Telecommunications, World Cities and Urban Policy

Introduction

Cities are the communication centers of our civilization yet, we know remarkably little about how information and telecommunications technologies affect central cities and their surrounding metropolitan areas. Many observers believe that new information systems will ultimately lead to the demise of cities by allowing electronic means of communication to substitute for face-to-face exchanges. (Webber, 1973; Downs, 1985; Kellerman, 1984). Technologies, such as telecommuting, teleconferencing, and electronic mail will, it is argued, eliminate the differences between home and office and city and country by providing the benefits of urban life without confronting the problems of the city such as commuting, crime, congestion, and pollution. This article explores the way that telecommunications technologies are leading to the centralization of business services in a small number of principal world cities, while simultaneously leading to the dispersion of routine information-based activities to the periphery of the metropolitan regions surrounding the largest central cities. The article consists of three parts: 1) a discussion of the communications deregulation and its effects on telecommunications infrastructure; 2) an analysis of the office location for advanced 'producer services' in major world cities: 3) a reconsideration of urban policy and economic development strategies for information-intensive cities.

 

Cities and Communications

The rise of the modern city is integrally linked to advances in communications technology: the telephone was essential to the development of the office building, the key architectural innovation of the twentieth century city. Prior to the telephone, human messengers were the primary means of bringing information into and out of office buildings. As one observer wrote in 1908, 'Suppose there was no telephone and every message had to be carried by a personal messenger. How much room do you think the necessary elevators would leave for offices? Such structures [skyscrapers] would be an economic impossibility.' (Pool, 1980).

Despite the contribution of communications to urban growth, far more attention has been given to transportation systems than to communications systems in the study of cities. There exists a considerable geographical literature on the analysis and design of transportation networks, but there is no comparable literature on communication networks' (Abler, 1974). Although investing in urban infrastructure is widely regarded as a means to stimulate urban development, urban infrastructure policies have primarily focused on physical systems for the movement of people, water, cargo, and vehicles. 'As compared to all other major urban infrastructure investments, the telephone impact is the least documented, even though it is just about the oldest and the most familiar' (Meier, 1985).

The telecommunications infrastructure which includes the wires, ducts, and channels that carry voice, data, and video signals remains a mystery in most cities. In part, this is due to the fact that key components of the telecommunications infrastructure, such as underground cables and rooftop microwave transmitters, are not visible to the public (Blazar, Spector, and Grathwol, 1985). Unlike airports and garbage disposal plants, telecommunications facilities are not known for their negative side effects, and, until recently, have not been the source of public disputes and controversy. Moreover, the predominant role of either regulated monopolies or central government agencies in the design and development of communication facilities has meant that there have been few opportunities for local governments to intervene, whether through land use regulation or capital assistance. Airports, highways, and subways, by contrast, regardless of their funding source, are highly visible elements of the urban infrastructure that typically fall under the jurisdiction of one or more local and regional agencies. This situation is gradually changing, as public agencies have come to recognize the importance of communications in economic development and, as citizens groups have expressed concerns about potential health hazards from telecommunications facilities.

More than a quarter of a century ago, Meier observed that 'an intensification of communications, knowledge and controls seemed to be highly correlated with the growth of cities' (Meier, 1962). Although Meier emphasized the need for systematic measures of the transactions that occur in cities, with the notable exception of Abler, Pred, Goddard and Gottmann remarkably little empirical work on communications within and among cities has been done. One area which has received considerable attention has been the relationship of communications to the location of offices (Goddard, 1975; Goddard and Pye, 1977; Hepworth, 1986; Pye, 1979; Thorngren, 1977).

 

Alternative Approaches to Communications and Urban Growth

There are two major schools of thought regarding the effects of communications technology on office location (Bakis, 1981). The conventional wisdom is that new information and communications technologies will eliminate the need for central cities since technology makes it possible to transact business without requiring face-to-face contact. Abler observed that with the shift from industrial to information activities, the locational advantages of a city would diminish. 'Advances in information transmission may soon permit us to disperse information-gathering and decision-making activities away from metropolitan centers, and electronic communication media will make all kinds of information equally abundant everywhere in the nation, if not the world. When that occurs, the downtown areas of our metropolitan centers are sure to lose some of their locational advantages for management and governmental activities' (Abler, 1970).

