Cities, Vol. 16, No. 1, pp. 33–41, 1999



1999 Elsevier Science Ltd. All rights reserved

Pergamon

Printed in Great Britain

0264-2751/99/$ - see front matter

PII: S0264-2751(98)00052-3

Telecommunications

A realistic strategy for the revitalization of
American cities

Zenia Kotval

Urban and Regional Planning Program, Michigan State University, East Lansing, MI 48824-1221, USA

There is much speculation and debate on the impact of telecommunications on the economic
and social fabric of cities and urban areas. Many scholars excitedly predict radical changes in
the nature of city and urban life as telecommunication systems weave their way into the fabric
of urban culture. This paper identifies major theoretical approaches to studying the relation-
ship between the city and telecommunications, identifies the extent of integration of telecom-
munications with planning, assesses its impacts as a strategy for economic revitalization, evalu-
ates its needs as an industry and assesses its impact on the revitalization of cities.



1999

Elsevier Science Ltd. All rights reserved.

Keywords: Telecommunications, American cities, revitalization

Telecommunications: a realistic strategy for
the revitalization of American cities

Cities should be the focus of studies related to the
effects of current telecommunications advancement
and capabilities as they are still the dominant centers
of population, transportation and communication net-
works, and business and financial transactions. As we
move towards a society based more and more on
information technologies and the rapid movement of
messages and transactions, cities can no longer be
studied solely by the need to concentrate physical
markets, need for labor, exchange of commodities and
face-to-face communications within a concentrated
area. Cities need to be examined within the context of
complex social, technological and economic networks
that bring intense mobility to complicated interactions
within and between cities. There is much speculation
and debate on the role of telecommunications on the
economic and social fabric of cities, as scholars
excitedly predict radical changes in the nature of city
life as telecommunication systems weave their way
into the fabric of urban culture.

This paper examines the role of telecommuni-

cations as a viable strategy for economic development
in cities. It identifies the major theoretical approaches
to studying the relationship between the city and tele-

33

communications, identifies the extent of integration
of telecommunication, as a utility or strategy, in city
planning and revitalization, evaluates its needs as an
industry and finally estimates its impact on city revi-
talization.

The growth of telecommunications

There are many definitions involved with telecom-
munications technology. Schwartz views telecom-
munications as either a sector of industry or a utility
(Schwartz, 1990). Graham and Marvin (1996) see
telecommunications as communications from afar that
merge with digital and microelectronically based
computer and media technologies. They also offer
another definition which is related to telecommuni-
cations: telematics. Telematics are the services and
infrastructures which link computer and digital media
equipment over telecommunication links. It consists
of converging sets of computer, media, and telecom-
munications based around the digital storage, manipu-
lation, and transmission of information. Malecki
(1991) defines information technology as the com-
bined utilization of electronics, telecommunications,
software, decentralized computer workstations, and
integration of information media (voice, text, data and
image). Furthermore, the “Information Superhigh-

Telecommunications: Z Kotval

way” is an ever-evolving concept. The United States
Advisory Council on the Information Infrastructure
defines the Information Superhighway as a highly
dynamic system which includes satellite, terrestrial
and wireless technologies that deliver content to
homes, businesses, and other public and private insti-
tutions. It is also referred to as the information and
content that flow over the infrastructure, whether in
the form of databases, written word, film, music,
sound recordings, pictures, or computer software. It
can also be the computers, televisions, telephones,
radios, and other products that people will employ to
access the infrastructure, the people who will provide,
manage, and generate new information, and those
who will help others to do the same, and the individ-
ual citizen who will use and benefit from the Infor-
mation Superhighway.

There is extensive evidence available to support the

assumption that telecommunications, as an industry,
is growing. The global telecommunications service
industry employs just over five million people. The
global market for telecommunications, software and
electronics in 1995 was one trillion dollars, and is
estimated to triple by the year 2010. Global figures for
1997 estimate the use of 700 million wired phones,
50 million

mobile

phones,

40 million

faxes,

30 million on-line computers, 80 million videoconfer-
encing sets, and approximately 20 – 35 million people
using electronic mail, a figure which is increasing at
a rate of 10 – 20% each month (Graham and Marvin,
1996). The Internet has increased from 213 host com-
puters in 1981 to almost 3.9 million in 1995. It is esti-
mated that by the end of the decade nearly 59 million
households will have computers, 25 million of which
will be on-line. The North American market is cur-
rently estimated at $103.8 billion (up from the 1992
figure of $52.5 billion). The North American Tele-
communications Association (NATA) projects that
the telecommunications equipment market will con-
tinue to grow by approximately 15% per year
(NTIA, 1996).

