Economic development

Ohio economic development strategy

Submitted by acohill on Wed, 05/25/2005 - 14:38

Pat Valente, the Deputy Director for the Department of Development of Ohio, spoke at the Ohio CDC Technology conference about the state's strategy for economic development. Here are the key points:

What is most interesting about Valente's remarks is what went unsaid. There was nothing about industrial recruitment or giving lavish tax breaks to big companies. Ohio is probably still doing some of those things, but the emphasis on entrepreneurs and support for innovation is refreshing. The state is also headed in the right direction by identifying assets and competencies already in the state and trying to leverage those, rather than just imitating what has worked elsewhere or just trying a lot of stuff and hoping something sticks.

As examples of this strategy, Valente mentioned a focus on fuel cells as an alternate power source. The state is funding research to use biomass as a feedstock for fuel cells, leveraging the state's agricultural industry. It is also funding the development of new polymers (plastics) from soybeans rather than fossil fuels, because the state is a big soybean producer.

If Ohio sticks to this plan, it will have an advantage over many other states that don't have the same level of focus. I thought only one thing was missing--a statement of intent to ensure that every business in the state has affordable broadband. If Ohio is serious about competing in the global economy, you can't leave this to chance.

Has the economy turned a corner?

Submitted by acohill on Fri, 05/06/2005 - 09:36

This article (via InstaPundit) says online advertising has passed the levels seen during the dot-com era. That's interesting, because advertisers want to see a return on their marketing expenditures--if ads don't turn into sales, they don't keep throwing more money into a particular medium.

What's a big driver? It's broadband, which as I noted recently, has pulled even with dial up in terms of households using it. Broadband connections make ads less annoying because they download faster and don't slow down the display of a Web page the way they do on dialup. And broadband enables newer, richer kinds of ads with embedded movies and other multimedia widgets that don't work at all on dialup. And finally, Internet ads provide incredible feedback to advertisers, compared to the "black hole" of traditional media, where it's often quite difficult to determine who saw and ad and if they were interested in it.

All the advertising also means people are buying more....a sign of a strong economy.

Digital Cities: PacketFront talk

Submitted by acohill on Mon, 04/18/2005 - 14:39

PacketFront is a vendor of network equipment designed specifically for community broadband projects. Matt Wenger, an expert in communitywide broadband and senior analyst for the company, gave the talk.

Wenger strongly advocated a services orientation for community broadband projects. His thesis throughout the talk was the current connection-based model used by the telcos and the cable companies discourages innovation and use of broadband.

Wenger spoke at length at the connection between broadband and economic development, and said, "If you don't have a broadband strategy, you don't have an economic development strategy." He went on to show the connection between small business job growth and the potential for broadband to increase small business jobs in the community.

Wenger had some good case studies that led to his proposition that a focus on services is most likely to be successful. He advocated letting a particular service (like VoIP or video on demand) determine bandwidth needs and quality of service, and those two factors in turn determine price. A wholesale model encourages innovation and service growth, and revenues go up for the network owner (the community) with a service-based model. Wenger illustrated how revenues tend to go down using a connection-based model.

Broadband and the public good

Submitted by acohill on Tue, 04/12/2005 - 16:03

The Free Press has released three useful reports on broadband that ought to be required reading for any citizen's group trying to convince public officials and economic developers that something needs to be done.

Connecting the Public: The Truth About Municipal Broadband
This paper makes a thoughtful case of public investment in broadband. Among the data presented is the fact that the number of private sector service providers goes up in communities with public broadband, contrary to some reports. An excellent position piece to provide to appointed and elected officials who need more information about the subject.
Telco Lies and the Truth about Municipal Broadband Networks
A carefully researched paper that compares telco statements about several community broadband projects in the U.S. to the actual outcomes and impact of the projects.
Broadband and Economic Development: A Municipal Case Study from Florida
Lake County, Florida experienced 100% greater growth than surrounding counties because of the public investment in a communitywide fiber system.

U.S. prosperity at risk

Submitted by acohill on Tue, 04/12/2005 - 12:30

The IEEE (Institute of Electronic and Electrical Engineers) has issued a new white paper stating that "U.S. prosperity is at risk" if it does not become a national goal to invest heavily in Gigabit networks. The organization went on to say this:

Failure to act will "relegate the U.S. telecommunications infrastructure to an inferior competitive position" and undermine the future of the U.S. economy.

