Hold the Phone!

By Mitchell Moss

The future impact of telecommunications on our lives and businesses is not as clear as its monolithic past—and we've been wrong before about where it would lead us. What is certain is that not everyone will get the call.

Is it still surprising that the invention of the telephone has not rendered cities obsolete by eliminating the need for face-to-face business? Now that we have gone well beyond that wire-bound instrument and into new forms of remote communication, we are seeing instead that cities—both urban and edge—are more of the moment than ever. The clustering of easily accessible and affordable telecommunications technology has in fact reinforced the city's economic importance as a hub for both interpersonal and electronic communications. And in New York City, the enormous concentration of that technology has served to enhance business activity in an explosive and mostly unforeseen manner.

That doesn't mean things haven't changed quite a bit. While telecommunications has certainly made it possible to disperse routine back-office functions and manufacturing activities to suburban sites and low-cost locations, the development of new technologies has also allowed businesses based in New York to expand their activities and enlarge their markets so that they are no longer bound by traditional constraints of time and space. Simply put, telecommunications has allowed information-intensive firms, whether in finance, publishing, advertising or law, to compete on a global scale around the clock—time zones be damned. Owing to the chicken-and-egg circularity of being in New York City to take advantage of new technology and of attracting new technology because they are in New York City, locally based businesses large and small have been at the forefront of using new telecommunications technology to compete in markets across the world.

Now that deregulation of the industry is allowing market criteria rather than regulatory agencies to guide new investment, telecommunications firms are eager to build new systems in New York, where there is such an intense demand for advanced information technologies. (Interestingly, that is still not happening as efficiently and rapidly in the still-deregulating energy industry, where giant Enron has chosen to avoid New York because it views the state's deregulation structure as a barrier to competition.) Ironically, while the city's aging public infrastructure—its roads, bridges, water mains and subways—suffers from underinvestment and neglect, massive private investment has been made in new telecommunications systems to move information into, out of and through the city of New York. This contemporary infrastructure, largely invisible to the average New Yorker, consists of copper wires, optic fiber, microwave dishes, cellular antennas and computers. It is located underground and on roofs, beneath floors and in the vertical risers of commercial and residential buildings. Bell Atlantic, which provides most local telephone service, has invested $4 billion in New York City's telecommunications infrastructure during the past five years, while Teleport Communications Croup, a subsidiary of AT&T, has installed optic-fiber systems in more than 500 metro area office buildings, providing an alternative to Bell Atlantic. In addition, numerous other companies—including MFS, COVAD, Winstar and Time Warner Cable—provide a variety of telecommunications services to businesses in the city. A subsidiary of Con Edison will be offering high speed telecommunications by devoting a portion of its electrical ducts to communications.

New York City has always been a leader in international telecommunications. The first overseas telephone call was placed on January 7, 1927, from New York City to London. In 1981, prior to AT&T's divestiture of the Bell system, more than 24 percent of all U.S. overseas business calls and 15 percent of all overseas residential calls originated in New York City.

One obstacle to developing an advanced communications infrastructure is the continued resistance of property owners and managers to granting unfamiliar telecommunications companies—i.e. practically any concern other than Bell Atlantic—entry to their buildings. Most landlords still do not appreciate the value of allowing multiple telecommunications companies to provide competing services—particularly in commercial office buildings—not to mention the leasing value of their roof space (see following story, "Satellite Sod"). At the Federal level, there are serious lobbying efforts underway directed at compelling property owners to allow telecommunications companies access to commercial buildings without being subject to excessive charges.

In New York, a handful of landlords are seizing the initiative by encouraging multiple communications companies to provide telecommunications service in their commercial properties. Tenants in these buildings have a choice of telecom providers creating a competitive market for services. Ostensibly, this should serve as a key attraction to new tenants and a bonus to existing tenants. It also allows globally active tenants with multiple international offices to use the same telecommunications carrier in locations around the world.

Residential landlords, on the other hand, are clamoring for the new technology. Already, residential buildings in Manhattan are being marketed according to the speed of their dial-up connection to the Internet. New luxury apartment buildings as well as converted industrial buildings are being equipped with advanced T-1 lines similar to the high-speed lines in commercial buildings. At one East Side apartment house, when a tenant moves out of an apartment, the tech-savvy owner rips out the baseboards and installs new wires behind them so that future tenants can have their own computer network along with access to high speed cable and phone lines.

New investment in telecommunications equipment in New York is hampered by a city and state tax structure that levies a sales tax on telecommunications lines, conduits and equipment not located in the central offices of telephone companies. This puts advanced telecommunications equipment at a disadvantage when compared to industrial equipment, which is not so taxed, and imposes higher costs on information-based industries and services. Even so, New York City remains the nation's strongest market for advanced telecommunications services. With the leading broadcast television and radio networks, news organizations and entertainment companies based in Manhattan, the city's telecommunications infrastructure rivals its sea and air ports as its most vital link to the rest of the nation and the world.

In the next century, telecommunications and information technology will become a pervasive element in the walls, floors and ceilings of most urban structures. The massive growth of wireless mobile telephony will soon require that even elevators, bathrooms and lobbies be equipped with antennas so that New York City workers can be connected to advanced telecommunications systems at all times. The Telecom Revolution has only just begun.

 

Originally published in GRID New York
Volume 1, number 3. Summer, 1999