Abstract
This article explores the ways in which communications
technologies influence the shape and form of cities and large metropolitan
regions. After reviewing the scholarly literature, the author suggests
that there is a need to consider the ways in which telecommunications
can lead to both the centralization and decentralization of economic
activity. The article analyzes the limits and opportunities for
telecommuting as well as the emerging pattern of Internet development
in the United States. Although local governments have traditionally
taken a passive role with regard to telecommunications systems,
there is a growing awareness that telecommunications can affect
local economic development. Furthermore, the widespread deployment
of antennas for cellular telephones is stimulating public involvement
in land use regulations. Finally, the article considers the impact
of new telecommunications on inner-city communities and the delivery
of public services in cities.
Technology and Cities
Technological advances have shaped and continue to shape the economic
and physical development of cities in the United States. During
the 19th century, industrialization gave rise to manufacturing plants
and factory towns, while the steam engine led to the growth of seaport
cities and a system of railroads that linked cities and towns across
North America. During the 20th century, advances in transportation
technology - notably the internal combustion engine and the jet
airplane - contributed to the dispersion of the Nation's population
to suburban areas and to urban growth in southern and western States.
Federal policies that financed the construction of airports and
the development of an interstate highway system have reinforced
these technological trends as well. And, of course, air-conditioning
has contributed to the growth of year-round populations in what
were once seasonal communities.
Today, new and emerging telecommunications technologies are transforming
the economic role of cities and their pattern of physical development.
Many cities have lost their roles as corporate headquarters and
manufacturing centers, while others have attracted information-intensive
activities, such as back offices, customer service centers, and
research and development laboratories. Furthermore, rapid advances
in information technology pose a major challenge to city-based financial,
healthcare, and educational institutions and to cities' roles as
centers for commerce and culture. This article examines the ways
in which information and telecommunications technologies are influencing
the economic development of cities in the United States. It consists
of:
- A brief review of the scholarly research on telecommunications
and urban development.
- A discussion of how communications technologies affect face-to-face
activities and the location of economic activities.
- An analysis of the role of urban concentration in an era of
advanced telecommunications technology.
- An evaluation of telecommuting and its implications for urban
development.
- A summary of research on the Internet and its impact on cities
and metropolitan regions.
- An assessment of the potential of electronic commerce and new
media on urban economic growth.
- A survey of efforts by local units of government and nonprofit
organizations to use telecommunications systems to strengthen
local communities.
- Consideration of municipal regulatory, planning, and public
policy strategies for telecommunications.
- Conclusions regarding the role of telecommunications in the
economic and physical development of cities.
Cities and Communications - A Review of the Research
Although cities are centers for culture, trade, and commerce -
activities that rely on both face-to-face and electronic communication
- remarkably little research has been done on the ways in which
communications technologies affect the function of cities in an
information-based economy. Deregulation of the telecommunications
industry has caused State and local governments to become increasingly
concerned about the effects of new technologies on economic development
in rural and urban areas (Bonnett, 1996; Miller, 1996). However,
as Stephen Graham and Simon Marvin (1996) state, 'Telecommunications
remain far from being a central focus in urban studies or urban
policy-making. The subject of telecommunications and cities is a
curiously neglected and extremely immature field of policy and research."
This lack of systematic knowledge is particularly striking since
Daniel Bell (1979) noted almost two decades ago that "communications
infrastructure is the central infrastructure tying together a society."
Unlike the Nation's transportation infrastructure - the system of
highways, airports, and seaports that has generally been designed
and financed by the public sector - the Nation's information infrastructure
has been built by the private sector, albeit under Federal and State
regulations. It has emerged only recently as the subject of community
debate and discussion. In addition much of the Nation's information
infrastructure, such as telephone switching offices, fiber-optics,
copper cables, and satellite dishes, has traditionally been invisible
to most citizens and local government agencies. But the proliferation
of antennas for cellular telephone systems is generating conflict
in many communities over the size and location of the new communications
infrastructure.
The Nation's cities are at the forefront of the latest advances
in communications infrastructure because they house large information
producers, such as banks, law firms, and insurance companies, that
rely on communications systems to move information by messenger,
telephone, facsimile, e-mail, or express mail. Businesses, such
as financial service firms, manufacturers, and retailers, depend
on telecommunications systems to coordinate activities around the
world. This dependence has led to the demand that modem office buildings
be equipped with high-speed communications systems that link satellites,
fiber-optics, and computers to move information instantly across
the Nation and around the globe.
The reform of telecommunications policies at State and Federal
levels is leading to increased reliance on market criteria to guide
investments in communications infrastructure. Large cities and regions
with dense concentrations of communications users are typically
the first places to get the benefits of the new telecommunications
services. As Dan Salomon (1996) has stated:
The increasing trend towards deregulation and privatization of
telecommunications providers encourages the development of high-end
services on the basis of demand rather than social objectives
which have motivated the universal service requirement. Consequently,
the advanced services enter the advanced markets and slowly diffuse
into the secondary, more dispersed markets.
Thus cities are bound to be affected by emerging changes in the
regulatory approaches and public policies stemming from telecommunications
reform at the State and Federal levels. A report issued by the Benton
Foundation (1996) points out the Telecommunications Act of 1996,
signed into law by President Bill Clinton on February 8, 1996, will
"affect almost every aspect of communications" including local,
long distance, and wireless telephone services; cable and broadcast
television; and the content of television and computer networks.
Communications Technology and the Location of Economic Activities
There are two distinct schools of thought about the effect of telecommunications
on urban centers. Some social theorists argue that new information
technologies will inevitably lead to the economic decline of cities
as electronic communications make it possible to replace the face-to-face
activities that occur in central locations. For example, George
Gilder (1995) states that "we are headed for the death of cities"
due to the continued growth of personal computing and distributed
organizations advances. Gilder further claims that "cities are leftover
baggage from the industrial era."