The IEEE is a fairly staid body that rarely gets involved in political issues, so when this group speaks out, it's worth paying attention. How about your community? Are your local leaders and economic developers paying attention to this?

New handouts in the library

Submitted by acohill on Tue, 03/29/2005 - 20:32

We've added two new handouts to the Design Nine library. Ten things a community needs to compete summarizes a column from a few months ago about what amenities a community needs to attract businesses to the area.

Community broadband step by step compares community broadband development to the construction of a new building and the development of a new water or sewer system. It's easy to see that broadband development follows exactly the same processes that communities have successfully been using for years on much more expensive projects.

Giving your region an edge

Submitted by acohill on Thu, 03/10/2005 - 10:38

One definition of insanity is doing the same thing over and over again and expecting different results.

I still see many regions continuing to build shell buildings designed for manufacturing. It used to bring jobs to the area, so why not just keep doing it? The problem is that kind of strategy is competing for fewer and fewer jobs (as few as 10% of all new jobs) against more and more regions willing to throw enormous tax incentives at manufacturers. Meanwhile, more and more manufacturing is going to other countries.

How about trying something different--something that will really give your region a marketing edge, for about the same price as a shell building? What if you could provide this resource to businesses by the hour, so that you don't have to find a single business to lease the whole facility for a long time?

How about a supercomputer?

Add Bowie State to the growing number of colleges and universities that are building supercomputers, both for their own academic research but also for use by local businesses. Virginia Tech's "Big Mac" project led the way, but other areas are beginning to do this as well. Here is the key information from the article:

The initiative is expected to increase grant opportunities and attract business partnerships. In the near future, Bowie State will generate revenue by selling and negotiating cycle time.

Wouldn't you like to be able to advertise to businesses that you have one of the 100 fastest supercomputers in the world? Doesn't that sound a little better than saying, "We've got a nice, drab metal shell building just like about 10,000 others in the U.S.?"

Guess what? They both cost about the same. Which one is most likely to project an image of being connected and being part of the global Knowledge Economy?

The iPod economy

Submitted by acohill on Fri, 03/04/2005 - 08:18

One of the big flaws in the whole telecom debate is a chronic focus on the past. The telecom companies and the FCC both tend to rely on looking backward, and by extension, it's a problem at the state level because the incumbent providers have been much better at getting their message to state legislators than purchasers of telecom services.

Here's a concrete example of what I mean. The Times-Picayune has a story today on the fast-growing "iPod Economy," which is the exploding market for iPod accessories. According to one researcher, iPod owners spend half as much as the cost of their iPod on accessories. With most iPods selling for between $200 and $300, that's a lot of money. And iPod sales itself grew 525% last year. By some estimates, iPods account for as much as 80% of the total portable audio player market.

So what's the point? The point is that very few people could have predicted this three years ago. Technology innovation is creating incredible business opportunities. If you browse through the companies selling accessories, none of them are "big name" companies, and many of them are garage start-ups, especially those that make protective sleeves and cases for the iPod.

The telecom discussion tends to be framed by what is called the "triple play," which is voice telephony, video, and (Internet) data. I've seen a lot of business cases that "prove" that communities can't recover their costs using a triple play model. I think the reports are right, but for the wrong reason (which makes them wrong overall).

It's really a quadruple play, with voice, video, data, and what I call "advanced services." Advanced services are anything that will be delivered via the Internet that we have either not thought of yet or just are not including. My favorite example is network backups. Knowledge Economy startups like Data Ensure are growing rapidly by playing in the Advanced Services arena, and Data Ensure, in particular, is creating jobs in a remote part of southwest Virginia. They just happen to be in a vertical business incubator with fiber in the basement--part of a regional fiber project.

New York Times comes out against communities

Submitted by acohill on Sun, 02/20/2005 - 10:13

The New York Times (registration required) has a very biased article about Philadelphia's plan for citywide wireless broadband. The paper interviewed mainly opponents of the plan, and seemed to go to great lengths to interview those opponents, while trivializing successful community projects. Worth a read just to understand the anti-community sentiment out there.

It's unfortunate that the MSM (MainStream Media) is unwilling to make the effort to report both sides of the issue. I'm not arguing that the Times should be in favor of community technology projects, but rather that their reporting should strive to present both sides of the issue fairly.