Telecommunications and the city

Studying the relationship between the city and tele-
communications is part of a broader process of ana-
lyzing the relations between technology and society.
As can be seen from the differing perspectives, there
is no one factual method for assessing the impacts of
telecommunications on city planning and revitaliz-
ation.

The mainstream approach, commonly referred to

as technological determinism, has been to study the
relationship between technology and urban change as
relatively straightforward, linear and direct cause and
effect (Mansell, 1994). Technology will inevitably
cause urban effects or impacts: decentralization, the
growth of telecommuting, the omnipresence of highly
capable communications to all, and the shift towards
an information based economy are only a matter of

34

time (Winner, 1978; Miles and Robins, 1992). “Tech-
nological determinists tend to see technology as
autonomous, with social and cultural transformations
being the consequence of a technologically-inspired
trajectory, not the creators of this path” (Hill, 1988,
pp 23 – 24). Policy suggestions center around how
society can adapt to and learn from telecommuni-
cations based change, rather than focus on the ways
in which these effects may be altered through pol-
icy initiatives.

Utopianists herald telecommunications as the quick

fix solution to urban society’s social, economic and
political ills. They tend to take a relatively optimistic
view of the future impacts of telecommunications on
cities and urban life. They tend to see telecommuni-
cations having potentially huge benefits for all in the
realms of social, environmental, economic and physi-
cal considerations. Wassily Leontief (cited in Hamel-
ick, 1988) foresaw a reduction in jobs due to digitized
information collection, processing, transmission and
reception, but his utopian prophecy is that pro-
ductivity gains from such labor reducing technologies
will fix the skewed distribution of social, political and
economic power since its benefits will be shared with
labor rather than only between investors and CEOs
of firms. The universal assumption in utopianist writ-
ings is that access to telecommunication networks
will be more democratic and equitable than social
divisions apparent in today’s cities (Martin, 1978;
Dutton et al., 1987; Gold, 1990).

Dystopianists, on the other hand, do not see tele-

communications technology as autonomous and
somehow separate from society. Therefore, they do
not consider the technology to be simple determinants
of urban change or quick fixes to urban problems.
City – telecommunications relationships are seen to
be driven by the economic forces of a capitalist
society and reflect capitalism’s highly unequal social
relations (Hill, 1988; Robbins and Gillespie, 1992).
Political economists argue that, just because spatial
barriers can be overcome in certain circumstances, it
does not mean that they are being overcome. In the
process of restructuring cities, telecommunications
technologies exacerbate and intensify the uneven
social and geographic development at all levels,
promoting the development of more polarized and
fragmented cities (Lyon, 1988).

Yet another approach, “the social construction of

technology”, rises from the rejection of technological
determinism and utopian ideals. The objective of this
approach is to demonstrate that society can influence
technology. Individuals, social groups and institutions
have a degree of choice in shaping the design, devel-
opment and application of technology in specific
cases (Mackenzie and Wajcman, 1985). Researchers
aim to understand how technology and its uses are
socially and politically constructed through complex
personal and institutional interactions over a period
of time. In essence, the effects of telecommunications
on urban development are indeterminate. Unlike the

Telecommunications: Z Kotval

political economists who project telecommunications
based urban development reflective of capitalism
itself, social construction theorists argue that it is
impossible to define an all-inclusive “impact” of tele-
communications on cities. The way telecommuni-
cations relate to urban change is likely to vary in time
and space (Graham and Marvin, 1996).

A number of scholars have further speculated about

the spatial implications of new information tech-
nology. Gottman (1983) refers to the “transactional
city”; Hepworth (1990) examines the geography of
the “information economy”; Castells and Hall (1994)
coin the term “technopoles”; other terms such as
wired cities, telecities, digital cities and virtual cities
have been used to describe these new economic enti-
ties. Telecommunications have a dual implication for
spatial planning concepts. As the technology disre-
gards time and distance, it can connect outlying areas
to the core, yet by the same token, it can further facili-
tate the dispersion of activity from the central city.