In this context, cities are no longer needed to access a wide range
of cultural activities and information sources because telecommunications
can bring the library, concert hall, or business meeting into any
home or office. Telephones linked by modems to computers, television
sets connected to direct broadcast satellites, and mobile telephones
in cars or carried by individuals make it possible to enjoy many
of the benefits of urban life without cities' problems, such as
crime, congestion, commuting, and air pollution. Twenty-eight years
ago, Ronald Abler (1970) noted:
[A]dvances in information transmission may soon permit us to
disperse information-gathering and decision-making activities
away from metropolitan centers, and electronic communications
media will make all kinds of information equally abundant everywhere
in the nation, if not everywhere in the world.
Recently, Peter Gordon and Harry W. Richardson (1997) of the University
of Southern California, have suggested that communications technologies
are reinforcing the movement out of cities that the automobile had
initiated: "Rapid advances in telecommunications are now accelerating
the decentralization trends set in motion by the advent of the automobile."
They contend that, "Proximity is becoming redundant.... Entertainment
already is, and instruction is more likely to be, transmitted over
broad-band radio frequencies rather than seen in traditional theaters
or lecture halls. Today's cities continue to become less compact;
the city of the future will be anything but compact."
The widespread belief that telecommunications will lead to the
inevitable decline of the city as a site for the exchange of ideas
and information is based on three untested theories of communication:
- All information activities are conducted more efficiently electronically
than in person.
- Human beings place little or no value on the social and psychological
attributes of the workplace.
- The physical setting in which work occurs is irrelevant, if
not counterproductive, to the performance of individuals and organizations.
However, the relationship between telecommunications and face-to-face
activities is far more complex than most futurists would imagine.
Jess Gaspar and Edward L. Glaeser (1996) suggest that "it is also
possible that telecommunications are not a substitute for face-to-face
interactions, but in fact these two forms of information transmission
are complements. If they are complements, then we should expect
cities and [selected urban] space to get more important as information
technology improves...." They argue that telecommunications can
make it easier for people to initiate relationships that may lead
to face-to-face meetings. They also point out that relationships
involving both electronic and face-to-face meetings produce increased
interaction - both electronic and face-to-face. The implications
of increased interaction reinforce the role of cities as meeting
places, "since a common urban location drives down the costs of
face-to-face meetings. If face-to-face meetings rise in importance,
then more people will try to group together in areas that are easily
accessible to their many contacts, and cities will still have an
economic role to play in the informational economy."
Clearly, the growth of professional meetings and conventions demonstrates
the value that people still place on face-to-face transactions.
Recent estimates indicate that even as the use of informational
technology increases, the number of conventions is actually rising:
Between 1992 and 1995, the number of these events in the United
States rose 11 percent, and further increases are expected in the
next few years (Goldberg, 1997). (Ironically, the rise is partially
attributable to the number of meetings about informational technology.)
Gaspar and Glaeser (1996) point to the rise in business travel over
the past 15 years as an indication that the demand for face-to-face
contact has not diminished, even with the widespread deployment
of information technology. A case can certainly be made for cities
to serve as centers for meetings and face-to-face activities, but
the infrastructure needed to support that function now includes
direct access by airplane, adequate hotel accommodations, and amenities
to attract business travelers. As the demand for interaction increases,
cities capable of supporting dense concentrations of face-to-face
activity will become even more economically competitive. This situation
has led many cities to encourage hotel construction and invest in
sophisticated convention centers and airport modernization and expansion.
Cities such as Orlando and Las Vegas, once principally concerned
with attracting tourists, are increasingly targeting business travelers
and professional meetings, a reflection of the importance of face-to-face
activities in an age of advanced telecommunications.
It is important to note that there is still an unquestioned belief
in technology's capacity to eliminate the need for cities as centers
of interaction. In The Informational City (1989), Manuel Castells
contends that technological change is leading to "[t]he supersession
of places by a network of information flows.... The emergence of
the space of flows [communities linked by communications rather
than by geographic proximity] actually expresses the disarticulation
of place-based societies and cultures from the organizations of
power and production that continue to dominate society without submitting
to its control." This perspective is stated even more strongly by
Nicholas Negroponte (1995), "[T]he post-information age will remove
the limitations of geography. Digital living will include less and
less dependence upon being in a specific place at a specific time,
and the transmission of place itself will start to become possible."
Negroponte's vision is shared by many futurists who argue that
the "electronic cottage" will eventually replace the office. The
emergence of the edge city, a label that Joel Garreau (1991) applied
to the rise of population clusters surrounding suburban office parks,
is a reflection of how both transportation and communication technologies
have fostered the outmigration of work and housing from central
city locations. Information technology has made it possible for
many firms to move their headquarters and support functions to suburban
campuses; others have simply moved their routine data-processing
activities to low-cost settings, in medium-size cities, suburban
areas, or overseas. A report prepared for the Office of Technology
Assessment (1995) points out that information and telecommunications
technologies "are making more economic functions footloose," but
only in regions that provide an advanced telecommunications infrastructure,
skilled labor, and good airport access.
Despite this evidence, individuals and firms that specialize in
developing computer systems and software are remarkably concentrated
in specific cities and regions of the United States, such as Austin;
Boston; New York City; Orange County and Silicon Valley, California;
Salt Lake City; and Seattle. Jonathan Weber (1997) has pointed out
that "even the companies that are at the forefront of the digital
revolution are placing a premium on human contact. At Microsoft,
everyone is fully wired and everyone is expected to show up, every
day, in person, at the company campus if they're not traveling."
The value that firms place on face-to-face activities as a means
to generate new products and develop new services is reflected in
such corporate policies and in the intense concentration of skilled
information workers in the cities and regions discussed in the following
section.
Telecommunications and Urban Concentration
An alternative to the idea that telecommunications technology fosters
the spatial dispersion of economic life has been put forth by geographers
such as John Goddard, Jean Gottmann, and Alien Scott. Gottmann (1997)
proposes that communications technologies work in two directions
by making it possible both to concentrate and to disperse economic
activities. He writes that the telephone had a "dual impact" on
office location: "First, it has freed the office from the previous
necessity of locating next to the operations it directed; second,
it has helped to gather offices in large concentrations in special
areas."
