February 2010 Archives

"We have learned that to raise a happy, healthy and hopeful child, it takes a family, it takes teachers, it takes clergy, it takes business people, it takes community leaders, it takes those who protect our health and safety it takes all of us.  Yes, it takes a village."  

So pronounced former First Lady of the United States Hillary Clinton, before an audience in Chicago 14 years ago.  Ever the politician, Mrs. Clinton then shouted in her best political twang:  "And Chicago is my kind of village!" 

At that time she was quoting from her controversial book, It Takes a Village.  While her idea seemed radical at the time, mainly because of its political ideas, it identified a rooted challenge in an era of increased social mobility and economic and technological transformation.  On the day in 1996 when Mrs. Clinton spoke, the Internet was in its infancy, along with billions of the planet's inhabitants who today use broadband and the web as part of their daily experience.  They have used the digital experience to create communities in their own image. 

Like Mrs. Clinton, they intuitively had it right: we live in relationship, not in isolation.  If the physical community cannot comply to our collective need, a virtual one will emerge.  Borrowing a phrase from Africa, she thus began a revival of an old idea concerning the strength of communities.  It is collective.  "Strength in numbers" is an old political axiom, which usually refers to voters.  However, in the era of the new community, it is unabashedly an acknowledgment of collaboration. 

I think the title of Mrs. Clinton's book, as much as the book itself, began to set the tone for how I think about the new community.  ICF has begun to understand what it really takes to become a successful village or community in the new century.  Politics has trailed along.  At the community level, in many cases, it has even led.  As we head toward naming another intelligent community of the year I would say that we are still only beginning to scratch the surface of what is possible.

A new tribalism has become visible on the horizon.  Not one that is collectivist as were attempts to have a central state plan the lives of citizens.  Nor "tribal" in the sense of being defined or organized in response to an enemy, or an external threat.  But rather one that is capable of delivering the promise of a safe and more wholesome community.  Like explorers setting out to chart a new land or, closer to home for me, a satellite exploring the edges of the universe and all of the excitement that generates, our criteria is a new type of map.  It has allowed hundreds of communities to begin to search for their future, and understand its potential by looking at successful places. 

The Role of Culture

I wrote in my 31 December blog that the culture within a community, especially an intelligent community, is yielding an as-yet unmeasured gross domestic local product.  This GDLP comes not from the presence of museums, historic sites of interest or hotels developed to accommodate and house tourists.  While these are attractive features for any community, and famously so in cases such as Bilbao, Spain through its Guggenheim Museum or in Hong Kong, through its new West Kowloon development, they are not the raw materials needed to generate the "economy of the creative culture."  Their virtue is that they are promoted in the business and travel sections of newspapers and magazines, which adds luster to a community for tourists.  They also help to attract real estate investments, add money to the tax rolls and produce livable wages for workers and managers in the services sector.  Curators of museums, as well as other professionals, do even better.  However, in my view, they are byproducts of what a local culture is capable of truly producing.  In a sense, they are fossilized unless identified and used as a source of innovation. 

To quote another political figure from the era of the Clinton presidency, former Vice President and Nobel Laureate, Al Gore, is right when he says that "political will is a renewable resource."  The suggestion is that innovation and vision, expressed in political terms, will produce new energy.  If this is the case, I believe that it is also true that local culture is both a renewable resource and imperishable.  It is the gold mine we should rush to exploit.

When a local culture is harnessed to broadband and telecom, it receives new potency and invigorates an old "investment."  The investment is a complex one to readily define, but one that is familiar.  So familiar that we take it for granted.  Yet it is the continuously reinforced, and reinforcing, experience of community life.  No matter where we are, community life persists through our daily, vibrant spectrum of experience.  We richen ourselves in direct proportion to our pride of place, educational experiences, ancestral identification, economic status and our ambition and desire.  The "village" includes a particular history, language and its social customs. 

It can be revealed in a flash.  I cannot forget a presentation made by Darrell Ohokannoak, chairman of Nunavut Broadband.  Nunavut is Canada's third Arctic territory and was named a Smart21 community by ICF in 2006.  We knew that Nunavut had developed a broadband company and an infrastructure to connect its 28 communities, all of them remote, in an attempt to tackle harsh unemployment and an increasing disappearance of its cultural essence. 

