Category Archives: Telecommunications

Small-Cell Broadband Comes to Fredericksburg

Fredericksburg soon could become the next city in Virginia with super-fast broadband, reports the Free Lance-Star. City Council approved a deal last week granting Cox Wireless Access LLC a 10-year, non-exclusive franchise to install the small-cell facilities that enable the next-generation 5G telecommunications network.

That decision follows previous deals with ExteNet to install 14 facilities on utility poles around the University of Mary Washington campus, and with Mobilitie LLC to install around a dozen boxes in the city’s public rights-of-way.

“Small-cell telecommunications infrastructure has generally been found to be a win–win for the city,” Public Works Director Dave King told the council. “Small cells help the city to achieve its goal of being the fastest broadband city in Virginia while also minimizing the visual impacts that are caused by the massive monopole towers that you may be accustomed to seeing in different areas around the region.”

The small-cell equipment is about the size of a piece of carry-on luggage. Its range is significantly shorter than typical cell phone coverage, however, so far more of the units must be installed.

Small cells are enjoying a global boom right now as wireless carriers compete to roll out 5G technology, the fastest, bestest broadband access yet. The Federal Communications Commission voted in April to limit the ability of local governments to tax and regulate small-cell deployment. Virginia got a jump start, however, thanks to legislation enacted last year, which curtailed the ability of local governments to impose special exemptions or special use permits for small cell facilities installed on existing structures where providers already have permission to co-locate equipment.  

Va Beach Snags Third Trans-Atlantic Cable

Route of proposed South Atlantic Express International data cable. Image credit: Virginian-Pilot

South Atlantic Express International Ltd. plans to build a high-speed data cable to connect South Africa with Virginia Beach. The third trans-Atlantic cable terminating in Hampton Road, it would provide yet another stimulus to Virginia’s burgeoning data center industry.

As a bonus, ACA International will relocate its headquarters from Northern Virginia to Virginia Beach. The project could bring 200 high-tech jobs to the city, including software engineers, data analysts, and cyber-security professionals, according to the cable company’s local partner, ACA International. Reports the Virginian-Pilot:

The announcement of a third cable comes on the heels of the completion of Marea – Microsoft and Facebook’s first subsea cable connecting Virginia Beach to Spain. Marea’s transmissions are “more than 16 million times faster than the average home internet connection, with the capability to stream 71 million high-definition videos simultaneously,” according to Microsoft.

A second cable, Brusa, is under construction, and will connect Virginia Beach to South America.

This is great news for Hampton Roads, which desperately needs to diversify its economy away the defense industry. I’m certainly no expert on the data center industry, but a third trans-Atlantic connection, which will also create high-speed data links to Nigeria and Brazil, could help other Virginia localities in their competition to lure new data centers. Virginia has one of the densest clusters in the country of high-capacity cable, but until recently it has not had direct connections overseas.

Let’s say I was a cloud provider wanting to serve the market in Brazil, Nigeria or South Africa. Would I rather locate my data center in Capetown, Lagos, Forteleza… or Virginia Beach, where (a) IT skills are abundant, (b) I could plug into one of the the premier land-line fiber-optic cable networks in the world, (c) there is a reliable, competitively priced and increasingly green source of electricity, and (d) the business climate is favorable and the political system stable?

Sounds like a no-brainer to me. Hopefully, Virginia Beach will see many more data centers coming its way.

(Hat tip: Paul Yoon)

5G Wireless: Build, Baby, Build!

The latest wave of wireless innovation is upon us — fifth generation wireless, otherwise known as 5G. The technology will multiply download speeds by 10 times or more, allowing wireless carriers to compete with cable companies for high-speed Internet access. As former FCC trade commissioner Robert McDowell writes in the Wall Street Journal today:

5G will enable advances in everything from driverless cars to the “tactile internet,” in which surgeons can perform operations and builders operate construction equipment remotely, and entertainment can include sensations beyond the audiovisual.

A 5G-enabled Internet of Things will connect people, data and new devices, creating a surge of economic growth. IHS Markit estimates that in the U.S. alone 5G will yield $719 billion in growth and 3.4 million new jobs by 2035.

To deploy the technology, 5G wireless carriers need to deploy thousands of “small cell” antennas the size of pizza boxes. Although these small cells are almost invisible, some state and local governments are treating them as if they are 100-foot towers. Outdated local requirements restrict carriers from placing small cells in local rights-of-way and on government-owned utility poles. Zoning ordinances designed for big cell towers require zoning board approval. Other localities impose prohibitive fees.

It was with a sickening feeling in the pit of my stomach that I Googled “Virginia 5G regulations,” fearing that the Old Dominion still would be living up to the “Old” in its moniker, imposing all manner of unreasonable fees and restrictions. But I was pleasantly surprised. We have been making progress.

Last year Governor Terry McAuliffe signed S.B. 1282, which, according to Wireless Week, removed some regulatory barriers and sped up local permitting processes.