The shift from the factory to the office and the concomitant growth
in white-collar work during the 20th century has had profound consequences
for cities as the headquarters for global businesses that operate
on a 24-hour basis. Advanced telecommunications systems have allowed
firms based in one city to be directly linked to branches and subsidiary
offices in other cities. Cities that were once the centers for the
production of goods are now centers for the production of information
that is distributed around the world. By extending the global reach
of cities that are centers for information-intensive activities,
communications technology has led to the rise of a set of global
cities that are linked to one another by telecommunications networks.
As a result, cities such as Hong Kong, London, Los Angeles, New
York, and Tokyo are linked through a complex network of computers,
undersea fiber trunks, local telephone lines and microwave links,
and communication satellites. The transactions, functions, and meetings
in these cities are not confined to one place but are connected
by advanced telecommunications systems to other cities around the
world.
Rather than consider telecommunications as a substitute for human
interaction, Nigel Thrift (1996) suggests that "the rise of electronic
telecommunications networks may well have produced more, not less,
socialization, much of it face-to-face." According to Thrift, the
principal function of major financial centers is interpreting in
real time the massive amounts of information that are generated
each day: "Since the international financial system generates such
a massive load of information, power goes to those who are able
to offer the most convincing interpretations of the moment." Interpreting
information depends as much on face-to-face interaction as on electronic
technologies, and this is most efficiently done in a handful of
world financial centers.
Scholars such as Annalee Saxenian (1994) have highlighted the different
ways in which a high concentration of research and development activities
in suburban regions such as the Silicon Valley in California and
Route 128 in Massachusetts can generate significant economic growth.
The emergence of new economic clusters, whether in central cities,
near university campuses, or in suburban settings, demonstrates
the continued importance of human interaction in generating ideas,
products and innovation, and the heightened role of telecommunications
in enhancing the productivity of innovative individuals and firms.
Considered in this context, computers and telecommunications systems
have made the modern office building even more prominent as the
organizational node for generating and processing information. Today
banks and financial service firms require buildings equipped with
high-capacity telephone lines; backup power; large, clear floors
for trading rooms; and redundant telecommunications links in the
event of system breakdowns. These requirements have led to the technological
retrofitting of obsolete commercial structures, the growth of new
office districts in central cities, and the concentration of office
parks in edge cities.
Charlotte, North Carolina, the third-largest banking center in
the United States (after New York and San Francisco), is an example
of a city that has thrived as its major commercial banks have expanded
their operations and geographic scope of activities. Charlotte is
thriving precisely because technological innovations have expanded
the geographical reach and role of interstate banking. NationsBank
is explicitly expanding its use of technologically intensive ways
of providing banking services while reducing the need for the traditional
branch bank. According to NationsBank's 1996 annual report, "We
are selectively reducing our investment in bricks and mortar (we
closed or sold more than 200 banking centers in 1996) and expanding
lower-cost and more efficient ways to do business with us." While
NationsBank is undoubtedly driven by corporate strategy, telecommunications
technologies have allowed its plans to go forward. As a result,
the telephone line has replaced the branch bank as the primary instrument
for serving customers. The ornate edifices built to store money
in downtown areas have been superseded by the automated teller machine
(ATM).
One important factor that has contributed to the need for concentrating
information-intensive activities and that has assumed importance
in recent years is the need for high-capacity bandwidth to gain
rapid access to the Internet. William Mitchell (1995) points out
that a "low baud-rate connection puts you out in the boonies, where
the flow of information reduces to a trickle, where you cannot make
so many connections, and where interactions are less intense....
Since the cost of high bandwidth cable connection grows with distance,
information hotspots often develop around high-capacity data sources.
Much as oases grow up around wells."
It should be noted that a study of the distribution of information
technology infrastructure in the United States found that "access
to advanced information infrastructure has become more equally distributed"
over dme. Greenstein, Lizardo, and Spiller (1997) point out that
"the highest levels of information infrastructure" are located in
the Nation's big urban centers, but added that "only a small number
of areas, in particular small and less densely populated regions,
may not have direct access to advanced information technology capital."
Many new technologies are being implemented to increase bandwidth
and capacity of the existing information transportation infrastructure,
particularly the Internet. Fiber-based national high-capacity backbone
networks are being rapidly deployed by telecommunications firms.
An analysis of data provided by Boardwatch magazine on the major
backbone providers finds that the hubs or major "points of presence"
of most backbones are located in cities. Major information-intensive
cities, such as Atlanta, Boston, Chicago, Dallas-Fort Worth, Los
Angeles, New York, Philadelphia, San Francisco, and Washington,
D.C., turn out to be locations of the most hubs.(1) Furthermore,
a report by Goidman Sachs Global Research (1996) affirms that "phone
companies in general will continue to put fiber in the ground, build
out broadband where it makes the most economic sense, and focus
their efforts on those areas that are attractive from the standpoint
of consumer demographics."
High-speed telecommunications access, however, does not depend
only on access to the fastest backbone, because the transfer of
information packets is only as fast as the slowest point in their
journey. Bringing high-speed access to users in the so-called local
loop is expensive (Blau, 1996). Some of the most promising technologies
in the short- to mid-term (20 to 40 years) rely not on deploying
fiber but on the existing copper infrastructure. These technologies
(called DSL for digital subscriber line) have an inverse distance-to-speed
ratio; that is, the greater the distance the signal has to travel,
the slower the speed. In fact, the greatest benefit is achieved
in an area approximately 2 miles or less from the service provider
(Freed, 1996). This technological limitation meanstest cases asidethat
the first mass deployment of high-bandwidth access is likely to
take place in areas of concentrated demand, such as information-intense
central cities or suburban office centers.
The comparative advantages of dense urban areas are not limited
to high-bandwidth access. They extend to the deployment of new information
technologies in general, since most cities that have a high concentration
of information industries such as finance, insurance, and real estate
are also high-use telecommunications customers (Guidman, 1994).
