Bridging the Digital Divide

Innovative communities, big and small, are connecting to the global marketplace.

Rural southwest Virginia may seem like an unlikely place for something called a Technology Center of Excellence. But the global IT firm CGI Group found Lebanon, VA to be the perfect location for its 42,000-square-foot center for software developers, analysts and consultants, all now part of a knowledge-based economy taking root in coal country.

With a new, cutting-edge broadband network that has been extended across the region from nearby Bristol, CGI and Northrop Grumman both were able to locate multi-million-dollar facilities in Lebanon’s new technology park in late 2007. Virginia Governor Tim Kaine described the firms’ arrival as the anchor of future economic development in the region. It also broke new ground for CGI, one of the world’s largest firms for IT and business process services, as it was the company’s first center in rural America.

The high-tech site selections were enough of a signal of a new era that Barack Obama decided to make Lebanon a campaign stop last year, seeing the area as a symbol of hope and change. But the region now also is emblematic of the new model of economic development, as it possesses the key to luring businesses big and small—the availability of advanced broadband technology.

Fiber optic broadband delivers speed and synchronicity and the high capacity for passing digital information to remote and suburban communities, just as it does to businesses in the biggest, most wired cities. Increasing numbers of economists and politicians see broadband as an essential component of a community’s infrastructure, right up there with roads and schools and public utilities, at least for those seeking a vital future economy. In recent years, many municipalities have worked with or without private telecom companies to invest in infrastructure that brings high-speed Internet access and related services to schools, healthcare institutions, residences and businesses.

This has jumpstarted economic and job growth in remote locations across rural and suburban America.

Despite a new focus at the federal level to gather data and promote the use of broadband, there is little empirical research to determine the full economic effects of this technology. Still, most have drawn the conclusion that such networks contribute significantly to economic growth. A recent study from the Brookings Institution, a nonprofit research firm, supported “the widespread view that broadband is indeed essential infrastructure” for job and output growth. Sectors that appear to be benefiting the most are finance, education and healthcare, but even manufacturing employment rates appear to be related to broadband penetration, the firm found.

Still, many times the economic benefits of broadband are an afterthought of an investment designed to serve educational or healthcare needs. In 2004, when Northern Illinois University began work on NIUNet, connecting new and existing fiber lines along highways in the region, the goal was to create a high-speed network linking the main campus and its remote facilities. Soon, area municipalities saw the potential benefits and began partnering with the university to expand the network and bring advanced digital communications to their communities. Suddenly, northern Illinois was more attractive to corporate executives and small business owners alike.

“Creating NIUNet helps ensure that northern Illinois remains a player in the global marketplace,” writes Dr. Robert Gleason, the university’s director of the Center for Governmental Studies. Global investors already were interested in the region due to its population growth and wealth, but “by creating NIUNet, we are making the region even more attractive by providing one of the key pieces of infrastructure that those companies demand.”

NIUNet now is a roughly 175-mile fiber optic loop running along several major interstates and connecting suburban cities like DeKalb and Rockford with Chicago at the ring’s eastern tip. The university partnered with local towns and private industry to build the infrastructure. It also helped to create a second fiber ring mirroring NIUNet called the Northern Illinois Technology Triangle (NITT), which is run mostly by cities and counties and handles connections to businesses. NIUNet already has given way to spinoffs such as a federally funded $25-million network connecting all rural health facilities in Illinois. The broadband services are being extended to residents, businesses and other institutions by both the local governments and private Internet service providers.

“This is clearly and foremost a major economic tool for the communities we serve,” Walter L. Czerniak, associate vice president for NIU information technology services, tells Business Facilities. Businesses, schools, cities and hospitals in the area are used to connections of 1.5 megabits per second (mbps) via T1 lines, whereas NIUNet offers up to 100 mbps. “In many of our communities, T1s are the only service offering they can afford. This does not attract major business.”

Rochelle, IL, a partner in the NITT, already has attracted two major offsite data centers: Northern Trust Corp. is building an 80,000-square-foot facility alongside Allstate’s 65,000-square-foot facility, which has just opened at the 160-acre Rochelle Business and Technology Park. The two $50-million data centers represent a defining moment for the Chicago suburb, made possible by the fiber optic network.

“They would not have located in Rochelle without the networks in place to provide gig access,” Czerniak says.

Allstate, whose data center team has an imperative of ensuring high availability of critical technology systems, decided to consolidate its four existing facilities into a two-data center model. The company required a robust computing environment and sought to reduce deployment and operating costs and improve disaster recovery capabilities. An extensive, multi-state search brought it to Rochelle, which met the company’s requirements for redundant, reliable, scalable and cost-effective telecommunications infrastructure, according to Brandi K. Landreth of Allstate’s continuity management and data center strategy team.