More recently, a study of office location concluded that 'the central city is continuing to lose its locational advantage and uniqueness within the metropolitan spatial structure. Technological changes continue to lower the necessity for concentration. Emerging telecommunications technologies promise an even greater freedom of locational choice' (Kutay, 1986). The proposition that cities and communities need not be defined by a sense of physical place and that accessibility through communications systems would replace propinquity in the creation of communities was raised by Webber who observed that 'the glue that once held the spatial settlement together is now dissolving, and the settlement is dispersing over ever widening terrains' (Webber, 1968). Although Webber was a pioneer in recognizing the significance of communications in extending the boundaries of social communities, he overestimated the degree to which technology would erode the need for cities and the potential for remote areas to replace metropolitan centers.

"For the first time in history, it might be possible to locate on a mountain top and to maintain intimate, real-time, and realistic contact with business or other associates. All persons tapped into the global communications net would have ties approximating those used today in a given metropolitan region" (Webber, 1968).

The second approach has been taken by Gottmann who argues that the telephone has 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' (Gottmann, 1977). The effects of telecommunications systems on cities depends on the functions that urban centers perform. The shift from the factory to the office and the concomitant growth of white-collar work beginning in the nineteenth century had enormous consequence for cities. 'The growth of white-collar occupations of all kinds, then, is without doubt the most important single explanation for the growth of the world cities in the period since 1850' (Hall, 1984). In the future, it will be the computer and telecommunications system, rather than the white collar which drives urban growth, and, in certain cases, decline.

While advances in transportation and communications technologies have long made it possible to disperse both the headquarters and production of manufacturing activities to suburban locations, cities that are centers for 'information-intensive services', (e.g. accounting, advertising, banking, law, management consulting, publishing) are likely to benefit from the greater use of sophisticated information and telecommunications technologies. The opportunities that communications technologies present for multinational firms to engage in the provision of global services has also heightened the value of information to co-ordinate international activities. If the possession of product, process, or material technology is one of the foundations of ownership advantages in manufacturing industry, then that of information and management, organizational and marketing technology, is the key to success in the provision of business services' (Dunning and Norman, 1983). In fact, the greater the extent of geographic decentralization, the greater the need for centralization of key control activities. 'Telecommunications has eliminated the dichotomy between centralization and decentralization and allowed decentralization with centralization' (Keen, 1986). Not all cities will benefit from 'telecommunications technologies; rather, those cities whose economic life is based on the exchange of information, both face-to-face and electronically, will be strengthened by the capacity to participate in the increased global marketplace for business services through communications technologies. Indeed, Chinitz suggests that communications technologies will improve the efficiency with which information is transmitted in central cities; '... technological developments and capital investments which facilitate interaction within the CBD and reduce congestion favor the CBD by expanding its holding capacity. ... the new CDP [computer and data processing] technologies, by facilitating communication within the CBD will expand its capacity' (Chinitz, 1984).

 

International Information Capitals

New Telecommunications technologies, in conjunction with the internationalization of services and finance, are strengthening a handful of world cities such as New York, London, Tokyo, Los Angeles, and Hong Kong. These cities, at one time centers for the manufacture of goods, are now the centers for the production of information that is distributed electronically around the globe. In reviewing the changing economic fortunes of industrial cities, Newton has identified a similar trend in urban transformation, without explicitly considering the role of telecommunications technology:

...western cities may have lost their supreme importance as centers of industry and production, but they have gained as the centers of the coordination and control of production, and as centers of consumption. ... As the production and the distribution of goods becomes more complex, more differentiated and more spatially specialized, so the need for centralized integration and planning becomes more essential, and the office block tends to replace the factory in the city (Newton, 1986).