While beginning his presentation at a summit of Canadian Intelligent Communities, organized by MISA, I expected another interesting Powerpoint presentation with graphs, bullet points and a quote here and there for emphasis.  Instead, we saw beautiful photographs of what seemed like someone's family vacation, but far more unique.

"My apologies for not having words for you," he began slowly  "But we are a visual people and we tell stories."  He paused.  "We use our imagination."  In four words he had explained a persistent quality of his community and one that would inform its unique economic offering.  Using imagination and knowledge of communications technology, Nunavut had been enabled by the power of broadband via satellite.  The satellite connected it to the world.  Over time it managed to use the Internet to bring to market its unique tribal art, which thanks to its e-commerce site found markets outside of its frosty region. 

The community had reached into its own core, brought forward its collective imagination and harnessed it to broadband and related technology and allowed its cultural assets to renew themselves in a new era of "community." 

It is an old story but one that is constantly rewritten.  The question is, what will it look like in the 21st century, and how can we best study it?

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Now that ICF has announced its Top Seven Intelligent Communities of the Year, it is a good time to reflect on "the other 14."  That is, the 14 out of the Smart21 Communities of the Year that were not selected by our analysts to be among the Top Seven.

These stages in the competition are my least favorite part of our yearly process.  So much innovation, inspiration and hard work are on display from October to January, only to be pushed out of the limelight by the Top Seven selection.  It's true that the Top Seven scored higher on our Intelligent Community Indicators, and on the annual theme of the Awards, than the other 14.  But those 14 deserve to be honored.  More important, the rest of us need to know about the strategies and practices that put them on the short-list of the world's most successful Intelligent Communities.

Three of our Smart21 - Danville and Bristol in the state of Virginia, USA, and Porto Alegre in Brazil - illustrate a really successful strategy for community broadband, one that has put them square at the center of growing regional economies. 

When local governments go into telecommunications, they have different priorities than do private companies. They need to deliver dependable, high-quality, cost-effective service, and to make money doing it, because otherwise there's nothing to invest in maintenance and growth.  (For all those who like to chant "people, not profits," I offer the wisdom of management consultant Peter Drucker, who pointed out that, contrary to popular belief, businesses do not exist to make profits; it's just that they just can't do anything else unless they do.)  But governments have other goals that are part of their special mission: economic development, improved public services, more equal access to opportunity.  Sometimes the pursuit of those goals distracts them from running the store properly, in which case they lose money and make voters angry.  But that's certainly not the case with Porto Alegre, Danville or Bristol. 

All three communities were starved for both broadband and economic opportunity.  They are in rural areas and long depended on agriculture and low-skilled manufacturing for employment. Not a recipe for economic success in the 21st Century.  The incumbent telephone or cable TV providers were not willing to make the investments needed to create a robust level of service.  So, all three communities decided to do something about it themselves. 

In Bristol and Danville, the cities owned their own electric utilities, and made these the basis for the build-out of a 100 Mbps fiber-optic network.  In Porto Alegre, a city-owned communications and IT company built a hybrid fiber and wireless network.  The original concept was to serve city-owned facilities as a substitute for paying the incumbent telephone carrier for service.  In other words, to save the taxpayers money.  But demand from businesses and citizens caused all three communities to aim higher.  Bristol fought in the courts and state legislature for 3 years, at a cost of US$2.5m, to win the right to compete with incumbents - and within a few years had over 60% of the market.  In Danville, community leaders were able to sidestep legal battles by making theirs an open-access network, in which the city provided the physical infrastructure that private-sector carriers used to deliver voice, Internet and video services.  Because of a different legal and political climate, Porto Alegre reported no major obstacles to its deployment of both infrastructure and services.

So far, these are community network stories like many others.  It was after the networks were up and running that things got interesting.  Bristol Virginia Utilities (BVU), the city-owned carrier, developed partnerships with neighboring counties, and became the prime contractor for a network build-out there funded in part by public grants.  The networks linked not only to homes and businesses, but also to a new technology park that attracted major IT employers.  In Danville, the city-owned electric utility services the entire region, and the third phase of the nDanville network is reaching outside the city limits to more than 20,000 rural businesses and homes.  It will support telework, rural schools and local business start-ups.  Porto Alegre is using their 350km regional fiber ring to connect rural health clinics with hospitals downtown.  That has reduced waiting time at the clinics from 4 months to 30 days, and missed appointments from 40% to less than 10% of the total. 