“In particular, we were impressed by how innovative and technology-savvy this small town of 10,000 is,” Landreth says. “Rochelle is one of the few cities in the country to own and operate its own local fiber-optics network. It has made broadband, IP telephone and wi-fi available to local businesses and residents. It also provides most of its own utilities, including affordable and reliable electricity.”

After five years of planning and construction on the fiber network, the northern Illinois region is poised for continued economic growth. Czerniak says that because of the network, “I am attending at least one meeting a month were a high-tech company is looking to build a major tech center in one of the communities we serve.”

The Smart Community

The broadband network that helped Lebanon, VA, attract CGI Group and Northrop Grumman extends 850 miles, originating in Bristol. Nestled in the Appalachian Mountains, Bristol has been known as “the birthplace of country music” and the site of a major NASCAR speedway, but it is now a national benchmark for having introduced the first government-owned fiber-to-the-user network with phone, video and digital data services. The city-owned Bristol Virginia Utilities invested millions in the infrastructure, called OptiNet, and—after first developing the network in the 1990s for its electric substations and later expanding it to schools and government offices—decided in 2001 to extend the service to residents and businesses. This would lead to litigation from private sector carriers and legislative hurdles that lasted three years and cost $2.5 million in legal fees, but the city won the right to deliver retail communications. Soon, OptiNet was expanded across other rural counties, and it now operates self-sufficiently on $16 million in annual net revenues.

Bristol’s OptiNet has brought business growth to the tune of 1,220 jobs worth $37 million in annual payroll, and more than $50 million in new private investment to the area. In May, Bristol was the only U.S. city, and the smallest worldwide, to be recognized in the Intelligent Community Forum’s “Top Seven Communities of 2009.” The ICF honors communities for working to create prosperity and social inclusion in what it terms the “broadband economy.” The other cities making this year’s list are Eindhoven, Netherlands; Fredericton, New Brunswick, Canada; Issy-les-Moulineaux, France; Moncton, New Brunswick, Canada; Stockholm, Sweden; and Tallinn, Estonia.

Bristol Mayor Jim Rector and Bristol Utilities Board Chairman Paul Hurley accepted their city’s trophy during a May ceremony in Brooklyn, NY. Rector, humbled by the recognition, says he never envisioned that the fiber-optic network launched to offer cable, Internet and telephone service to Bristol customers “would put us on the map globally.” But the partnerships and collaborations that evolved over the years connected the coalfield counties to the world, a process he called “nothing short of phenomenal.”

The award comes after 10 years of foresight in decisions to invest in advanced broadband, along with the BVU’s hard work, according to Hurley. “And I want to credit the legislative, economic development and community leaders across our region for breathing new life into our economy through this broadband venture. Even during these tough economic times, broadband offers new commerce opportunities to businesses and gives us hope for a viable economic future.”

Bristol may have innovative practices, but it isn’t necessarily the most wired U.S. city. Seattle takes that honor, according to Forbes’ annual list of the most broadband-connected cities. Behind Seattle is Atlanta, which had been the top wired city in 2007 and 2008, followed by Washington D.C., Orlando and Boston. Forbes measures cities’ wired quotient by computing the percentage of Internet users with high-speed connections and the number of companies providing high-speed Internet. Seattle, home base of Microsoft and Amazon, was chosen for its increased use of broadband and its number of wi-fi hotspots.

The DIY Concept

But such resources are no longer just the domain of big cities. More and more communities are taking notice of the advantages of broadband. The city of Danville, VA, near the North Carolina border, began operating its own fiber network as part of an aggressive economic development effort in response to its declining textile and tobacco industries. Private service providers pay the city for use of the network, called nDanville, and sell the services to businesses and residents. Since its launch in December 2007, the city has been backlogged with businesses looking to hook up, says Dr. Andrew Cohill, president of Design Nine, which provides project management for broadband initiatives.

“Last year they took fiber to every single premise in their five business parks, which is about 500 lots,” Cohill says of Danville. “And the early impact has been that a local service provider has been able to get a lot of new business, and for a lot of the existing businesses they were already providing services to, they’re typically able to provide a lot more bandwidth at the same price. So the biggest thing we’ve seen in the first year is that businesses are spending about the same amount of money on telecom, but they’re getting a lot more for what they’re spending.”

Danville also recently landed a 930,000-square-foot IKEA plant, bringing much needed manufacturing jobs to the slumping economy. According to Cohill, “When they broke ground, the first thing they asked for was the nDanville fiber connections.” Nearby, the counties of Carroll and Grayson and the city of Galax— struggling in recent years due to plant closings and job losses— formed a regional broadband authority and began construction of a unique, open-access fiber and wireless network called the Wired Road, which will connect to every business and home in the Blue Ridge Crossroads region. As with Danville, the authority was set up with private service providers paying for use of the network and offering services to residents and businesses. Cohill, whose firm planned and managed the project, says the network was launched in mid-2008 and is already accomplishing the initial goal of increasing entrepreneurship and new business development.

