International Research Center QUICK NAVIGATOR

Universal Service To Universal Access
© 1995 - International Research Center

| PREV | CONTENTS | ECONOMIC DEVELOPMENT | NEXT |

ECONOMIC DEVELOPMENT AND THE RISE OF THE VIRTUAL CORPORATION

Information technology is obliterating the distinction between small business and big business. Big businesses are becoming collections of small businesses, and small companies are partnering with one another, creating virtual corporations for a given period. Many industries that have been dominated by large corporations, like the automobile industry, are becoming networks of small suppliers linked through Information Technology (IT). In the past, one of the major barriers to entry for small business into fields dominated by large players was access to information. But large companies no longer have a monopoly on information regarding emerging technologies, consumers, capital markets, or even personnel. Today, small companies can rapidly form niche markets using all this specialized information.
--Robert Reich, U.S. Secretary of Labor

The advances in telecommunications technology, first facsimile (fax) transmission of business notes and documents with unprecedented immediacy, the prevalence of e-mail and file transfer, and more recently the evolution of mobile computing, videoconferencing and groupware applications have proved to be substantial enablers to the efficient operation, delivery of customer service and strategic outreach and interaction of today's businesses. Large enterprises utilize these telecommunications tools to drive efficient internal operations and manage the information flows in their global organization and customer base. Smaller firms can form collaborative partnerships and offer more competitive service delivery by also employing these tools, creating a business presence and quality of service well targeted to an era of outsourcing and the rise of entrepreneurial service enterprises .

ASPED (Arizona Strategic Planning for Economic Development), the forerunner of today's Governor's Strategic Partnership for Economic Development (GSPED), in their January, 1992 report "Creating a 21st Century Economy: Arizona's Strategic Plan for Economic Development," clearly stated the issue:

Telecommunications and access to information have taken on increasing importance as the global economy becomes more tightly connected. Invariably, the most economically successful regions of the world also possess the most advanced information and communications infrastructure. During the 1980s, a virtual revolution in telecommunications occurred as a result of the fusing of computer and communications technology. The revolution was further fueled by the breakup of AT&T and the new competitive marketplace it created. For Arizona, information and communications infrastructure may be the key to opening up whole new economic development opportunities.

This vision of Arizona's economic development, nourished by its active participation in the revolution in telecommunications, is further advanced by the January, 1995 report of the Governor's Commission for the Study of the Telecommunications and Information Industry in Arizona. The report, prepared by Network Resources, Inc. is titled "Arizona Telecommunications: Leadership through Partnership for Competitive and Innovative Information Industry." Section 2 on Telecommunications and Economic Development in Arizona analyzes in detail the historical trends and research data confirming that the need for and use of advanced telecommunication and information services is inexorably linked to economic development and that the telecommunications industry itself is a major employer and generator of economic activity. It also confirms the linkage of the availability of advanced telecommunication and information services to the presence and demands of high technology companies and that such availability remains a substantial factor in their growth, the new formation of such companies within an area and the potential for high technology business relocation to an area. The importance of such high technology businesses to the state's economy is very significant and well documented in the Governor's Commission report and elsewhere.

Rural areas can reap enormous development benefits from the availability of advanced telecommunication services that are competitive with the region's urban services and costs. Rural economic development, at a disadvantage for many traditional factors, can greatly benefit from the integration of technology and automation in its existing businesses and be aided in the development and attraction of new businesses, often diversifying the business base of a community in the process. Returning again to the January, 1995 Governor's Commission Study, we find extensive and thoughtful analysis in Section 8.3 on Telecommunications and Rural Development in Arizona authored by Edwin B. Parker including this quote:

Telecommunications offers the promise and potential to help rural businesses overcome problems of distance and lack of economies of scale. Many rural businesses, especially information-intensive businesses, can bridge wide distances to serve an enlarged customer base, including urban customers, through advanced telecommunications technology and services. This is why many catalog sales and other "telemarketing" businesses have grown in rural areas in the past decade and why many software developers and "lone eagle" entrepreneurs have moved to rural communities. As the U.S. and Arizona economies continue the global trend to more high technology and telecommunications-dependent businesses, rural locations with good telecommunications can be economically viable.