This paper attempts to look at the impacts of tele-

communications on city planning and revitalization
within the “social construction approach” where
urban planners and policy-makers can “socially con-
struct” telecommunications initiatives in a variety of
ways to meet different needs and interests. The effects
of these policies and initiatives vary dramatically,
reflecting diversity of processes and patterns of polit-
ical and planning initiatives across cities.

Telecommunications as a utility or strategy
for city planning and revitalization

Previous studies (Jipp, 1963; Bebee and Gilling,
1976; Sanders et al., 1983) have shown that a clear
relationship exists between highly developed national
economies and highly developed telecommunications
infrastructure in the United States. Cronin et al.
(1993) further tested this relationship at the state and
local levels. They found that this relationship also
exists at the lower levels. Their results indicated that
telecommunication investments stimulated economic
development, and vice versa, that enhanced economic
development promoted more investment in telecom-
munications infrastructure. Cronin et al. (1993) found
that this interrelationship also held true for very small
geographical areas.

Dholakia and Harlam (1994) used statistical data

from each of the 50 states to examine the relationship
between economic development and telecommuni-
cations infrastructure. Using multiple regression
analyses,

they

examined

input

of

resources

(telecommunications infrastructure, other physical
infrastructure, human capital through education, and
energy) and the strength of their contributions to
economic development. Their results indicated a very
strong positive correlation between investment in tele-
communications infrastructure and economic devel-
opment (measured through higher average annual pay
and

increased

per

capita

income).

Multiple

35

regressions showed that telecommunications and edu-
cation (respectively) made the greatest contributions
to enhancing economic development.

This section begins with a look at those realms in

which telecommunication is currently impacting city
planning and revitalization efforts. It also addresses
the constraints and barriers, and to some extent the
state and federal response, to fully utilizing the
opportunities offered by telecommunications at the
present time.

Integration of telecommunications with city
planning and revitalization

Telecommunications

technology

in

the

routine

governance of cities. Concomitant to the growth in
the telecommunications industry, its use as a utility
in routine governance has increased. Telecommuni-
cation technologies are being actively used in govern-
ment offices for record keeping, tracking develop-
ment, management, information exchanges between
various arms of local government and information
flow to the citizens. Cities are using cable networks
and linking their web pages to other related sites in
an attempt to provide pertinent, accurate and timely
information to its citizens as well as prospective tax
payers and businesses. Furthermore, these techno-
logies have a targeted function in law enforcement,
fire and other emergency systems, health care, energy
conservation and management, pollution control, and
transportation

and

traffic

management

systems

(National Academy of Engineering, 1995).

Emergence

of

collaborative

interurban

net-

works. The last decade witnessed a proliferation of
policy initiatives which involved horizontal coordi-
nation and collaboration between different cities
operating to achieve mutual complementary benefits.
These emerging policies stress the importance of
intermunicipal cooperation, resource pooling, infor-
mation exchange and mutual commitment to shared
goals across spatial boundaries. These policies stress
the role of networked rather than market based forms
of interurban organizations, moving toward a mixture
of competition and collaboration (Graham and Mar-
vin, 1996). Telecommunication can also be the tool
used for enhancing relationships between businesses,
social and economic development organizations,
governments, and citizens. Government agencies at
federal, state and local levels are using the Internet
to provide information to each other and the public.
Telecommunications can link small local businesses
to similar regional firms and suppliers. It can cut mai-
ling, transportation, bookkeeping, marketing, distri-
bution, and many other office costs for a company.

Using telecommunications to showcase the city. An
ever-increasing number of cities are developing web
pages and providing information on themselves
through the Internet. Internet searches reveal thou-

Telecommunications: Z Kotval

sands of cities across the US providing general infor-
mation as well as socioeconomic data on themselves
and their regions on their web sites. Denver’s Page
reveals the top 10 reasons why businesses should
locate there, validated with valuable statistics. Tele-
communication is actually listed as one of those 10
assets along with details of its infrastructure, inno-
vations, and possibilities (http://www.denvernet.org/)
(Denver Economic and Business Resource Center,
1996). Moline, Illinois, offers site specific opport-
unities as well as general information on its homepage
(http://www.moline.il.us). Often cities will use tele-
communications infrastructure (teleports, fiber optic
cabling, etc) along with details (cost, quality, etc) to
entice firms to locate within their boundaries.

