The Journal reports that of the twenty-five largest IPOs (Initial Public Offerings of stock) in the world last year, only one took place in the United States. Lethargic U.S. companies and over-zealous regulation in the wake of things like the Enron scandal are leaving the U.S. behind in the global Knowledge Economy.

Local communities are competing with Hong Kong, South Korea, Singapore, and even London for business, but too many economic developers and community leaders are stubbornly determined to ignore the data. I see unlimited opportunities for communities that are willing to make some changes, but some communities, especially in rural areas, are going to slowly wither away.

Charleston's Digital Corridor worth studying

Submitted by acohill on Fri, 11/17/2006 - 11:02

Charleston, South Carolina's very successful Digital Corridor program is worth careful study. Ernest Andrade, the manager of the program, understands that economic development today is about making and nurturing relationships, not water and sewer. Here is a short excerpt from Andrade's article that summarizes where economic development should be focused today:

"Three key pieces of statistical data reinforce an argument that communities should spend more of their economic development resources on business formation. First, approximately 80% of all job creation occurs from within the community; second, a majority of the businesses being formed today have five or fewer employees; and third, there is an inverse relationship between high wage, knowledge-based companies and their physical space requirements."

It is the last item that is particularly worthy of careful analysis: high wage knowledge companies don't need a lot of real estate. They don't need vast tracts of empty land. They often don't even want to be in business parks. They often want to be in rehabbed downtown lofts, close to other small businesses, and close to good restaurants, where the deals are so often made. They want to be close to good coffee shops so they can meet casually with co-workers and clients. They want to be near vibrant and active downtown areas.

Charleston is a shining example of what is possible in community revitalization, and if you have never visited the city, it would be worth it to pack up all your economic developers and spend a couple of days there. Give Andrade a call and talk to him while you are there.

Attracting talent, not businesses

Submitted by acohill on Fri, 11/17/2006 - 08:19

I was fortunate enough to have dinner the other night with a very gifted and smart county administrator, who told me this:

"Our job is to attract talent to our region, not businesses. If we have talented people, we can do anything. And to attract talented people, we have to have the amenities that they want and expect, like broadband."

I think he has it exactly right. In the Knowledge Economy, businesses are becoming more and more portable and less and less reliant on traditional infrastructure like water and sewer. It does not mean that infrastructure is now irrelevant or unimportant, but it does mean that we have to think about it in different ways.

I was at a major top tier college recently, and they told me they had a hiring crisis. New faculty were turning down well paying jobs at this prestigious school. Why do you think? It was because broadband was unavailable outside the "downtown" area of this otherwise rural community. Many faculty wanted to live outside town where they could own a few acres of land and really enjoy country living, but broadband was no longer a nice luxury, it was now a life necessity. These prospective faculty were telling the college they simply would not live in a community without broadband.

In other words, these talented people were not attracted to this community because of the lack of broadband in residential areas, not business parks. So you have to have affordable broadband options in your business and industrial parks, but you also have to have it everywhere else if you want to attract talented people to your region.

Power, quality of life, and broadband

Submitted by acohill on Fri, 11/10/2006 - 07:49

For some time, I have been telling communities that quality of life and affordable broadband are the drivers of economic development in rural areas of the country. But over the past few months, I have come to believe that there is a third factor: reliable electric power. As we store more and more data and dish more of that data out to a global audience via our Web sites and businesses, reliable electric power is a critical resource that is needed to keep electricity-hungry servers humming.

How important is it? Wired reports that Google is building a new office campus and data center next to a hydroelectric dam. It turns out that not only do communities need redundant fiber connections to the Internet. They also need redundant power connections into business parks and business districts, to minimize power outages. A company like Amazon is doing millions of dollars of business PER HOUR, and just a few minutes of losing connectivity to the Internet or to electric power is disastrous.

Regions served by public electric utilities or by electric coops are well-positioned to take advantage of the new interest in rural areas by high tech companies, because those utilities are more flexible and can more easily make investments that benefit the community.

Finally, safety and security are also driving the shift to placing these in rural areas. In the aftermath of 9/11 and Katrina, companies are realizing decentralized operations are a business necessity. And the low cost of land, lower wages, less traffic, and the beautiful countryside helps too. Rural communities, start your power generators for the coming boom of the Energy Economy.

Fiber transforms local economies

Submitted by acohill on Thu, 10/26/2006 - 10:01

The magazine Killer App has a must read article on how fiber infrastructure has turned the rust belt economy of Wales (abandoned coal mines and steel mills) into a global powerhouse. The key: a steady investment in fiber over a period of years turned into a magnet for Knowledge Economy businesses looking for a reliable workforce, reasonable cost of living, and affordable broadband.

Oh, and there was one more thing. Wales had excellent electrical power because of the former demands of the steel mills. The region was able to attract large data centers because Wales had an unbeatable one-two punch: world class fiber infrastructure AND reliable electric power.

Finally, Wales has adopted an open access model, meaning they did not try to create a new government monopoly on telecom services. Instead, they are encouraging competition among service providers to ensure a rich variety of services that can meet any business need as well as keeping prices low (because of competition).

This is an article you may want to print out and send to every local elected official and economic developer--especially those that think telecom is somebody else's problem. It is an excellent case study of a region that pulled its economy out of a nose dive and successfully created economic prosperity.

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