A recent study, "Impact of High Technology Industry on the Arizona Economy," begins by describing that "Among states and cities that actively recruit businesses to relocate, high technology firms are coveted. There is good reason for this. First and foremost, the high technology industry offers high quality jobs. In addition, high technology firms tend to be export oriented and make important contributions to the balance of trade." The report, published October, 1995, was authored by Dr. Alberta Charney and Dr. Julie Leones, both of the University of Arizona in Tucson. Upon its release, Governor Fife Symington of Arizona said, "This report tells us that this is the industry that is going to carry us into the 21st century." Some highlights of the data are presented below:

Direct contribution of high technology industry to Arizona's economy (1994)

Total contribution of high technology industry to Arizona's economy (1994)

In April, 1994, the AZTEL 2000 study "Strategic Plan for Arizona's Information Infrastructure" was published as a collaborative effort of government, University and private enterprise participants led by the Arizona Department of Administration. The report "concludes that current and future telecommunications environments are central to the economic, social, and educational growth of the businesses and people of the State, and that the infrastructure needed to support Arizona's emerging future must be flexible, dynamic, and inclusive." In regards to business and economic development, it notes "As in other modern economies, the competitive survival of Arizona's business and work force depends on both the flow of information and the infrastructure that controls that information within the State. Critical services such as government, education, manufacturing, agriculture, financial services, transportation, wholesale and retail commerce, and utilities are all becoming increasingly dependent on telecommunications for cost effective administration."

While going on to propose a vision of a coordinated Arizona's telecommunications infrastructure which has yet to be realized, the driving factors the Aztel 2000 Task Force identified remain thoroughly relevant:

The Morrison Institute for Public Policy at Arizona State University in conjunction with the Arizona Telecommunications and Information Council (ATIC - formerly the Advanced Information and Communications Infrastructure Foundation) surveyed Arizona businesses in June, 1994 on the effects of telecommunications and information issues on their individual companies and Arizona business in general. The nearly 60 businesses surveyed were from all around the state and included some of Arizona's most prominent employers as well as small, medium, and large businesses in each of the 10 industry clusters of the Governor's Strategic Partnership for Economic Development (GSPED). More than 80% of these companies, divergent in their size, location and industry, ranked telecommunications and information services as "very important" to the future success of their businesses. The majority of the companies currently use local and wide area networks, electronic mail, and electronic commerce. They also found they faced a variety of barriers to using telecommunication and information services in technical areas (incompatibility of systems, concerns for data security, complexity of technology), business rationale (difficulty in identifying return on investment), and market forces (lack of provider choice, access in their locale, regulatory barriers). The results of the survey indicated six directions for public and private entities. They are listed below, followed by selected data from the survey on Arizona business' current and planned utilization of various telecommunications technologies.

Table 8: Arizona Businesses - Utilization of Network Technology


 Currently Using
%		 To Be Used
In 3 Years % 		No Response
%
Local Area Network
93
5
2
Internal E-mail
86
10
3
Electronic Commerce
76
21
3
Wide Area Network (WAN)
66
12
22
Commercial Services E-mail
48
24
28
Metropolitan Area Network (MAN)
24
30
47
Frame Relay
17
33
50
Switched Multimegabit Data Services (SMDS)
12
31
57
Asynchronous Transfer Mode (ATM)
10
43
47
Synchronous Optical Network (SONET)
2
36
62

(Source: Morrison Institute for Public Policy at ASU Study, September, 1994)
(From a Business Perspective: Outlooks on Telecommunications and Information Services)

Table 9: Arizona Businesses -
Utilization of Telecommunications Transmission Systems


 Currently Using
%		 To Be Used
In 3 Years % 		No Response
%
Modem
95
0
5
Dedicated Phone Lines
88
2
10
Wireless or Personal Communication Devices
69
21
10
Cable Systems
67
9
24
Fiber Optic Lines/Networks
66
12
22
Satellite
40
3
57
Microwave Radio Relay Systems
34
14
52
ISDN
33
26
41

(Source: Morrison Institute for Public Policy at ASU Study, September, 1994)
( From a Business Perspective: Outlooks on Telecommunications and Information Services)

| PREV | CONTENTS | ECONOMIC DEVELOPMENT | NEXT |