Using telecommunications infrastructure as a value
added amenity in attracting businesses. Communities
are increasingly using their telecommunication infra-
structure as a strategy to attract new business and to
increase their overall economic competitiveness. In a
recent European survey of 500 companies, telecom-
munications quality was cited as the second most
important location factor (Graham and Marvin, 1996).
Cities such as New York, Boston and Amsterdam
have earned a competitive business advantage by
establishing teleports: these are satellite linkages con-
necting to local telecommunications networks, and
they effectively result in a globally networked city.
Some of the many teleport services commonly pro-
vided to customers include media transmissions, data-
processing services, security services, videoconfer-
encing, and shared access information services. New
York City is home to the first teleport in the US which
was constructed at the cost of $350 million dollars. It
consists of a satellite communications center with a
350 acre office park on Staten Island. The city
government played an active role in its development
by envisioning it as a vital infrastructure need for suc-
cessful business competition. The Staten Island tele-
port can offer less expensive office space than down-
town, newer and better physical and communications
facilities, stable rates for office space, and a unique,
digital fiber optic telecommunications network to link
up with the city, national, and international locations
(Elam and Edwards, 1989). Atlanta uses a recruitment
strategy involving telecommunications infrastructure
by realizing that high technology, telecommuni-
cations-intensive

businesses

have

facilitated

the

development of a modern and sophisticated tele-
communications infrastructure. Currently, 431 of the
Fortune 500 top industrial firms in the US have
operations in Atlanta and over 300 foreign firms are
located in the metropolitan area.

Using telecommunications to provide new opport-
unities in education, support networks, job training,
and job searches. Telecommunications can provide
new opportunities in education, support networks, job
training, and job searches, provided people have

36

access to the technology and the know-how to use it.
In the areas of educational and training opportunities,
universities, community colleges and schools are
beginning to offer, specifically through net access,
self-paced education, information, distance learning,
and opportunities to enhance computer skills (Irving,
1996). Along with education and training, there are
an ever-increasing number of support groups, chat
rooms and interactive health and safety bulletins
designed to connect and network people that share the
same interests or concerns. Many government agenc-
ies and even private firms now have job boards as a
part of their web pages. It is even possible for people
to perform searches for jobs in their particular fields.
Grace Hill, a multi-service United Way agency in St.
Louis, Missouri, won a 1994 TIIAP grant to install
touch-screen computers at various community centers
and other public places in 11 disadvantaged neighbor-
hoods. Grace Hill arranged for the Missouri Depart-
ment of Labor and Industrial Relations to make its
resources available to residents over the new com-
puter network. It also sought to use the computers to
expand an innovative barter system in which residents
had been exchanging services with each other.

Spatial implications of telecommunications tech-
nology. As mentioned earlier, the spatial implications
of this technology are not definitive. The technology
can certainly be used to connect and provide infor-
mation on a regional basis. For example, the Eastern
Maine Development Corporation (EMDC), based in
Bangor, in partnership with the Northern Maine
Development Commission (and with funding from
TIIAP), has implemented a joint videoconferencing
and high speed data transfer network. The network
not only provides a vehicle for creating community
development, but also helps deliver industrial market-
ing and rural transportation planning activities in six
rural, isolated towns and cities in northern, upper cen-
tral, and eastern Maine. The project’s goal is to create
market and technical information access points for
manufacturing firms. This will lead to enhanced econ-
omic development opportunities to communities in a
region where small towns can be hours apart by road.
The Tri-State Network Project of Jackson, Missis-
sippi, has shown that a community based advanced
telecommunications infrastructure can help a com-
munity further its educational and economic goals.
The Tri-State Project is assisting educational and
economic development initiatives in rural regions of
Alabama, Mississippi and Tennessee.