A technological alternative to Internet access through telephone
lines is already being marketed but in only a few U.S. cities with
a concentrated number of users. This alternative provides wireless
Internet access through a system of radios mounted on utility poles
that are accessed by radio modems. Metricom, an Internet service
provider based in Los Gatos, California, has already wired the San
Francisco Bay Area and intends to wire the largest cities where
there is substantial online activity ("The Net, Via Thin Air," 1996).
Furthermore, the recent announcement that Teledesic Corporation
plans to develop a new communications system based on low-Earth-orbit
satellites that can provide Internet connections around the world
means that remote areas will have access to high-speed Internet
service without relying on terrestrial fiber-optic or copper cable
systems. With such satellites, users would need to rent or purchase
antennas and signal decoders that would plug into telephones or
computers. This technology would make it possible to conduct video
conferencing and advanced telecommunications activities almost anywhere
in the world. Seen in the context of telecommunications increasing
interaction, it would intensify the global demand for both face-to-face
and electronic communications in the next century.
The comparative advantage of large metropolitan regions as the
sites for new capital investment in telecommunications should allow
information-intensive cities to maintain their economic strength
as places where both face-to-face and electronic communications
are affordable and accessible. Far from proving the unmitigated
decentralizing force of technology, current events bear out Thomas
Mandeville's conclusion (1983) that technology facilitates both
centralization and decentralization of tasks and jobs.
Telecommuting, Small Business, and the City
Almost every technological forecast of the urban future emphasizes
the enormous potential of telecommuting, the capacity to do work
at home or remote locations, rather than commute to an office or
work environment. Changes in the organization of work, in the composition
of the work force, and in the cost and capability of personal computers
are contributing to the rise of telecommuting in the United States.
Advanced information systems make it possible for workers to be
electronically accessible without being physically confined to an
assigned office. In addition, the increased need for flexible hours
to retain and attract employees has reinforced the appeal of telecommuting
for both individuals and managers. According to at least one management
consulting firm, approximately 9 million people regularly telecommute,
and approximately 25 million will telecommute by 2000. However,
most telecommuters work at home only 2 or 3 days a weekthe balance
of their work is conducted in an office (McQuay, 1995).
Despite the popular rhetoric that telecommuting will replace the
need for offices, most workers do not have jobs that allow them
to have substantial freedom from their work sites. Most of the largest
growing occupations in the United States involve jobs that are location
dependentthey require the onsite presence of the worker. The well-publicized
growth of the service sector involves many location-dependent jobs
(Salomon, 1996). Thus while many entrepreneurial jobs offer the
potential for working at home, work will not be totally dispersed
to the "cottage" or countryside in the next decade.
It is useful to remember that long before e-mail and the Internet
were developed, teleworkers conducted all or part of their work
from home. Operating a business from home, full- or part-time, is
increasingly feasible with advanced telecommunications systems.
Many people have traditionally worked at home on an informal basis:
reading reports, preparing for meetings, or grading papers. The
home telephone line linked to a computer and modem has expanded
that informal mode of work into a far broader set of activities.
Telecommuting is also being used by businesses and public agencies
as a way to reduce air pollution from automobiles and as a technique
for reducing highway congestion at peak periods. Several studies
have suggested that telecommuting can increase productivity in an
organization, improve employee morale, reduce the stress associated
with commuting, and help companies recruit highly skilled employees.
However, telecommuting presents several obstacles. Serious concerns
have been expressed about the social isolation of people who work
at home alone. Even some studies recommending telecommuting add
that the problem of social isolation should be dealt with by limiting
the number of days an employee can do so (Lewis, 1996). Resentment
by fellow workers has occurred in some cases, and unions have opposed
telework for fear that it would diminish the opportunity to organize
workers (Argyle, 1990). One study reports:
[I]t is not self-evident to us that home-based teleworking is likely
to be sustainable on any appreciable scale. The reasons for reaching
this view include the problems of social isolation for individual
teleworkers, the difficulties of managing large-scale telework schemes,
the risk of losing both creativity and team spirit within organizations
with substantial numbers of home-based teleworkers, and the economic
precariousness of much freelance work. (Gillespie et al 1995)
The experiences of public organizations and private firms indicate
that remote work has distinctive limits. Despite the massive investment
in information technology by individuals and businesses over the
past two decades, the office environmenttypically in a central city,
but often in the suburbsremains the fundamental organizing element
of the information economy. Trends in office design also shed light
on the importance of central offices as places where ideas are exchanged.
Offices (even those engaged in computer software development) are
increasingly turning to cubicles as opposed to individual rooms
to foster "teamwork, cooperation, and shared knowledge" (Lohr, 1997).
At the same time, technological innovations and the reduced costs
of computers and long-distance telecommunications are now making
it possible for entrepreneurs and small businesses to take advantage
of telecommunications technologies and to compete in national and
international markets. James E. Katz (1996) suggests that cellular
telephones are especially important to small firms: "Wireless communication
can help small and medium-sized businesses, and especially the one-person
shop." In contrast with technological innovations that were initially
used by large organizations and subsequently adopted by small firms,
mobile telephony has been most heavily used by the self-employed
and by small businesses. A study by a British telecommunications
firm found that a majority of its mobile telephony users were self-employed
and one-fourth were in firms with fewer than 100 employees.
The Internet, Cities, and Regions - A Summary of the Research
The Internet is transforming the ways in which individuals and
firms obtain information, market services and products, and communicate
within and between organizations. Access to and use of the Internet
is an essential requirement for obtaining timely information and
for distributing information that was once available only in libraries
or through books, newspapers, magazines, and other publications.
In March 1997, the Federal Communicacations Commission (FCC) issued
a report stating:
The Internet is substitutable for all existing media. In other
words, the Internet potentially poses a competitive threat for every
provider of telephony, broadcasting, and data communications servicesd….