Communications technology, by extending the global reach of cities that are centers for information-based services, also affects the relationship of a city to its home nation. The world information capitals increasingly resemble the 'city-states' of ancient Greece, for their destiny is remarkably independent of their own domestic national economies. Such cities are intricately linked to each other through sophisticated telecommunications networks that operate on an around-the-clock basis. The face-to-face activities that occur in these cities have not been made obsolete by new technology; rather, technology has extended the geographic reach of the individuals and firms that transact business in these world capitals. The operational boundaries of a city are no longer defined by geography or law, but by the reach of phone lines and computer networks. As McLuhan stated, 'a speed-up in communications always enables a central authority to extend its operations to more distant margins' (McLuhan, 1964).

The emergence of such international information capitals is not measured by traditional criteria such as population size, land area, or employment. The world's top ten cities in terms of population are not the principal world cities with regard to amount of economic activity, location of information industries, or the flow of communication messages. The number of people living in a city may be an adequate measure of a city's importance in a nation-state, but it does not fully measure the significance of a city in today's global economy. Population size was critical to city growth when the purpose of cities was to provide large numbers of laborers to work in factories devoted to the manufacture and assembly of goods; today, the location of foreign banks, number of long distance telephone calls, and penetration of telex machines may be a more appropriate barometer of a city's economic health and vitality.

 

Telecommunications Policy and Infrastructure

The deregulation of the telecommunications industry in the United States and the privatization of telecommunications in other advanced industrial nations is leading to the creation of a new telecommunications infrastructure designed to serve the information intensive activities of large metropolitan regions. Decisions concerning investment in new telecommunications systems are no longer made solely by governmental agencies concerned with uniformity of service; rather, in today's competitive telecommunications environment, decisions concerning telecommunications infrastructure are increasingly based upon market demand.

There are three main components to the telecommunications infrastructure: long-distance or inter-city systems; regional or local distribution systems; and intra-building or intra-complex communications systems, such as local area networks or 'smart building' systems. While competition in the United States first appeared in the provision of long distance service, deregulation and technological innovation are also leading to competition at the local and regional level (Moss, 1986). For cities such as London, Tokyo, and New York, that are centers for information and financial services, understanding how the new infrastructure will help or hinder their capacity to attract and retain growing information intensive industries has enormous importance.

 

Optical Fiber Systems and Cities

In the United States, a telecommunications infrastructure is being built that relies on optical fiber rather than traditional pairs of copper wire. Among the advantages of optical fiber systems are their large carrying capacity, the speed at which they transmit information, their signal strength, and their high security. The current state of the technology and the economics of fiber favor high-volume point-to-point communications from one hub to another hub. As a result, the new optical fiber systems are initially being built to serve the heavily used communication routes, typically those linking major cities, further enhancing the comparative advantages possessed by these centers. This pattern of development is in sharp contrast with communication satellites, where the technology favors traffic from one point to multiple points or vice versa. 'Geostationary satellites lean towards the creation of a more equitable and decentralized communications network, ...optical fibers lean more to the heavy routing of messages and to more centralized patterns of communication, preferring only fixed sources and receivers' (Podmore and Faguy, 1986).

Just as telegraph systems were installed alongside railroad tracks in the nineteenth century, optical fiber systems are being installed along the transportation rights-of-way of railroads, waterways, highways, and even bicycle paths (Moss, 1986a). In the United States, MCI has built its Northeast fiber system along the AMTRAK right-of-way; Cable and Wireless is using the right-of-way of the Missouri-Kansas-Texas Railroad to connect the Texas cities of Austin, San Antonio, Dallas, and Forth Worth; and optical fiber has also been installed along the Ohio Turnpike. The US Department of Transportation has proposed that the rights-of-way of the federal interstate highway system be made available for communication systems.

Fiber optic systems are also being built for intraurban and intra-building communications. New York Telephone has built three fiber optic networks around Manhattan and an interborough fiber network that links the counties adjacent to Manhattan. At the same time, Teleport Communications Inc. has installed 150 miles of fiber in the New York-New Jersey Metropolitan Area that not only provides access to their communications satellite park, but also serves as an alternative to the intraregional public switched network. In Washington, D.C., an optical fiber communications network linking federal government offices is to be built using the rights-of-way of underground steam tunnels, and in Chicago, a fiber optic is being installed in the coal tunnels below Chicago's business district. 'Once primarily a physical crossroads, the new metropolis is likely to become more important to us as an electronic crossroads for information processing and exchange' (Hicks, 1985).