Barriers to using telecommunications as a utility or
strategy for city planning and revitalization

The role of politics and bureaucratic inertia. The
growing importance and need for urban planners and
local governments in shaping telecommunication
technologies in their cities is increasingly recognized
by the telecommunications industry and urban policy-
makers at the national level. Successful intervention,

Telecommunications: Z Kotval

however, is both risky and far from easy. There is the
risk of adopting simplistic versions of technological
determinism or utopian ideals as basic policy. Policy-
makers are often captivated by sophistication and
allure of the technology and hype up their policies as
quick fixes for the problems of their cities (Gillespie,
1991). Technological and regulatory changes often
outstrip the ability of local policy-makers to innovate
and adapt to changing circumstances, resulting in
technological white elephants.

Furthermore, the impacts or benefits from telecom-

munication technologies, by their intrinsic nature, see
no political boundaries. Therefore, it is hard for local
politicians and planners to justify spending limited
dollars on technology related without being able to
demonstrate a direct benefit to their city or show how
the city can gain a competitive advantage over sur-
rounding areas. This raises the fundamental tensions
between cities as territories and telecommunications
as networks. Finally, city planners and local govern-
ments have limited flexibility and are still greatly
dependent on national development policy as tele-
communications infrastructure and initiatives are still
highly contingent on national level support.

Community concerns and universal access. Com-
munity concerns such as aesthetics, property devalu-
ation and health and safety, associated with the siting
of wireless service facilities coupled with the
limitations and barriers to access and use, remain
impediments to the full and effective utilization of the
technology. Some concerns are being addressed
through zoning and telecommunications bylaws that
address size, type and location of facilities. Universal
access, however, is particularly important in cities
with their high share of economically disadvantaged
population.

Graham and Marvin (1996) suggest that growth of

information and communications technologies tends
to reinforce those social groups that are already
empowered, but does not provide new opportunities
to the “informationally disadvantaged”. It is clearly
the isolated, handicapped, and economically disad-
vantaged social groups that can reap the greatest
benefits

from

telecommunications

in

overall

empowerment and quality of life, job searches, alter-
native methods of employment, education, and
enhanced communication. Results of

the 1994

National

Telecommunications

and

Information

Administration (NTIA) study comparing telephone
service, computer and modem ownership rates in
rural, urban, and inner city areas indicate that these
“have nots” are disproportionately located in rural
areas and inner cities. Further, it reinforces the fact
that when this technology is made more accessible,
the low income, minority, young, and less educated
computer households are most likely to use on-line
services for employment searches and educational
classes. In addition to the barriers to accessing this
technology, there are also barriers to using it appropri-

37

ately, even when it is made available, due to the lack
of motivation, knowledge and skills required to apply
these tools to one’s circumstance. Finally, the effec-
tiveness of using the Internet to actually find jobs is
unclear. Many factors such as the mobility of the per-
son seeking a job, a match in required skill levels and
even

recruitment

practices

of

the

employers

(employers often tend to advertise locally through
newspapers, informal networks, job postings in
windows, and use local employment agencies) play a
crucial role in determining success.

Federal, state and local strategies in response to
the barriers
Given the current patterns of increasing social and
economic inequalities, intervention is required to
equalize

access

and

opportunities.

The

federal

government is aware that access is an important issue
for many citizens. This can best be noted in the intent
of the US Congress designated Telecommunications
Act of 1996—“An Act to promote competition and
reduce regulation in order to secure lower prices and
higher quality services for American telecommuni-
cations consumers and encourage the rapid deploy-
ment of new telecommunications technology.” At the
local level, the National Information Infrastructure
Advisory Council (NIIAC) has developed the Kick-
Start Initiative Program to assist in bringing com-
munities

into

the

Information

Age

(http://www.benton.org/Library/KickStart/Kick.home.
html). Through grants, schools, community centers
and hospitals are connected to the Information Super-
highway. As part of the Federal Department of
Commerce, the National Telecommunications and
Information Administration (NTIA) includes in its
goals the promotion of economic development. NTIA
has a “Get Connected to the Information Age” cam-
paign, which targets underserved communities by
meeting the needs of traditionally underserved citi-
zens

through

networked

community

centers.

Examples include creating a community access and
youth opportunity training program in 1997, to help
revitalize a distressed, multi-ethnic urban area in Oak-
land, California, and in collaboration with the
National Urban League, it funded access to infor-
mation technology for community residents and com-
munity based organizations in four targeted communi-
ties—Baltimore, Maryland; Binghamton, New York;
Roxbury, Massachusetts; and Newark, New Jersey.
NTIA also promotes opportunities for small, minority,
and female-owned businesses in the telecommuni-
cation and information industries (detail project
descriptions are available at the NTIA web site at
http://www.ntia.doc.gov/).