The Internet creates alternate distribution channels of pre-existing
content, but more importantly, it permits delivery of new and hybrid
forms of content (Werbach, 1997).
Even in this arena, however, the influence of technology is selecdve.
While the Internet will undoubtedly have a competitive effect on
other forms of content distribution, the content being distributed
continues to emanate largely from cities where media have traditionally
been concentrated. The Internet provides a powerful vehicle for
delivery of old content while stimulating new content production
because of the ease of startup and distribution.
The development of Internet-related technologies is also having
a profound effect on the headquarters of major financial firms by
allowing a corporation's headquarters office to exert a new form
of control over their satellite offices. For instance, BankBoston
is using Java, an Internet programming language, to deploy "complex
programs across a smorgasbord of operating systems across the world."
(Stirland, 1997.) Java programs are developed at the center (where
such activity remains) and deployed to branch offices. The final
effect is to concentrate decisionmaking and control in the city
of Boston where BankBoston is headquartered. All indications are
that such enabling technologies will soon be widely deployed.
According to data compiled by FCC, there are approximately 47 million
Internet subscribers in the United States and more than 175 countries
are now connected to the Internet. Originally created by the U.S.
Department of Defense as ARPANET, the Internet was transformed in
1984 when the National Science Foundation (NSF) took control of
it, renamed it NSFNET, and linked five supercomputers across the
United States. The Internet has grown rapidly in recent years through
connections to conventional telephone systems. According to Barney
Warf (1995), "The Internet is the largest electronic network on
the planet…and has become the single most important mechanism for
the transmission of scientific and academic knowledge."
The Internet has evolved into a medium that serves many more purposes
than anyone anticipated. With Internet use growing at approximately
40 percent a year nationally, new technologies - high-speed microwave
and wireless communications and enhanced cable television systems
- will compete with local telephone companies as direct access providers
to the Internet. Investment in the Nation's telecommunications systems
to accommodate Internet traffic will have its most obvious effects
on those cities and metropolitan regions with the largest concentrations
of Internet users. Rather than undermining cities and major metropolitan
regions, the Internet may reinforce their comparative advantage
as centers for information production and transmission.(2)
According to a recent study, 50 percent of all U.S. Internet hosts
are located in just five States: California, Massachusetts, New
York, Texas, and Virginia.(3) Within these States, Internet hosts
are densely concentrated in a small number of metropolitan regions.
Furthermore, 90 percent of all Internet hosts are in 21 States,
primarily on the East and West coasts of the Nation; in the Midwestern
States of Michigan, Minnesota, and Ohio; and in a cluster of Western
States, including Colorado, New Mexico, Texas, Utah, and Washington.
This concentration may represent a natural process of technological
diffusion, a technological gap that will close in the future. Nevertheless,
Internet activity in the United States is clearly associated with
large cities and metropolitan regions.
Within and among cities and regions, the Internet is creating a
new set of leaders and losers. Five large metropolitan regions in
the United States account for approximately one-third of the Nation's
Internet hosts. The largest single concentration of Internet hosts
is based in Silicon Valley, California (encompassing Alameda, San
Francisco, San Mateo, and Santa Clara counties).(4) This region,
with major universities, high-technology firms, and computer software
companies, has almost twice as many Internet hosts as southern California's
Los Angeles, Orange, and San Diego counties combined. Middlesex
County, Massachusetts, the home of many of the high-technology firms
along Route 128, has 4.3 percent of the Internet hosts in the United
States, the second-largest concentration of Internet hosts of any
county in the Nation. Los Angeles County has the third-largest concentration
of Internet hosts - 2.8 percent of the Nation's total.
A hierarchy of Internet host concentrations can be found in major
metropolitan regions in the United States. The top five have 40,000
Internet hosts or more, and a second tier of regions includes cities
such as Atlanta, Austin, Boulder, Charlotte, Chicago, Dallas, Minneapolis-St.
Paul, Pittsburgh, Salt Lake City, and Seattle. Cities such as Detroit,
Houston, Miami, and New Orleans have yet to develop as centers for
Internet host computers. This pattern confirms Robert Warren's observation
(1989) that "the uneven distribution of benefits from telematics
exists among, as well as within, urban regions."(5)
Given the heightened role of information in a knowledge-based economy
and the great value placed on high-speed communications, the location
of Internet hosts suggests that urban and metropolitan regions may
avoid decline tiecause of telecommunications technology. In the
19th century, access to a deep-water port was essential for the
growth of cities; at the end of the 20th century, high-speed, reliable
access to the Internet may be the critical factor in regional development.
Despite the rhetoric surrounding the Internet, high-capacity bandwidth
is not yet available in most households, and downloading information
from the Internet can take a substantial amount of time. But universities,
corporations, government facilities, and commercial office buildings
with high-capacity links to the Internet offer users substantial
advantages for obtaining and sending information.
Municipal governments are also actively involved in developing
their own World Wide Web sites to disseminate information about
local government activities and to provide a way for citizens to
contact local officials. Samuel Nunn and Joseph R. Rubleske (1997)
found from their content analysis of 39 municipal Web sites that
the typical site provided information on government operations and
services, government and citizen interaction, legislation, and elected
officials. Cities, however, were not found to be taking advantage
of the more advanced technological characteristics of the Internet,
such as electronic filing of forms and other transaction-based features.
New Media, Electronic Commerce, and Urban Growth
The Internet is emerging as a new source of jobs and economic development
for firms based in large cities. Businesses increasingly rely on
the Internet to sell their products and services. One computer manufacturer
sells more than $2 million in computers and related equipment each
day on the Internet, and corporate demand for the design and construction
of Web sites is expected to be a $10 billion industry by the end
of the century. Entertainment companies, advertising agencies, and
financial service firms are developing new products and services
to be distributed electronically to the home and office. Electronic
commerce is expected to be a huge industry in the very near future.