A parallel pattern of infrastructure development is underway in the United Kingdom where the new competitor to British Telecom, Mercury Communications, anticipates that its 'initial customers will be businesses located within the city of London' (Jonscher, 1984). Mercury Communications is building a fiber system with hubs in London, Manchester, and Birmingham, that uses the rights-of-way of British Rail to link cities, and the unused ducts of the London Hydraulic System for its fiber system within London. In Western Europe as a whole, the emergence of new communications technologies is heightening the regional differences in the availability of advanced telecommunications. As is the case in the United States, the new optical fiber systems will not serve all cities initially, and may even exacerbate the disparities that exist between information-based cities and the declining manufacturing cities, "There is little to indicate that development in telecommunications networks are likely to disadvantage the largest cities relative to small towns and rural areas in any national urban and regional system. The incremental modernization of networks and the logic of density will ensure that the inner parts of large cities will have an initial advantage. ...In an increasingly commercial environment, PTTs will not continue to provide services in advance of demand if that demand fails to come forward; lagging regions will therefore find themselves at greater disadvantage" (Goddard, Gillespie, Thwaites, and Robinson, 1986).

 

Front and Back-Offices

The growth of information services has not only led to a new infrastructure for transmitting information over long distances, but to a significant reconceptualization of the modern office building (Black, Roark, and Schwartz, 1986). Office buildings are not just places of employment, but structures within which information is generated, processed, and disseminated. As a result, there is a growing recognition of the need to design buildings that incorporate advanced telecommunications and computer systems, e.g., local area networks'. The modern office building must be able to accommodate elaborate technical systems to support computer and information processing functions that operate on a 24-hour basis. Moreover, financial institutions that participate in global markets require elaborate trading rooms that are linked to the major exchanges around the world; such trading rooms occupy large floor areas, often in multi-level settings, that are not available in the narrow skyscraper or traditional office structure. For data processing functions, the intense use of information technology is leading to the movement of routine clerical functions out of the central city to lower cost locations that are within close proximity to the large metropolitan region (Nelson, 1986).

The specialized information functions that rely extensively on face-to-face transactions with access to international telecommunications systems are being centralized in highly innovative buildings, such as the Lloyd's Bank in London, and the Hong Kong Shanghai Bank in Hong Kong. At the same time, banks and securities firms are moving their back-office activities to buildings specifically designed for high energy loads, large floor areas, and round-the-clock operations located in suburban areas or on the periphery of the central business district (Moss and Dunau, 1986). This has not led to the obsolescence of the central city, but to the increased specialization of function within large metropolitan areas. The trend toward 'centralized decision making and dispersing routine data processing' has, of course, been evolving since the 1960s (Cowan, 1969). What is particularly notable is the internationalization of control functions and the integration of functions among a handful of world cities (Friedmann, 1986). This has intensified the demand for space in the core of major cities. 'Even with the considerable suburbanization of office activities that has taken place in the recent past, it is evident that central cities have continued to hold their own as foci of office functions, that is, as foci of management and control operations within the national economy as a whole' (Scott, 1982).

The new communications technologies, whether they be teleports, optical fiber systems, mobile telephones, 'smart buildings', or radio paging systems are initially being built to serve the major information users located in large cities and metropolitan areas. Moreover, the very cities that are the centers for face-to-face communication are also the ones which will benefit most from the spread of advanced telecommunications systems. For, as electronic means of communications are used to control and co-ordinate geographically dispersed activities, there will be less face-to-face decision making in outlying areas and the city's role as a hub for the interpersonal exchange of information will be even more important. As Netzer presciently noted, 'there is a texture and subtlety in three-dimensional face-to-face communications that cannot be reproduced in any other way, so much so that past advances in telecommunications technology appear to have increased, not substituted for, some aspects of the demand for face-to-face communication'. This suggests that the demand for traditional clusters of office and service activities will not simply disappear.

... As long as there is some real remaining demand for the essential economic characteristic that central cities offer, the decline in the total demand for cities will not take the form of a proportionate decline in the size of all cities: there will be winners and losers, as some cities fare very badly indeed while some hold their own, or better (Netzer, 1977).