NTIA supports the Telecommunications and Infor-

mation Infrastructure Assistance Program (TIIAP),
which provides grants to state and local governments,
schools, medical facilities, libraries, and community
centers. The grants require at least 50% matching
funds, and has encouraged the formation of many

Telecommunications: Z Kotval

public – private partnerships. TIIAP serves as the
principal advisor to the President, Vice President, and
Secretary of Commerce on domestic and international
communications and information-related issues. It
offers a highly competitive merit based grant program
that provides seed money for innovative, practical,
technology projects, and seeks to develop a nation-
wide, interactive, multimedia information infrastruc-
ture. It also helps to bridge the information gap for
children

in

inner

cities

by

connecting

urban

underserved Americans to information networks. In
addition, it provides matching grants to nonprofit
organizations (schools, libraries, hospitals, etc) to
fund projects that improve the quality of and the pub-
lic access to education, government services, and
economic development. In 1995, TIIAP funded a pro-
ject to provide low income adults with free access to
the information infrastructure, and provide free job
training in basic computer literacy and Internet skills
at the Community Computer and Communications
Center (C4), located in the Massachusetts Museum of
Contemporary Art (MASS MoCA). The University of
Nebraska’s Center on Children, Families and the Law
received a TIIAP grant in 1996 to increase access and
develop on-line peer support for families with chil-
dren who have special health care and education
needs. The IDEAS network (Information, Dialogue,
Education, Access, and Support) was created by the
University, the Nebraska Health and Human Services
System, the Nebraska Department of Education, the
Nebraska Library Commission, FHC Options, Inc,
and Probe Technology. SmartCities, a project of the
Kansas City Area Development Council, has demon-
strated that a regional development group can acceler-
ate the deployment of advanced telecommunications
technologies to attract businesses and create jobs.
Working with a broad coalition of public and private
sector organizations, the group developed a blueprint
for modernizing the information infrastructure in the
greater Kansas City area, thus contributing to the
region’s reputation as a leading-edge area for doing
business electronically (detailed project descriptions
are

available

at

the

TIIAP

web

site

at

http://www.ntia.doc.gov/ otiahome/tiiap/index.html).

Between 1994 and 1996, TIIAP awarded funds

totaling $79 million and were matched by more than
$133 million in non-federal funds. In 1997, TIIAP
funded 55 grants to 38 states and Washington, DC,
totaling $21 million with a non-federal match of
$25 million. An estimated 18 million is available for
the

1998

grant

round

(http://www.ntia.doc.gov/

otiahome/tiiap/newsletter/).

At the state and local levels there is a developing

awareness and readiness to embrace new information
and communication technologies. States are looking
at these technologies to enhance overall economic
development, and are addressing the issue of univer-
sal access. Ohio, for example, recently required
Ameritech to wire schools, and create training and
access centers in seven Ohio cities at a cost of over

38

$20 million, in exchange for more freedom for Ameri-
tech to raise rates. The state of Michigan has taken a
different approach—businesses and school have
joined to purchase Internet access at lower costs. The
businesses pay the costs of connecting up the schools,
and they can claim tax deductions. Once on-line,
schools can use the network at low costs. Starting 1
March 1998, two New Hampshire companies, Bell
Atlantic of New Hampshire and Cabletron Systems,
will spend $5 million to bring Internet access to every
public school and library in the state. Bell Atlantic,
which is providing $3 million for the project, will
offer each school and library a new business tele-
phone line or a high capacity 56 K frame relay circuit.
The company will also help with training for teachers
and librarians. Cabletron has pledged $2 million in
networking equipment and will also help schools
develop individual technology plans (http://www.
ntia.doc.gov/).

