Fiber and the New Economy

Many communities look at having a fiber network as a catalyst for economic development. When fiber was relatively new this was clearly the case. We can look at some of the early adapters of fiber, like Bristol Virginia to see how communities leveraged a fiber network to bring large employers and jobs to their communities.

I’ve been talking to some economic development pros recently and I think that historic economic development model is rapidly changing due to the nature of our new economy. I don’t think there will ever come a time when communities won’t hope for a major employer to move to their area, and we know today that requires having great broadband. But I also think that smart communities will look beyond this model and will find new ways to best leverage fiber.

Probably the biggest recent change in our economy is the work-at-home phenomenon. People are able to work at home for major corporations, and that means they can live anywhere. But the real juice from the work-at-home economy is from people starting their own businesses from their homes.

I’ve worked out of my house for nearly twenty years. When I first started doing this it was rare and I didn’t know anybody else who worked full-time from home. But today its common – just on my one city block there are a half a dozen families supported by work-at-home jobs.

The other big economic trend is that we are becoming more of a service economy. There are numerous businesses making a go of it by supporting others in their community. A few big retail companies like Walmart and Amazon devastated a lot of the small retail community across the country. But I look around and see a thriving service community that is immune from the effects of big retail – restaurants, brew pubs, pet sitters, investment advisors, Lyft drivers, etc.

The new economy also fosters craftsmen and artists. Where I live it’s hard to find a carpenter or electrician since they are all so busy. As I travel around the country I see art and photography studios everywhere.

So what does all of this have to do with fiber and economic development? First, I think it’s becoming clear that communities without fiber are in danger of becoming irrelevant and of withering. The people working in the new economy need broadband to work at home or to sell their services or art work. And communities clearly need good broadband to support good education.

The new model I see for economic development recognizes the new economy and values it in the same way that they used to value drawing in the big employer. A person making $65,000 per year from their home is probably more valuable to a community than somebody making the same in a new factory that relocated for tax incentives. The factory worker might be commuting and carrying the salary elsewhere while the home worker is likely to shop and spend their money locally. And the factory is likely to be shipping profits out of town. We’ve known for decades that there is a huge multiplier effect from spending money locally, and creating jobs that spend locally can really fuels a local economy.

So I think the smart communities are those that will embrace this new economy and foster it. I would venture to say that very few communities even know how many local people work from their homes. And few have any strategy for attracting more people to work from home or for helping local people start new home-based businesses.

Since work-at-home employees can generally live anywhere, cities need a strategy if they want to foster this new economy. One possible strategy is to do everything possible to make a community into a place that people want to live. That means expending economic development resources to promote new restaurants, to foster the local art community, to create better parks and green spaces. It means cleaning up old downtowns and doing everything possible to get businesses to occupy empty spaces. It means eliminating tax or other disincentives for new small businesses. And it means making sure there is good enough broadband to support all of these efforts.

A New Vision of Economic Development

 

Photo by Drew C. Wilson of the Wilson Times


I attended a forum in Wilson, North Carolina last week that talked about how fiber is transforming their city. They talked about how they are trying a new model for economic development.

The traditional economic development model concentrated on searching for big piles of jobs. Communities made efforts to attract major employers and worked hard to keep companies from leaving their town. But it’s pretty obvious when looking around rural America that this model stopped working somewhere along the line. I visit far too many communities that have lost big employers and that are not finding anybody to replace them. This is due to some degree to the overall huge decrease in US manufacturing jobs. But it also is due in part to the general decline of businesses located in smaller communities.

Wilson is a community of around 50,000. Historically the city was known as the ‘world’s greatest tobacco market’ in the 19th century and tobacco was huge in the area until a few decades ago. Wilson was also the birthplace to BB&T bank, which is still the largest employer in the city. But like happened with many US cities, Wilson also went through a decline. Some small manufacturers closed and the tobacco business died. In a scene that is familiar across the country the downtown business district dried-up as retail moved to other places.

Wilson started its fiber optic business in 2008 under the tradename of Greenlight. They were one of the first cities in the country to offer gigabit broadband to residents. And that fiber network was the linchpin for the city in developing their new vision of economic development.

The concept behind Wilson’s vision sounds simple. They figure that that the best way to attract jobs to the community is by working to make their community a place where people want to live. They want visitors to the city to like it enough that some of them will want to move there. And they figure that when they reach that goal that businesses will naturally want to locate there. So they are looking to grow their economy by concentrating on and improving the assets they already have.

Of course, this is anything but simple. Many cities have tried this and only a few have found a way to rebound from the decaying downtowns we see all over the country. Wilson is making the turn by concentrating on the downtown area. They lured the Wilson Times, a local daily newspaper, to refurbish an old building and move back into downtown. They raised the money to renovate an old theater to create the Edna Boykin Cultural Center. There is a project to build new housing downtown next to the whirligig park (the picture accompanying this blog). They attracted Peak Demand to make a $2.6 M investment to manufacture electrical components in an old tobacco processing plant. And these investments are bringing back other businesses. There are new restaurants and two brew pubs that have opened in the downtown.

Wilson is using an approach that other cities should consider. They involve all of the stakeholders in the community in the effort to improve quality of life there. That includes working with Barton College, a 1,200-student liberal arts university and nursing school. They challenged the arts community to move and grow downtown and have a thriving art scene. They put an emphasis on buying local, which we all know has a tremendous local economic multiplier effect. The various constituencies in the city meet often to discuss ways to make the city better.

But they credit the fiber network for being the change that started everything. While big companies and big employers are important to every community, Wilson understood that the work-from-home entrepreneur movement is creating a lot of jobs and a lot of wealth. And so they foster innovation in a number of different ways and strive to make small and new businesses successful.

The big shame is that the North Carolina legislature passed a law to prohibit other communities in the state from following the Wilson model. Cities are no longer allowed to become retail ISPs in North Carolina. If they build fiber it has to be operated by somebody else – and we know that is a far harder model to make work. One only has to look at what’s happening in Wilson to understand that fiber is an important component these days for economic vitality. But fiber alone is not a guarantee for economic success. It takes a community-wide effort like the one in Wilson to take advantage of what fiber offers. Wilson still has a way to go, but you can feel the excitement in the community – and that is what makes any city a place where people want to live.