Great Plains communities are starting to "get it"

Submitted by acohill on Wed, 02/09/2005 - 09:00

Run, don't walk, to the nearest store and pick up a copy of USA Today. If you live in a rural community and are involved with economic and community development issues, you need to read the cover story today.

Small towns in the Great Plains are finally starting to give up "elephant hunting" and instead are using an "economic gardening" strategy. This is exactly what I have been saying in our Knowledge Economy Roadshow for the past several years.

Elephant hunting refers to traditional industrial recruitment....trying to bag a big company with lots of jobs. But small rural communities are finally starting to realize that if that is the only strategy they have, it does not work any more.

What is working? Just what I've been recommending: recruit entrepreneurs and families, not businesses. In Kansas, they are giving away free land to families that move to town, and even making cash payments to help with down payments on mortgages. They are helping the head of the household to find a job. It is still economic development, but cast in an entirely different way.

You really need to read the entire article. These communities are getting results, and are beginning to turn things around.

Where the customers will come from

Submitted by acohill on Thu, 02/03/2005 - 09:47

This CNet article says that businesses are realizing the value of dark fiber, and are willing to pay for it.

Here is the money quote:

"....Ford [Motor Company] found that it would cost less to lay its own optical fiber lines than to subscribe to a service from the local phone company."

Bingo. That's exactly right. As more and more businesses require more bandwidth beyond one or two T1 lines, the high prices from incumbents are tipping the tables in favor of community projects. Medium and large businesses in your community can become anchor tenants for a community digital transport system (aka duct, fiber, and wireless). Ford is building their own, but it would be cheaper for them to join a community project.

Good news? Not if your state is one of several that have anti-municipal legislation pending that will take the right of communities to decide their own future away from them.

This article shows how wrong-headed that legislation is. Let's see....our state will outlaw efforts to lower business costs, and force our biggest employers to buy overpriced services from near monopoly providers. That's a great Knowledge Economy strategy.

Get your legislators on the phone, invite them to lunch, and give them a copy of this article. It's a good first step.

Sun rents out supercomputer

Submitted by acohill on Tue, 02/01/2005 - 09:56

Back on October 31, 2003, I wrote about supercomputers as the economic development infrastructure. I suggested that regions that wanted to have a real marketing edge invest in a modest supercomputer cluster and rent it out to businesses that wanted occasional access to such equipment but could not justify the cost of owning it.

Today, Sun Computers had a full page ad in the Wall Street Journal advertising their supercomputer cluster for hire, at a rate of $1/hour/CPU. That's a good bit higher than what some universities like Virginia Tech are charging for business access to their supercomputer facilities, but it shows that there is a market out there.

How about your region? Are you still building steel-sided shell buildings that are sitting empty, or are you ready to enter the Knowledge Economy with some investments that businesses really want?

Southside Virginia builds high capacity regional network

Submitted by acohill on Tue, 01/25/2005 - 13:54

Here is an excerpt from a brochure about a project in Southside Virginia, a rural area that has traditionally relied on tobacco as a primary engine of its economy. Furniture and textile manufacturing were also mainstays for jobs and development, but over the past twenty years, all three have declined sharply.

The low cost of living, combined with the proximity to Greensboro and the North Carolina Research Triangle, may make Southside one of the best places to work in America, once this infrastructure is in place.

Also included as a service will be MSAPs in some locations, which create very high performance community intranets that support next generation multimedia services. The MSAP concept was pioneered by me while I was Director of the Blacksburg Electronic Village. Blacksburg has had an MSAP in operation since 1999, and Danville, Virginia also has an MSAP.

Note the emphasis on leasing capacity to "all interested providers," which includes incumbents, who, if they are smart, will realize they can lower their costs by leasing instead of overbuilding.

The Mid-Atlantic Broadband Cooperative (MBC), a non-profit cooperative with funding from the Economic Development Authority (EDA) and the Virginia Tobacco Commission (VTC), has contracted to deploy an advanced open-access wholesale broadband network in Southside Virginia. The RBI is a 700-mile fiber-optic network with 48 strands of dedicated fiber backbone, Synchronous Optical Network (SONET) architecture, dual rings with 13 OC-192 backbone sites and 65 satellite locations providing low speed & high speed interconnect facilities (OC-3, OC-12, OC-48, STS, VT). In addition to the turn-key implementation of the RBI, MBC has invested in building a new state of the art Network Operations Control Center (NOCC) in South Boston, Virginia.