What's the point?  Each of these communities has leveraged its own hunger for broadband to make itself the hub of a fiber-connected region.  As Mayor Jim Rector of Bristol told me, BVU is generating income from places far outside the city.  The network is making possible high-quality jobs to which Bristol residents commute.  It has encouraged the state university system to build a satellite campus nearby - connected, of course, to the fiber network.  Senior executives of a Fortune 500 mining company headquartered in Bristol told me that they couldn't keep their corporate nerve center where it was without the connectivity provided by BVU.  Broadband-based services flow outward from the hub and prosperity flows back in, only to flood outward again like a spring tide. 

If your community has its own broadband network, you probably have opportunities to grow it beyond your own boundaries.  In fact, neighboring communities and counties may be clamoring for your help.  Should you give it?  The experience of the Smart21 suggests you should.  You have to get the funding and business model right, of course, but the rewards to the network owner and operator can be substantial.  And while you are building traffic on your network and incomes in your community, you will be doing a lot of good for your neighbors as well.

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My grandmother used to say that "idle hands are the Devil's playthings."  She meant that when you don't know what to do with yourself, that's when you are most likely to get into trouble.  I guess the lesson stuck with me.  On the rare occasions when I am exposed to reality TV, my first reaction is always the same.  "Those people have way too much time on their hands."

On February 12, Sam Dillon of The New York Times published a story that shows what a smart woman my grandmother was.  The article ("Wi-Fi Turns Rowdy Bus Into Rolling Study Hall") reported on the miracle that occurred when school buses in the town of Vail, Arizona were equipped with WiFi hubs.  Instead of teasing, texting, flirting, shouting at, climbing over or punching each other, the kids turned to the Web for entertainment, communication and help with last-minute homework.  As Mr. Dillon put it, "Wi-Fi access has transformed what was often a boisterous bus ride into a rolling study hall, and behavioral problems have virtually disappeared." 

The story shows a local government making creative use of broadband to influence the behavior of its citizens for the good of the community.  Going to school?  Good.  Getting into trouble because long bus rides are boring?  Bad.  Catching up on homework and practicing digital skills instead?  Good. 

As I read it, I was thinking of our Smart21 of 2010.  I realized that smart communities around the world are doing a lot more than just deploying broadband.  They are thinking through how broadband deployment can also be a policy tool.  By applying creativity to the "how" and "where" of broadband deployment, they are multiplying the positive impacts on community life and economic performance.     

Moncton, New Brunswick, Canada is a small city of 65,000.  If you jump in your car, no part of the city is more than 15 or 20 minutes away.  That makes it a tough place to run a municipal bus line, because travel by car will always be more convenient.  At least it was until Moncton decided to change the equation.  The city partnered with a local company, Red Ball Internet, to install Wi-Fi hubs on all city buses, linked to the Web at up to 45 Mbps.  I have watched full-motion video online (see photo) while traveling on a Moncton bus, and the performance in this demanding application was as good as I get at home.  Suddenly, the idea of commuting by bus looks a lot more appealing.  Instead of staring at the cars ahead of me in traffic, I can use the time to get a head start on my work or finish something left over from the day without leaving late.  Moncton credits Wi-Fi with boosting ridership.  That's important for two reasons.  Moncton is growing and traffic congestion could become a real problem, as it is in Silicon Valley, where it hurts quality of life and raises costs.  Putting more people on buses also keeps Moncton's carbon footprint under control as its economy continued to prosper.   

Taoyuan County, Taiwan is home to the international airport that serves the nearby capital city of Taipei.   The airport is an important economic center for the county.  But the blessing is decidedly mixed.  Think about what you do when you fly into an airport located outside the city of your destination.  At my regular hub - Liberty International Airport in Newark, New Jersey - I get off the plane and head east for my office in New York City or north for home.  That's money leaving Newark, leaving Essex County, and going out of reach.

Taoyuan's answer is a plan called Aerotropolis, whose goal is to keep more of the airport's economic output within the county.  An important part of the plan is "M-Taoyuan," a WiMAX corridor it is building to improve connectivity across some pretty mountainous terrain.  But here's the real point.  When it is completed, it will form a seamless wireless broadband corridor connecting every traveler on every kilometer between the airport and downtown Taipei.  Like a physical highway that allows prosperity to flow out of major cities as well as inward, M-Taoyuan will transform that corridor into an entirely new economic center. 