Telecommunications as an industrial sector
to be targeted for economic revitalization

Applications of new information technologies, includ-
ing telecommunication to virtually all sectors of the
economy, are said to underpin and drive this new
economy. Telecommunication based (or dependent)
industries, much like other related industries, offer a
community jobs and contributions to the tax base.
These industries are usually sophisticated with a
major research and development component or
knowledge and information based service sectors that
provide a source of innovations and offer efficiency
of production, market, and distribution. These tele-
communication-intensive industries, however, need a
stable political, social and economic climate. They
require economic and social networks, skilled labor,
research and development opportunities and risk capi-
tal to survive and thrive. As such, not all cities are
good contenders to entice these industries. However,
cities inherently possess some of the key factors
(many dormant) needed to be competitive. They can
provide a relatively large, non-unionized work force
that could be trained. Most big cities house univer-
sities and other research institutes. Cities have the
capacity to provide infrastructure in a more efficient
manner than rural areas due to their compact nature
and size and, cities are offering innovating financing
initiatives and incentives for economic development.

Cities that have traditionally been vibrant hubs for

industry and commerce such as New York, Boston
and Chicago have certainly enhanced their potential
through

telecommunications.

Research-intensive

agglomerated economies such as the Silicon Valley
in California, the Research Triangle in North Carolina
and Route 128 in Massachusetts thrive on R and D
and technology based industry. Others such as Col-
umbus (Ohio) Springfield (Massachusetts), Omaha
(Nebraska) and Denver (Colorado) are fast becoming
industrial hubs using telecommunications as a part of

Telecommunications: Z Kotval

a cohesive redevelopment strategy. This section
explores some of the key factors necessary for tele-
communications based industries to survive and thrive
in cities.

Existing telecommunications infrastructure
Telecommunications industries favor areas that have
the necessary infrastructure needed for them to func-
tion in an efficient manner. Technologies that facili-
tate linkages and communication between operations
such as electronic data exchanges (EDI), faxes, video-
conferencing and telephones, Internet communi-
cations and email, local and wide area networks and
wireless communications and computing are being
widely adopted. Other infrastructure such as high
speed, high capacity fiber optic cables, advanced
packet switching and digital call distribution systems
are just some of the technologies that are altering the
production of many goods and services and the
relations among industries and between industries and
their customers. In order for a community to be
attractive to these technology based industries, it must
invest in the infrastructure needed for telecommuni-
cations technology in advance. Moss (1988) and Warf
(1989) further suggest that new telecommunications
infrastructure will favor large urban areas, especially
those which serve as headquarters and financial capi-
tals.

Already profitable communities will be the
recipients of the majority of benefits from
telecommunications investments
Telecommunications will have the largest impact on
areas that already exhibit positive economic develop-
ment. “New communications services are unlikely to
be introduced uniformly across space, and are increas-
ingly likely to favor investments in the existing con-
centrations of economic activity and areas of current
economic advantage” (Goddard and Gillespie, 1988).
Telecommunications industries are no different than
other industries in that they are seeking to be profit-
able. Few companies or industries are willing to
locate in regions with poor or worsening economic
conditions. If we view telecommunications as a tool
for economic development, the increased economic
stability of an area may result in the increased
capacity to use telecommunications for economic
development strategies or to supply the necessary
infrastructure for telecommunications to that area,
thus increasing its chances for economic success.
Simply stated, both arguments lend themselves to the
cliche´ that it takes money to make money.

Scientifically knowledgeable and skilled labor force

Scientific knowledge of information technology is
required in order to produce the technology-intensive
products and services. As technology is often linked
to research and development the presence of research
institutions, universities or large federal agencies with

39

the appropriate knowledge base are seen as important
factors, both as a resource for the scientific knowledge
required, and to provide the technically skilled labor
pool as well.

The presence of industrial clusters and
agglomerations

Technology-intensive industries tend to locate in
areas of research and development concentration or
where research and development activity has been
successful. Malecki (1991) points out that clustering
of like firms tends to reduce the cost of transferring
information between firms. The interaction of peers,
competitors, local universities and the local govern-
ment is crucial for the long term success of these firm.
Scholars such as Annallee Saxenian agree that regions
offer a competitive advantage to certain industrial
clusters even as production and markets become
increasingly global in nature. That proximity pro-
motes repeated interaction and mutual trust needed to
sustain collaboration and enhance technological
advancement. She argues, however, that spatial clus-
tering alone does not create mutually beneficial inter-
dependencies. There is a need for the complex of
institutional and social relationships that connect the
producers within a region’s fragmented industrial
structure (Saxenian, 1994). Bennett Harrison, in sup-
porting the theory of clusters, argues that agglomer-
ations of small and medium sized companies alone
will not create significant success. There is a need for
bigger firms to help upgrade the technical capabilities
of their smaller suppliers: “the possibilities of pros-
perity lie in a joining of the public and private sectors
to provide…technology training and technical assist-
ance” (Harrison, 1994, p 245). In the case of telecom-
munications, companies may locate in regions where
other telecommunications firms have had success.
This especially may be true if telecommunications
infrastructure is located in an area. Not only would
telecommunications firms locate here, but others that
are dependent on telecommunication services as well
may locate near new telecommunications infrastruc-
ture and industries to utilize its power and con-
venience.