The RBI network will connect four cities, 20 counties and 56 industrial parks providing access to nearly 700,000 citizens and more than 19,000 businesses throughout Southside Virginia. The goal of this project is to promote economic development opportunities for the region, attracting technologybased business and industry. Network construction begins in January 2005 and will be turned-up in phases. MBC plans to have the entire network fully operational by December 2006. MBC will be selling/leasing fiber and services on a wholesale basis to all interested providers.

Northern Illinois grabs hold of the future

Submitted by acohill on Tue, 01/25/2005 - 13:47

Northern Illinois, which is surprisingly rural in nature despite being a relatively easy drive to Chicago, has grabbed hold of the future. Below is a press release announcing an ambitious regional project to get affordable, high capacity broadband throughout that area. In announcing the effort, an official connected with the effort said, "The communication infrastructure we're talking about will be as important as electricity, water."

Northern Illinois Technology Triangle Unlocks New Opportunities for Northern Illinois Communities

Rochelle Municipal Utilities announces plans for a multi-gigabit capacity fiber optic ring to serve local rural communities

Rochelle, IL - Today, Rochelle Mayor Chet Olson unveiled plans for a superior fiber-optic telecommunications network labeled the Northern Illinois Technology Triangle (NITT). The network will provide multi-gigabit capacity to the Northern Illinois region, connecting communities across Northern Illinois and opening new opportunities for growth in education, research and business.

The NITT is a joint venture between Rochelle Municipal Utilities (RMU) and the Illinois Municipal Broadband Communications Association (IMBCA). It will provide a looped broadband fiber network in a triangle along I-88 from Rock Falls to Naperville, with a section north to St. Charles, and from St. Charles along I-90 to Rockford, and then along I-39 from Rockford to Rochelle. The physical infrastructure will be implemented in three parts. IMBCA has already leased existing fiber along I-88 from Naperville west to Rock Falls and is now negotiating leases for existing fiber on I-90. Rochelle Municipal Utilities plans on installing the remaining leg of the triangle, from Rochelle to Rockford, where no fiber exits. The NITT is the first municipal utility fiber optic network consortium in Illinois.

Chet Olson, Rochelle's Mayor, said, "We're pleased to play a part in bringing about the Northern Illinois Technology Triangle. NITT is the beginning of a new era, not only for Rochelle, but for all communities in this region that choose to access this network. For my community, it means an opportunity to expand our economic base from manufacturing and rail service to technology services and support." The network ring is based upon fiber optic cable and will offer 33 (or more) wavelengths, each with the capacity to carry data at a rate up to 40 Gigabits per second. With just one Gigabit connection, a family can download their favorite DVD movie in less than one (1) minute, something which would normally take 13 days to download using a telephone dial-up connection.

"Virtual" sales a big business

Submitted by acohill on Mon, 01/24/2005 - 11:06

In my talks to community leaders, I talk about the ability to sell goods and services that are, literally, weightless, via the Internet. I get a lot of blank stares, as some folks still have trouble understanding the revolution in business.

The latest news comes from Apple, which reports it sells more than one million songs PER DAY from its online music store, or nearly half a billion songs per year.

Remember that in the distant past, when dinosaurs roamed the earth, music was pretty heavy. It came in the form of 12" LP records, then tape cassettes, and then CDs. The very same product that used to weigh nearly a pound, in the form of those old records, is now delivered to us as a stream of electrons, radio waves, and/or photons. Same music--better, actually, since the digital recordings don't wear out or suffer tape breakages.

It's a new world, and in every state and in many communities, some businesspeople and entrepreneurs have already made the switch. But what about the rest of your businesses? How are your economic development programs preparing them to boost their business by going online?

Are we teaching the right things?

Submitted by acohill on Sat, 01/22/2005 - 11:35

The 'net is buzzing over an article called What You'll Wish You'd Known by computer scientist and dot-com success Paul Graham. The article is interesting, but I don't think most kids will take the time to read it--by their standards, it's way too long (a topic for another discussion).

But you can always rely on the geeks that inhabit SlashDot to not only read this stuff, but critique it extensively, and one comment jumped right off the page at me:

"...why didn't anyone, not even my parents, tell me that I could actually start my own business and not have to necessarily go and get a job working for someone else?"