The new urban-based telecommunications infrastructure is, in concert with the internationalization of services and the deregulation of financial markets, reinforcing the economic position of the major cities that are already the leading information hubs. Although the availability of telecommunications technologies is not a determinant of economic development, the presence of advanced telecommunications systems is a permissive factor, which can facilitate the growth of information-intensive firms (Goddard et al, 1986). Furthermore, the absence of a sophisticated telecommunications infrastructure may act as a deterrent in attracting information-based service firms. Certainly, there is the possibility of a synergistic relationship between telecommunications infrastructure and information-intensive industries. The infrastructure may be built to serve existing firms, but access to sophisticated telecommunications services may stimulate new uses and users, generating even further expansion of the telecommunications infrastructure.

 

Business Services and Global Cities

In order to understand the effect of new urban-based telecommunications systems on future patterns of growth, it is necessary to recognize the types of activities and firms that are concentrated in a handful of world cities. Hall has described the trend toward agglomerating services in cities and moving manufacturing to non-urban areas. ...'Especially when the non-routine, quaternary services are included, the service sector can be seen to have an urban location pattern, in stark contrast to the increasingly rural pattern found in manufacturing' (Hall, 1985). A new urban hierarchy based on the presence of 'advanced producer services' (e.g. finance, law, accounting, management consulting, and advertising) that provide services to businesses has been explicitly identified for American cities (Noyelle and Stanbach, 1984). Drawing upon their framework, it is possible to understand the role of telecommunications in leading to the concentration of key business services in large world cities. Before the advent of modern communications technology, most services had to be produced where they were consumed.

The production of business services, for example, was highly dependent on timely information inputs and outputs, and this made geographic proximity necessary. Most business services had to be performed where the manufacturing took place. With modern communications and data storage and processing, however, it is possible to receive and deliver information instantly over great distances, and this means that the two activities can be separated geographically (Feketekuty and Hauser, 1986).

Telecommunications systems facilitate both the global decentralization of manufacturing and the agglomeration of financial, legal and advertising services within a relatively limited number of urban hubs. This has been noted by Daniels who states. In contrast to consumer services the location of producer services is dominated by centralization in a small number of major employment centers which offer the range of agglomeration and urbanization economies which seem prerequisites for the effective provision of the specialized outputs from such services' (Daniels, 1985).

While technological innovations allow firms to overcome the constraints of time and space, the concentration of information-based activities in global cities continues to intensify (Cohen, 1981). By locating in these major urban centers, commercial banks and related enterprises benefit from the economies of scale inherent in centrally processing the actions of globally based lenders and borrowers. Nicol recognized this trend in noting, 'The introduction of information technology into the banking sector has not led to the dispersal of its activities. On the contrary, the current trend seems to be centralization, along with new functional and spatial divisions of labor'.

This implies, in particular, the gradual reduction in market-oriented, multi-service branches in favor of more specialized centers that can make efficient use of new communications technologies (Nicol, 1985).

New York's role as a global city has resulted in its attracting 405 foreign bank offices, which is 43 per cent of the 940 such offices in the United States, (see Figure 1). This dominance is even more significant considering the fact that foreign bank assets in New York amount to over $248 billion for a total of 59 per cent of all such assets in the U.S. Although New York City plays a dominant role in the global economy, other US cities act as important gateways for location-specific international trade and finance activities. Indeed, of the 55 cities in which offices are located, 83 per cent of the offices and 89 per cent of the assets are located in just six cities; New York, Los Angeles, San Francisco, Chicago, Houston, and Miami.

London's role as the largest center for Euromarket activity has resulted in the United Kingdom having the largest concentration of US bank branch locations and assets; in fact, as a percentage of European countries, the United Kingdom contains 74 per cent of American branch assets and 38 per cent of American branch offices. The capacity of telecommunications systems to integrate the operation of financial markets in different geographic locations has contributed to London's continued prominence as an international financial capital. 'London's position in between the US and Far Eastern Time Zones make it a useful center for arbitrage between financial markets in those zones (chiefly the markets of the U.S.A., Japan and Hong Kong); dealings on all those markets can be orchestrated from London in the course of one deal day' (Hewlett and Toporowski, 1985). Thus, the use of new communications systems represents an example of how telecommunications technology can give new meaning to existing locational assets, in this case the decision to put London at the locus of Greenwich Mean Time.