According to some media analysts, "ecommerce" will be an $11.7 billion
industry by 2007.(6)
The potential for commerce and other forms of revenue from the
Internet is having a positive effect on job growth in cities, where
most companies poised to reap its advantages are located. A significant
amount of effort is being directed toward production for the new
medium. Startups and subsidiaries of large companies have been established
to design Web sites and create electronic information services in
a handful of cities, such as Austin, Los Angeles, New York, San
Francisco, and Seattle. The new multimedia industry needs a broad
array of talent harnessed to the latest computer and graphics technologies.
Large cities and metropolitan regions are best equipped to supply
this skilled labor. They already have the writers to produce copy,
artists to design graphics, musicians to deploy sound, and skilled
technicians to integrate the various components.
The recently deployed multimedia industry is not geographically
dispersed across the country but based in urban centers where such
talent is accessible and an advanced telecommunications infrastructure
is available. Alien J. Scott (1995) has found that two regions in
California - the San Francisco Bay Area and the southern California
region, including Los Angeles and the immediate surrounding counties
- account for approximately 90 percent of multimedia producers in
the entire State. In the San Francisco Bay Area, the multimedia
industry consists primarily of technology-intensive firms, whereas
in the southern California region, the multimedia firms are generally
involved in entertainment and communications activities.
New York City, the Nation's financial and cultural capital, is
also home to an impressive amount of activity, stemming from the
growth of the Internet and the deregulation of the telecommunications
industry. The economic importance of new media to New York City
has been analyzed in a 1996 study by Coopers & Lybrand. The
report stated that new media businesses were concentrated in Manhattan,
south of 41st Street, in an area known as Silicon Alley. The study
found that firms in Silicon Alley generated more than $1.04 billion
in gross revenues and provided more than 18,000 full-time-equivalent
jobs. Coopers & Lybrand also found that multimedia firms considered
access to a high-quality telecommunications infrastructure to be
more important in future locational decisions than the quality of
life in New York - a fact that is spurring "recycling" of old urban
real estate.
In lower Manhattan, several office buildings have been rewired
to accommodate firms that require high-capacity telephone lines,
and in downtown Los Angeles, where there is a surplus of vacant
commercial space, new telecommunications infrastructure has been
used to attract tenants to vacant office buildings. One of the most
successful examples of using new telecommunications systems to revive
old real estate is a 400,000-square-foot office building at 55 Broad
Street in lower Manhattan - now the New York Information Technology
Center - which serves as a magnet for high-technology firms seeking
access to state-of-the-art telecommunications systems (Trachtenberg,
1996).
Using Telecommunications to Strengthen Urban Communities
Numerous efforts are under way to use communications technology
to increase citizen awareness and involvement in local activities
in towns, cities, and neighborhoods. Douglas Schuler (1996), author
of New Community Networks: Wired for Change, states:
[C]ommunity networks (sometimes, called civic networks, Free-Nets,
community computing-centers, or public access networks), some
with user populations in the tens of thousands, are generally
intended to advance social goals, such as building community awareness,
encouraging involvement in local decision making, or developing
economic opportunities in disadvantaged communities.
An example of such a local community network is the Liberty Net
in Philadelphia, which contains information on economic opportunities
and business organizations. In East Palo Alto, California, a city
with 26,000 residents, a 65-percent high school dropout rate, no
branch banks, and only one ATM, a successful nonprofit organization
- Plugged In - teaches young people how to use computers, design
Web pages, and create desktop publications. Plugged In also operates
a chat service that will soon be carried on the Web (Richtel, 1997).
A variety of public and nonprofit organizations are involved in
efforts to develop computer centers in public housing projects,
community centers, and libraries, thereby providing low-income individuals
access to the Internet, whether or not they have a telephone at
home. In Berkeley, California, workstations accessible to the public
have been placed in laundromats and at gathering places for the
homeless (Mitchell, 1995). Most important, the U.S. Department of
Housing and Urban Development (HUD) has established the Neighborhood
Networks program to provide computer hardware and software to residents
of HUD-insured and HUD-assisted housing. In East Harlem, Manhattan,
HUD has established a Neighborhood Networks computer learning center
at Taino Towers, a 676-unit, federally insured and assisted apartment
complex. The computer laboratory has 18 Pentium-chip-powered computers
and offers employment assistance, plus computer literacy training
and general equivalency diploma courses.
In Charlotte, North Carolina, a project supported by IBM has been
placed in a public housing complex and in the public library to
allow parents to learn about their children's performance in school.
The San Francisco Unified School District is working closely with
the San Francisco Housing Authority to provide computer access and
training in public housing projects, homeless shelters, and family
service centers.
It is important to remember, however, that even as Internet laboratories
proliferate, a considerable portion of the Nation's population does
not have basic telephone service. Large sections of central cities
often include low-income households that cannot afford such basic
services (Organisation for Economic Co-Operation and Development,
1992; National Telecommunications and Information Administration,
1995). As a recent report noted, "Americans most prone to phonelessness
are not rural and elderly as is often assumed. They are urban, young,
lower income, and within the lower income and age brackets, disproportionately
black and Hispanic" (Mueller and Schement, 1996). According to the
Bureau of the Census, U.S. Department of Commerce, 94.2 percent
of all households in the Nation have a telephone. Approximately
5.6 million households are without telephones in the United States,
affecting approximately 15 million individuals. A report prepared
for the National Telecommunications and Information Administration
(1995) states: "The lowest telephone penetration rates exist in
central cities.... The Northeast central cities ranked as the region
with the largest proportion of telephone and computer 'have nots,'
followed by Southern cities and rural areas." These households are
concentrated in large cities and consist predominantly of young,
minority, and poorly educated persons.(7)
The absence of telephone service in such a large number of households
limits those citizens' ability to obtain information about jobs,
to be in contact with healthcare providers, and to participate in
telephone-based educational tutoring, as well as prevents their
access to the Internet. However, several alternative technologies
may reduce the burden of being without a telephone. The growth of
storefront pay telephone centers, typically for international calling
customers, also provides local telephone service in low-income neighborhoods.