Bingo! Here's a young guy who perfectly fits the profile of the 21st Century entrepreneur and businessperson. Our young people are ready and anxious to get going, to create new businesses, to get into space, to wrangle the global economy.

But his comment raises a question. What are we doing in our schools to give our youth the skills they need? Are you, in your community, lamenting the fact that young people don't stay to live and to work? If you are, what are you doing to reform your schools to give them the skills to start their own businesses in their home towns, instead of feeling like they have to move away to find a job?

Business and the Web

Submitted by acohill on Fri, 01/14/2005 - 09:02

There was an article in yesterday's Roanoke Times in the Business section about a new firm in Roanoke that is selling late model used cars with a "new car showroom" approach. The owner is trying to overcome the stigma associated with the stereotyped used car salesman by offering only late model cars in excellent condition, and using a high quality presentation.

What was interesting was the owner's remark about his Web site. What he said was that he had put a lot of time and effort into the site because buyers checked out a business by taking a look at the Web site before visiting the physical location.

This businessperson has it exactly right, and has figured out that Manufacturing Economy sales techniques have to be updated to reflect the new kinds of tools that consumers have at their fingertips--literally. This firm has a large, expensive product that is typically sold in person,but the company is using the Web as an integral part of the sales experience.

How about the retail businesses in your area? Are they putting appropriate and regular time and energy into their Web sites? Do they understand the potential for expanding their business into new markets and attracting new customers? Have they figured out that the Web is now important to help keep their current customers? Does your economic development authority have regular programs for local businesses on how to use the Web?

Online buying jumps 25% over holidays

Submitted by acohill on Tue, 01/04/2005 - 11:12

Jewelry, flowers, clothing, and computer stuff fueled a 25% increase in online buying during the holiday season. This article describes the surge in spending in more detail.

In my own experience, I've seen a dramatic improvement in the quality of many online shopping sites. Even some smaller businesses have excellent and easy to use Web sites that make it quick and easy to find what you want, order it quickly, and get confirmation of the order via email. It sames time and money to be able to shop online, especially if you live in a rural area like I do, where shopping options are pretty limited.

Broadband is a key requirement, though. I'd do a lot less buying online if I had to use a dialup connection, which is just too slow to wade through a graphics-rich catalogue site. Broadband is not only an economic development issue, it's a quality of life issue. Who wants to move to an otherwise beautiful rural area far from big city shopping opportunities if broadband is not available to help mitigate that?

Getting businesses online

Submitted by acohill on Sun, 01/02/2005 - 11:18

One of the best ways to create new jobs in your region is to make sure the businesses that are already in the community have access to good advice, including advice and guidance on technical matters.

The traditional role of the economic developer in the Manufacturing Economy was to recruit jobs from other parts of the country. But that has not been an effective primary strategy for many years. In a global economy, many traditional manufacturing jobs have moved offshore, and no amount of tax incentives are going to change that.

A diversified economic development strategy would put more time and resources into helping existing businesses grow. And there is plenty of simple and effective things that can be done. For example, I still find many businesses have poorly designed Web sites. Why not use some ED funds to pay for Web site critiques and reviews of business Web sites? This could be done on a 50% match basis to ensure that the businesses are likely to take the advice seriously.

As an example of how bad things could be, I just found a business with this statement on their "Contact Us" page:

To email us, order a free catalog, check on an order, etc., please call 1-800-829-xxxx.

I'm not making this up--to email the company, you have to call them first! Here is a business that has apparently been asleep for the past ten years, and still does not recognize that current and potential customers may want to email the company. I find that the majority of small businesses are still not taking the Web seriously, largely because they simply don't know what to do.

Part of the problem is not their fault. Too many businesses have been burned badly with bad advice. There are basically two ways to get help with a business Web site.

Signs of the global marketplace

Submitted by acohill on Wed, 12/29/2004 - 12:30

I just bought an inexpensive audio mixer to help with some recording tasks I have. It is sold by a small German firm. I was struck by the User's Manual, which came with instructions in the following languages:

Do the businesspeople and merchants in your area understand the importance of providing multilingual instructions if they are trying to sell internationally? Has your economic development organization identified qualified translators to save each business from having to do so? Have you prepared a handout that walks a business through the steps of preparing a product or service for the global marketplace? How will the businesses in your region compete with market-savvy businesses from other countries? Can they do the job right?

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