Apart from financial institutions, additional producer services are also migrating to those cities that serve as international financial centers. In the case of advertising, the growth of multinational firms has created a demand for agencies which can 'shadow' their areas of distribution. The globalization of advertising incorporates both a centralized structure and centralized strategy. '...Because successful advertising must reflect national and cultural differences, extensive decentralization seems essential to the development of effective local campaigns. This tendency toward decentralization may occur simultaneously, however, with centralized development of advertising concepts and strategies in a few locations, as part of the trend toward "world advertising" for worldwide consumer agents' (Noyelle and Dutka, 1986). The merger and consolidation trend within the international advertising industry resembles that of the banking industry in the United States in which local communities are increasingly served by extensions and outposts of service providers based in global cities.

According to the American Association of Advertising Agencies, 1985 Roster, 166 of the 679 member agencies had more than one office. 750 of these branch offices were located outside of the US in 163 foreign cities. The global map in Figure 2 depicts the world cities with the largest concentrations of branch offices. In both Europe and the Pacific Rim there is a remarkably even distribution of offices between the largest information hubs of nation-states. This locational pattern is consistent with the notion that information hubs, as the locus for the greatest amount of communications technology, are the most efficient and effective centers for voice, video, and data transmission.

The Location of Law Firms

The emergence of global information hubs is also demonstrated in an analysis of the global location of law firms. The location of US law firms was traditionally determined by the need for access to the local courthouse; today, law firms are behaving like other service industries and are increasingly following their clients to locations far removed from their home city or nation. This branching effect mirrors the movements of multinational enterprises to information hubs where clients form agreements and draft contracts.

A survey by the Legal Times of the 500 largest American law firms reveals that 48 law firms have 72 offices in II European cities, and 19 law firms have 33 offices located in 10 Pacific Rim cities. Figure 3 demonstrates that these firms are largely concentrated in approximately the same cities as those for American branch banks. These cities are the largest information hubs which bring together the greatest amount of global business activities. In the case of the Pacific Rim, Tokyo's role as a global city suggests that more law firms would be expected to have a presence there; however, foreign lawyers have, until recently, been restricted from practicing in Japan.

International Accounting Firms

In contrast to law firms and advertising agencies, the accounting profession in the United States has long had an international character; for example. Peat, Marwick, Mitchell and Co., and Price, Waterhouse and Co. were originally founded in England, while Coopers and Lybrand represents a merger of British, Canadian, and American firms. Figure 4 portrays the location of the offices of the top 13 international accounting firms, and demonstrates an even greater tendency towards urban consolidation in a limited number of world cities. The dual process of intemationalization and urban concentration is demonstrated clearly, and reflects the fact that '...it is vital for an accountancy firm dealing with a large multinational corporation to be able to offer a worldwide network of offices and, especially offices in the big international financial centers where most of the corporate action still is' (Leyshon, Daniels, and Thrift, 1986).

Urban Policy in an International Context

It has previously been noted that the problems of the central city are no longer local, but national, (Scott, 1982a). The evidence presented here suggests that urban development policy requires an understanding of economic and technological forces which are international in character. 'The major arena of activity determining regional resource allocation is after all neither the locality, nor the region, nor even the national economy, but rather the international environment beyond. The structural parameters which determine local effects in the last analysis are well beyond the purview of local activity' (Ross, Shakow and Susman, 1980). Further, urban development policy needs to go beyond the 'brick and mortar' approach to rebuilding downtowns and attracting new business. Public officials have traditionally encouraged private firms to expand their operations and to attract new firms with a variety of mechanisms that lower the cost of land or make sites more accessible and attractive. These policies emphasize the location of land within a city rather than the location of a city within a world economy. This article has highlighted the synergistic role of technological and international forces in fostering growth and development in cities linked by advanced communications systems (Donaghy and Warren, 1986). Urban development policies can improve local conditions only if they are based on a full understanding of the factors that influence local economic development, and telecommunications technology is clearly a powerful, if often invisible force.