When communities deploy wireless, they often look for the easy victory. They put wireless antennas on light poles in the city parks and celebrate.  Hey look!  We've got a brand new Wi-Fi Zone!  But let me ask you: when was the last time you went to the park to check your email?  When I go for a walk in the park near my office, it is to get away from email and instant messages and telephone calls, to feel the breeze and get some sun on my face. 

When communities go into broadband or develop policies to guide the private sector, it's an important chance to think about what users need and what social and economic goals they want to accomplish.  "Connectivity for all" is a good slogan,  but it's not enough to make communities successful in the 21st Century. 

Recently, we announced our 2010 Top Seven Intelligent Communities of the Year.  They were selected by an international academic team of analysts from among the Smart21 Communities we named in October.  As always, some of my personal favorites did not make the list, and I failed to appreciate fully the strengths of some that did.

But there was one trend I did notice.  It was a focus on entrepreneurship: creating and growing new businesses.  Every one of this year's Top Seven Intelligent Communities based their economic success on creating the right environment for the start-up of small, fast-growing companies and on nurturing their progress in ways large and small. 

That turns out to be a smart move.  Last year, Metro Innovation - a venture capital firm in Cincinnati, Ohio, USA - published a brochure called Ideas in Progress.  It would be hard to find a better summary of why promoting entrepreneurship is a major best practice of Intelligent Communities.  Here are just a few of the important questions they answer.  All are based on US economic statistics but I think the conclusions apply anywhere that free enterprise is allowed to flourish.

♦  Where does prosperity come from?  Over the last 20 years, 100% of net job growth in the US can be attributed to companies that are less than five years old.  When the tech bubble burst in 2001, Fortune 500 firms cut more than 900,000 jobs.  In the same year, venture-backed start-ups created 4.3 million jobs and $736 billion in annual revenues.  In 2008, venture-backed companies employed more than 12 million Americans and produced nearly $3 trillion in revenue.  That accounts for 11% of private-sector employment and 21% of US GDP. 

♦  Why is venture capital so important?  Venture capital is early-stage investment in business.  It isn't essential to start-ups - 76% of American companies are financed by the founders themselves and 23% by their friends and family.  In fact, only one start-up in one thousand receives venture capital.  But they do better.  In 2000, venture-backed companies had a failure rate of less than 1%, compared with the 46% failure rate for all start-ups.  One percent compared to forty-six percent.  That sounds like magic, but it's not.  Investors in early-stage companies are very selective: for every 100 business plans they evaluate, on average, they fund only one.  So a company that receives venture financing has been tipped by experts as a likely winner - and still, only 10-15% of them will grow enough to meet their investors' goals. 

♦  Why is Silicon Valley so successful?  It's about clusters, sure.  Business-university collaboration, of course.  But money helps.  On average, the US venture capital industry invests $25 billion every year in start-ups - and 50% of that is invested in the state of California.  This money is raised from sources all across the United States, which means that most American communities are exporting investment to the Golden State.  In 2009, McKinsey & Co. published a "Global Innovation Heat Map" showing centers of innovation around the world.  Guess what region comes out on top.

View the interactive map at McKinsey & Co.

♦  Why does innovation matter?  Nobel Prize-winning economist Robert Solow has the answer.  In a major study, he found that "ingenuity" accounted for 88% of the growth in output per man-hour between 1909 and 1949.  Eighty-eight percent.  Innovation drives the economy because it is the only way to make costs lower while improving quality and usefulness.  It is the only way, in short, to improve our standard of living over time. 

What are the leaders of Intelligent Communities to make of all this?  Simply put, local entrepreneurship is a "must have" in the Broadband Economy.  If it is not taking place within the city line, it had better be going on nearby, so that your citizens can benefit from it.   

To become reliable creators of prosperity, entrepreneurs need risk capital, whether it comes from private, public or nonprofit sources.  The money fuels growth, but even more important is the experience, objectivity and downright ruthlessness that venture investors bring to business.  If a group of seasoned, committed investors is picking winners in your community or one next door, only one out of a hundred may get the cash, but other 99 will raise their game, too.  Creating an entrepreneurial culture, developing funding sources and attracting investors is one of the biggest challenges that Intelligent Communities face.  The good news is that, from the example of this year's Top Seven, they are tackling the challenge with everything they've got.