Unique social networks

Industrial clusters also tend to foster unique social
networks that help sustain the information economy.
Essentially, this network is based on information
exchange between individuals or, in some cases,
firms. This allows for the constant production of
innovative ideas and products that continue to sustain
the

positive

movement

toward

economic

sus-

tainability. The social network also provides for criti-
cal links to venture-capital firms that specialize in
financial backing to research and development com-
panies (Saxenian, 1994; Castells and Hall, 1994).

Telecommunications: Z Kotval

Availability of capital
Telecommunications companies welcome capital and
financial incentives much like any other industry.
Because of the nature of these companies, they need
more “risk financing” than most traditional industries.
The public sector is becoming increasingly involved
in partnering with the private sector in financing econ-
omic development activities. Most states indulge in
some form of financial incentives for the private sec-
tor—if nothing else, managing and distributing the
scarce federal grant moneys and loan programs.

Traditionally, local and state officials were less

involved with innovative or new financing programs
due to administrative constraints and lack of knowl-
edge on programs and eligibility requirements. With
increased competition and the crisis in traditional
financing sources (such as banks and other credit
institutions) that occurred in the early 1990s states
and localities were forced to research new alternatives
and to become more and more savvy in their initiat-
ives. These initiatives include, but are not limited to,
community based financing, tax increment financing,
tax abatements and incentives, enterprise zone desig-
nations and product development funds.

Conclusion

Each city is unique, where diverse social, cultural and
political institutions influence the shaping of the built
environment. Telecommunications technologies allow
for new patterns of control and domination to emerge
between places within which cities still have a key
role. This role is often indeterminate. The same tech-
nologies can be used to empower and assist disadvan-
taged groups as well as disenfranchise or exploit
them. It can be used to strengthen the public, local
and civic dimensions of cities as well as to support
social fragmentation. They can help improve urban
transportation or further the dominance of cars in cit-
ies. They can assist in the search for sustainable mod-
els of urban development or help maintain the growth
of highly unsustainable cities (Graham and Marvin,
1996). The fortunes of cities are very uneven within
these shifts. The world financial capitals (New York,
London and Tokyo) have emerged as key command
and control centers where the best jobs are located.
Certain smaller cities have emerged as centers of
advanced manufacturing, research and development
or high technology services. Others have emerged as
key tourist centers. At the same time, however, many
older industrial cities still compete even for low pay-
ing service jobs such as those in back offices, branch
manufacturing plants and shopping centers. In this
context, because of the speed of these systems and
the erosion of the attachment to place, city economics
are more turbulent and face uncertain futures.

Clearly, the adoption and adaptation of telecom-

munications technology alone will not result in city
revitalization or better urban development. Nor will
telecommunication technologies result in the dissol-

40

ution of cities altogether. We live in a fundamentally
urban civilization: cities as places still matter and will
continue to matter. They house a majority of our
population, and seem likely to remain the economic,
social and cultural concentrations of advanced capital-
ist society.

The assumption that telecommunications impacts

cities in some simple, direct, universal way is still
common; the stress that they simply reflect some
abstract capitalist political economy is still prevalent
in critical literature. However, an integrated perspec-
tive of cities and telecommunications teaches us that
social action shapes telecommunications applications
in cities in diverse and contingent ways. New tele-
communications networks bring new options and
capabilities within which urban processes can be
shaped.

Acknowledgements

The author acknowledges the research assistance of
Deborah Gellar, Katrina Hanks and Holly Voorhies-
Madell from the Urban and Regional Planning Pro-
gram at Michigan State University.

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