In addition, new forms of wireless technologies, including two-way
paging, may be an alternative to conventional telephone service
in certain communities. Beepers and paging services are used extensively
in inner-city neighborhoods, yet little is known about who uses
them, what purposes they are used for, and what their relationship
is to existing telephone networks. Mueller and Schement (1996) believe
that "narrowband, two-way paging services have enormous potential
to replace POTS [plain old telephone service] as the building block
of universal service. Simple paging services could limit telcos'
[telecommunications companies] exposure to bill nonpayment while
enhancing the communication access of otherwise phoneless people."
One strategy that addresses the phoneless population is to provide
voice mail to low-income individuals. This is the principal activity
of the Community Voice Mail Project (CVM), which was initiated in
Seattle but has spread to approximately 20 cities in the United
States. CVM provides people without telephone service with a seven-digit
telephone number and access code to retrieve messages from any public
or private touch-tone phone. In Seattle, a toll-free number donated
by Frontier Communications of New England, Inc., permits CVM users
to retrieve messages from pay phones at no cost. In addition, many
communities are providing e-mail and voice mail to their users.
The wiring of public schools has become a goal at the State and
Federal levels as part of their efforts to improve education with
new technologies. According to the National Center for Educational
Statistics (1996), 50 percent of public schools indicated that they
had access to the Internet, but "only 31 percent of schools with
a large proportion of students from poor families had access to
the Internet, compared to 62 percent of schools with relatively
few students from poor families." It is important to note that more
than wires are needed to build a modern telecommunications infrastructure
in a school. Wiring the public schools is "only a small part (4-15
percent) of the total cost for technology infrastructure in a school.
High powered workstations, local area networking and staff development
are three of the largest cost components for implementation." (NYSERNet,
1996.) Network infrastructure is one of the most rapidly changing
and volatile fields in the communications industry, so there is
considerable uncertainty about the lifespan of such "wiring."
Schools should enforce public policies for wiring that recognize
the need for adequate funds to acquire, operate, and maintain related
computers and equipment. This need poses a special challenge to
urban school districts that are typically less affluent than many
suburban districts. Ironically, it is less expensive to link public
schools in central cities to the Internet through high-capacity
T-l telephone lines than in rural areas. The cost of installing
high-capacity telephone lines is distance sensitive and, therefore,
it costs 4.5 times more per month to be connected to the Internet
using a T-l line in the 518 area code in upstate New York than in
Manhattan's 212 area code (NYSERNet, 1996).
Municipal Planning and Policymaking Strategies for Telecommunications
With a few exceptions, local governments in the United States have
traditionally limited their policymaking role in telecommunications
to the granting of municipal franchises for cable television systems.
The Telecommunications Act of 1996 altered the cities' role in regulating
telecommunications facilities and providing their services. Nunn
and Rubleske (1997) argue that "federal policy makers expect local
governments to devise their own local approaches to the use of advanced
infomatics to take advantage of whatevcer benefits the local community
believes the NII [National Information Infrastructure] can provide
for citizens." They report that the "closest thing to a federal
policy of local information highways is the Telecommunications and
Information Infrastructure Program of the National Telecommunications
and Information Administration," which provides grants to local
governments, educational institutions and nonprofit groups to use
telecommunications to improve access to and the quality of publich
services.
According to a legal interpretation of the Telecommunications Act
of 1996, cities still have the ability "to manage rights-of-way
and to receive compensation for the use of these rights-of-way."
However, they must do so on a "nondiscriminatory and competitively
neutral basis" (Bonnett, 1996). The Act also maintains local zoning
authority over cellular towers and other wireless telecommunications
facilities, and it allows municipalities to provide telecommunications
services "in connection with a municipal electric utility, municipal
water utility or on a stand-alone basis" (Thomas, 1996).
Many communities are using their authority over rights-of-way and
land use to develop new regulatory approaches to telecommunications
facilities that are located in residential or commercial zones.
The San Francisco Planning Commission has adopted guidelines designed
to ensure that rooftop wireless telephone antennas are as inconspicuous
as possible. To maintain an aesthetic standard, cellular towers
in Jefferson Parish, Louisiana, are required to be disguised as
trees; the tower is "required to resemble a woody tree with a single
trunk and branches on its upper part." (National League of Cities,
1996.) Piano, Texas, has imposed height restrictions on cellular
telephone towers, and towers that are on building facades must be
painted to match the structure.
Other cities have formulated policies for telecommunications that
are based on broader social and economic objectives. Birmingham,
Alabama, will receive $500,000 in cash and benefits by providing
to a cellular telephone company a 25-year lease for two antenna
sites on city-owned golf courses. Birmingham obtains rental fees,
cellular telephone service to the city's emergency and public safety
personnel, and improvements on the municipal golf courses. Huntsville,
Alabama, has formulated a public-private partnership with six personal
communication service providers to control the placement of towers
in the community. The city, in conjunction with a third party, has
developed a plan to have a single network of tower sites, and will
receive both long-term revenue from use of the towers and access
to the towers for municipal services.
Several communities are also involved in developing telecommunications
systems to strengthen their economic competitiveness. In part because
of dissatisfaction with its cable provider, Tacoma, Washington,
is proceeding with an ambitious plan to build a fiber-optic network
in every neighborhood and bring coaxial cable into every household
and business. The city will build the network through City Light,
the publicly owned utility company.
Clearly, cities are pursuing a variety of proactive strategies
to make certain that they have adequate telecommunications systems
and to ensure that privately built telecommunications systems do
not disrupt neighborhoods or the physical amenities of residential
communities. This is not, however, an easy task. Over the next few
years, armies of powerful lobbyists from cable companies, long distance
providers, regional operating corporations, utilities, and other
interested parties will descend on city halls and State capitols
to promote their agendas.
Cities also face another direct threat: the potential loss of billions
of dollars of revenue as online commerce grows. With consumers expected
to increasingly use retailers that set up shop on the Internet,
many cities with thriving retail districts stand to lose sales tax
revenue because of the change in consumer purchasing behavior. Furthermore,
the health of businesses in the retail districts is itself in question.