“The focus on entrepreneurship and work-from-home jobs has created or attracted 80 new businesses, about $19 million in investment, and more than 300 new jobs in three years [since the network plans were announced]. So the Wired Road’s impact has been limited, but they see that as the future, that this is going to be able to accelerate,” Cohill says.

Indiana’s Policy Pays Off

Indiana became a model state in the changing economic landscape when it deregulated its telecommunications industry in 2006. The move encouraged competition by shifting control of cable television from local governments to the state, and lowering regulatory barriers that had been keeping companies from investing in cable and broadband services. A study by Ball State University’s Digital Policy Institute showed that in its first 18 months, the deregulation resulted in $516 million in capital investments and more than 2,200 new jobs.

Following Indiana’s passage of the legislation, AT&T announced it would invest $250 million in Internet-based television services, and the company began expanding broadband services to rural communities in the state. According to Indiana Secretary of Commerce E. Mitchell Roob Jr., the continued broadband development has been a boon for attracting high-tech industry. Indiana has such homegrown companies as Interactive Intelligence, a telephone software provider for enterprise-wide systems and call centers, and Exact Target, an email software provider. The two Indianapolis-based firms are collectively expected to add nearly 1,000 jobs over the next few years. In addition, AT&T will add over 1,000 jobs, which Roob says is a direct result of the telecommunications reform that other states have since duplicated.

“Indiana’s telecommunications reform has been a national model as one of the most far-reaching state deregulation efforts to date, and is allowing Indiana to win new commitments for jobs and investment,” Roob says.

When Westminster, CO-based Global Water Technologies sought to relocate its corporate headquarters, it was of course looking for cost advantages and proximity to major customers. The innovator in water treatment services also sought an advanced technology infrastructure, and decided Indiana was “an excellent choice to grow a small clean-tech company,” says Erik Hromadka, president and CEO of the firm. “Indiana has an active technology community and excellent cooperation among state government, universities and the business community. That has also been reflected in the success of recent statewide initiatives in life sciences and logistics and advanced manufacturing.” The expansion of fiber optic broadband across areas of Indiana has brought economic growth to smaller communities, according to Roob. “Approximately half of the economic development projects our state is involved in occur in towns with populations less than 25,000,” Roob says. “As more and more communities become connected and broadband services truly reach the last mile, rural communities will continue to reap economic benefits.”

Cohill sees broadband, as well as wireless technology, as both being essential components for any community’s economic future. Advanced telecommunications services, he says, are critical for attracting and retaining business in the new economy. In a big city or a small town, corporate executives in every category are seeking the usual qualities in a site—a good workforce, quality of life, redundant electric services, a strong education system, a friendly business climate, and not least of all, big broadband connectivity.

“Nationwide,” Cohill says, “millions of new jobs could open up in rural communities if the right kind of affordable [telecom] is available.”

Chillicothe, OH: Mid-sized Town Makes Large Strides in Wireless

The town of Chillicothe, Ohio is an example of a mid-sized suburban municipality makingbig strides with broadband and wireless technology.

The seat of Ross County, in southern Ohio, has fiber optic cable within 3,500 feet of every building and wi-fi hotspots at many locations in and around the city. All major employers have access to broadband, and the wireless capabilities give businesses the ease and freedom of not being tied to the office.

“The abundance of fiber capabilities is great here and continues to grow. Businesses can design the network that fits their needs,” says Randy Davies, public relations manager with Horizon, which installed the wireless and broadband infrastructure as part of the cable TV/Internet service connections to residents and other customers. “It is not uncommon to work with potential new employers to design networks for their employees’ homes.”

Horizon currently is upgrading its software and testing higher speeds for connectivity, as well as continuing to install and expand its fiber optic network. The infrastructure has benefited companies headquartered in Chillicothe, such as Petland and Kitchen Collection. The 500-megawatt connections to schools, as well as telemedicine over fiber from the local hospital to major facilities 50 miles to the north in Columbus also make the community worth looking into for businesses seeking to start up or relocate, according to Davies.

“Increasingly, businesses [that are] dependent upon technology are looking for high bandwidth solutions. For healthcare systems to grow and prosper, the ability to exchange patient records with other healthcare facilities and to exchange high bandwidth radiology images [is important],” says Horizon CEO Bill McKell. “Businesses needing to back up data to a remote location need high speed connections to do so.”