In fact, one can argue that almost all of the land use conflicts and social policy problems of large cities in the 1980s are related to the growth of information-intensive service industries. Whether it be the gentrification of urban neighborhoods, the growth of office buildings in the suburbs, or the lack of jobs for unskilled inner city residents, the technological and economic forces that have shaped the global city have contributed to these urban development problems (Dowall, 1984). The so-called 'Manhattanization' of San Francisco and the traffic congestion in downtown Los Angeles are the by-products of the intense demand for central city office space by international banks and the corporate services that they support. For decades, planners have sought to create a 'central business district' in the City of Los Angeles with very limited success; it was not until Los Angeles emerged as a world financial center that the downtown central business district emerged as a vibrant office hub. 'Central business district was stimulated by considerable expansion of financial and headquarters functions, many keyed directly to the operation of international capital, especially within the Pacific Rim' (Soja and Scott, 1986).

In the United Kingdom, the decline of traditional manufacturing cities such as Manchester, Birmingham and Newcastle has occurred concurrently despite the growth of banking and business services in London and the communities within close proximity to London. The recent deregulation of financial markets in London has led to the massive immigration of foreign banks into the City of London and provided the impetus for the renewal of the London Docklands, where a teleport and financial service operations are to be located. It is especially ironic that the deployment of new computer systems has led to the obsolescence of the London Stock Exchange while simultaneously stimulating demand for technologically-intensive 'trading rooms', labeled the 'cockpit of the financial services revolution', that cannot be accommodated in London's modest-sized office buildings (The Banker, 1986). The revision of the London City Plan reflects the pressure for office space in the Square Mile and the way in which deregulation and technology have generated new demands for office development in London that were not initially planned for or anticipated by local authorities (Cochrane, 1986).

 

A Telecommunications-Based Urban Policy

In light of the diminished role of regulated monopolies and central government authorities in controlling the shape of new telecommunications systems, the challenge for urban policy is to determine how cities can maintain and attract communications-intensive economic activities. For some communities, 'teleports' are regarded as a 'technological fix' that can stimulate business and jobs. In the 1960s, many cities thought that cable television could solve the urban problems of poverty and participation; in the 1980s, teleports are being treated as the high technology solution to the economic development problems of the metropolis. In a technologically-driven industry, characterized by enormous regulatory change and technological advance, there is no basis for urban policies that favor a specific technology over another.

A telecommunications-oriented urban policy should recognize the way in which telecommunications technology imposes new demands on labor skills, office location and design, and even on transportation infrastructure. Planners and policy makers should monitor advances in telecommunications technology, and where appropriate, become active participants in telecommunications policy making concerning pricing, availability of services, and infrastructure development. Local governments, as large users of telecommunications systems, (i.e., signalization of traffic lights, emergency response systems, and operation of educational systems) could also leverage their telecommunications activities to create a telecommunications infrastructure for use by individuals and firms.

The fundamental challenge, though, is to recognize the pervasive impact of telecommunications in all aspects of urban growth and development, despite the fact that the design and development of communications systems fall outside the purview of local government authorities. '...The new electronic highways of the information society are ... not public thoroughfares, but a myriad of private roads' (Gillespie and Hepworth, 1986). This article has emphasized the extent to which telecommunications is creating a new urban hierarchy, in which those cities that are already information-intensive are becoming even stronger as telecommunications hubs. New communications technologies can also be used to foster economic growth in outlying communities; however, taking advantage of those opportunities requires a recognition of the specific, and often subtle, needs of information-based industries.

Understanding the importance of telecommunications systems and role of market values in guiding the telecommunications infrastructure is a necessary first step for an informed urban policy. For scholars, one of the key issues deserving of research is the relationship of telecommunications to other factors that affect urban economic development, such as the quality of the labor force and the transportation infrastructure. Finally, a framework that allows the movement of information to be considered as important as the movement of people and goods will be required to improve our understanding of cities in the twenty-first century.

 

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Originally published in Urban Studies
1987, 24, pp. 534-546