This matter is not trivial for major urban areas, in which manufacturing-oriented
employment has been replaced by retail jobs over the past three
decades. Even in New York City, which has a diversified economy,
approximately 17 percent of its overall tax revenue is generated
by sales taxes (Citizens Budget Commission, 1997). States may try
to make up for some of the lost revenue by imposing a telecommunications
sales tax on access providers, but the odds are against its success.
The governors of California, Massachusetts, and New York have voiced
opposition to targeting access providers. Massachusetts has already
passed a law prohibiting taxes on access providers. Federal legislation
seeking to prevent localities from imposing new taxes on the Internet
- through access providers or other means - has been introduced
in Congress. The legislation, introduced by Senator Ron Wyden (D-Oregon)
and Representative Chris Cox (R-Califomia), was criticized as an
intrusion in local affairs at the U.S. Conference of Mayors' June
1997 meeting.
Cities must also deal with the inherent biases in Federal policy
that favors rural areas over urban. In the wake of the Telecommunications
Act of 1996, FCC is changing its rules to fund services in rural
areas. A proposal likely to emerge is a surcharge on revenue, which
will amount to a massive subsidy from urban to rural areas. While
providing services in remote areas is a worthwhile goal, it will
impose significant costs on urban areas. In addition, large subsidies
to rural areas may inadvertently discourage investment in innovative
local-loop technologies in cities.
Conclusions
For the past half-century, futurists and urban planners have predicted
that advances in telecommunications would bring about the economic
demise of urban centers. While many cities in the United States
have experienced population loss and economic decline, a large number
of cities and metropolitan regions can benefit from the development
of advanced telecommunications networks and, particularly, the Internet.
In general, technology has had mixed results with regard to centralizing
and decentralizing forces. Forecasts that teleconferencing would
make air travel unnecessary have proven to be wildly exaggerated,
as have forecasts about telework and the electronic cottage replacing
the office environment. Contrary to the conventional wisdom, new
telecommunications technologies can strengthen cities with a high
concentration of information-intensive activities and firms that
depend on both face-to-face activities and electronic communications.
Many cities have distinct advantages in an information-based economy:
They have large concentrations of media, advertising, entertainment,
educational, healthcare, and financial services. Telecommunications
technologies can extend the reach of these services far beyond their
traditional physical boundaries. As these services prosper, so can
the cities that house them.
Many cities also have technological advantages. The private sector
is making new investments in technologies to improve bandwidth for
the flow of information through national backbone networks. Their
reach into localities is likely to occur first in cities that have
dense concentrations of businesses and population. The availability
of high-speed access is, in turn, likely to spur economic activity
and telecommunications innovation.
Local governments face several telecommunications-related challenges:
They need to attract and retain technology-intensive firms, develop
high-speed telecommunications access in their city, and try to guarantee
access to information to low-income residents in an era of deregulation.
Without access to the Internet, individuals and community groups
face serious obstacles to obtaining programs and reports from government
agencies and private sources.
Although cities have a vast array of public institutions that should
provide the natural access points for low-income individuals, many
of these institutions are plagued with problems. For example, public
school systems in large cities often have inadequate funding, crowded
classrooms, and aging buildings. Any school modernization and building
program should include the provision of classroom computers linked
to the Internet. Given the private sector's role in the production
of computers and the development of new telecommunications systems,
a collaborative enterprise between the public and private sectors
is necessary to achieve the goal of linking every public classroom
to the Internet. School programs must also include training for
the new multimedia industries that are burgeoning in many central
cities.
In some communities, the public library can serve as the community's
information resource; in other communities, housing projects, religious
organizations, and recreation centers can be used for facilitating
access to electronic information. Providing access to the Internet
must be part of the planning of any new construction or rehabilitation
of the existing built environment. And, as new technologies move
to the mass market, policies must address the need for universal
service in all households, including those of the urban poor.
Cities can capitalize on their role as major users of information
and telecommunications systems. Local public services, such as libraries,
tax and finance administrations, and criminal justice systems are
information intensive; they depend on computers, telephones, and
sophisticated information retrieval and imaging systems. Public-sector
organizations constitute a significant market for advanced telecommunications
equipment, yet they rarely use their purchasing power to achieve
economic and community development objectives. Local governments
play a vital role in the telecommunications infrastructure through
their purchasing power, authority over municipal franchises, and
control over land use.
Municipalities can also use information technology to reform their
own internal structures and set up feedback loops on the effectiveness
of municipal services. Currently most municipal Web sites provide
information about public services. Few take the next step to allow
the citizenry to make queries about specific situations or monitor
delivery of services.
A city's future as an information center depends on information-producing
activities that occur through both face-to-face and electronic communications.
Public policies that foster investment and competition in the telecommunications
industry are necessary to allow cities to retain information-intensive
industries and the residential populations necessary to support
stable neighborhoods and economic activity.
Notes
1. Based on Anthony Townsend's analysis of data from Boardwatch
magazine March/ April 1997 as posted on the publication's Web site.
2. Researchers use data from Matrix Information and Directory Services,
Inc., (http:// www-mids.org) and the Netwizards Internet Domain
Surveys (http://www.nw.com) to analyze the location of Internet
hosts in the United States. The data reflect all uniquely named
computers connected to the Internet on a full- or part-time basis,
thus measuring the number of computers engaged in frequent or continuous
Internet access and service provision.
3. For more detailed information, see Moss and Townsend, 1996.
4. The high concentration of computer software and information
technology companies in the San Francisco Bay Area has generated
competition for office space on the San Francisco Peninsula (McCloud,
1996).
5. Also see Nunn and Warren, 1996.
6. Paul Kagan and Associates, July 1997.
7. National Telecommunications and Information Administration.
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of Policy Development and Research
Volume 3, number 3. 1998
U.S. Department of Housing and Urban Development,
Office of Policy Development and Research