[The bill] stated that localities can’t require special exceptions or special use permits for small cell facilities installed on existing structures where providers already have permission to co-locate equipment, and gives municipalities 10 days to notify carriers of an incomplete application and 60 days to either approve or deny applications. The measure also caps municipal fees at $100 each for up to five small cell facilities on an application and $50 for each facility thereafter. Fees for carrier use of municipal rights-of-way are prohibited, except for zoning, subdivision, site plan, and comprehensive plan fees related to the general application. Additionally, the bill instructs municipalities that “approval for a permit shall not be unreasonably conditioned, withheld, or delayed.”

Consulting firm Accenture had said the wireless industry is looking to make “significant” infrastructure investments in the state, including $179 million in Richmond and $371 in Virginia Beach, reported Wireless Week. The firm also forecast that the investments would create more than 6,000 jobs across the state.

In the 2018 session, the General Assembly passed SB 405, which exempts wireless structures less than 50 feet tall from requirements to obtain special use permits under local zoning laws, as well as SB 823, which establishes an annual wireless infrastructure erected in public rights-of-way. The fee is $1,000 for structures that are 50 feet or shorter.  The bill awaits the signature of Governor Ralph Northam.

Bacon’s bottom line: If Virginia wants to run with the big boys in technology-intensive industries, it needs to encourage wireless operators to roll out 5G as rapidly as possible. What’s extra cool about the technology is that it doesn’t favor just the big metropolitan regions with dense populations. 5G can reach rural endpoints at one-fifth to one-tenth the cost of wireline connections, thus closing one of the big infrastructure barriers to rural economic development.

I don’t see any downside to 5G deployment. It’s driven by the private sector. It will open up high-speed Internet to virtually the entire state. All government has to do is get out of the way. The only losers are crybaby NIMBYs who can’t bare the thought of wireless towers less than 50 feet tall within their line of sight. Waaah. Build, baby, build!

Yet Another Path to Rural Broadband: Other Peoples’ Money

The Pamunkey Indian Tribe… soon delivering broadband Internet from a wireless tower near you.

Speaking of bringing broadband Internet to rural Virginia (see previous post)… PamunkeyNet, a business entity of the Pamunkey Indian Tribe, has received approval from the GO Virginia State Board to develop a plan to bring broadband to Gloucester, Mathews, Middlesex and other rural counties along the Chesapeake Bay.

The newly awarded federal designation of the Pumunkeys as an officially recognized Indian tribe is key to the venture. According to a GO-Virginia document, the project would unfold over three years. GO-Virginia, a state-funded economic development initiative, would provide backing for two years. The Pamunkey-owned project would:

  • Create a network of existing and new wireless towers throughout the Middle Peninsula and George Washington region that will have a high-performance backbone between towers and local access radios on each tower to provide affordable business, residential, and institutional broadband Internet service, and will provide Gigbit fiber services on the Pamunkey reservation.
  • Create a fiber-based Technology Corridor on Route 33 between Rappahannock Community College, the planned Telework Center, and the Middle Peninsula Regional Airport.
  • Design for linkage with Hampton Roads, specifically for VIMS and Rappahannock Community College, and anticipate the benefits of linkages to the south with transoceanic destinations from the MAREA landing point, as well as to the north at Ashburn.

Key to making this happen is Pamunkey access to federal funds — “the sole federally designated tribe in Virginia and a conduit to currently untapped federal resources.”

The project also would involve the Middle Peninsula Planning District Commission, the Rappahannock and Germanna community colleges, ten localities, and two electric co-ops.

Bacon’s bottom line: I’ve just finished reading Nassim Nicholas Taleb’s brilliant and confounding new book, “Skin in the Game: Hidden Asymmetries in Daily Life.” Taleb doesn’t have much use for movers, shakers, and pundits (which would include people like me) who don’t have “skin in the game,” that is, people who, if their analysis proves unfounded, walk away unscathed. One commonly encountered group of skinless gamers is people who play with taxpayers’ money.

If you had to make a prediction, which would you pick to have a greater chance of economic success (that is, recovering the funds invested): Gary Wood’s plan (described in the previous post) for the Central Virginia Electric Cooperative to deliver broadband to its 36,000 customers, or the Pamunkey plan to deliver broadband to a geographic area of comparable size?

I would lay my money on Wood. In a word, Wood has put his ass on the line, and he reports directly to a board of directors, whose members represent the interests of the customer-members of the co-op. If the venture fails, co-op members will take a bath, board members will catch endless flack from their friends and neighbors, and Wood’s career likely will be ruined. I would feel even better if he had some of his own money at stake, but there is a clear line of accountability, and the people involved have a lot to gain or lose. Without knowing Wood personally, I feel reasonably assured that he will do everything within his power to make the project a success.

Conversely, it doesn’t appear that anybody has skin in the game in the Pamunkey deal. There is no indication that the Pamunkeys are putting up any of their own money or that they’ll suffer any loss if the project bombs. Basically, a bunch of bureaucrats are playing with other peoples’ money, and if the project fizzles, there is no discernible impact on any of the participating organizations. Furthermore, participation is so broad and so diffused, there won’t be anyone to hold accountable. The Pamunkeys might tap enough state, federal, and local money to get the broadband service built. But would the project be economical, in the sense of earning back its cost of capital? Who cares? It’s other peoples’ money.

Another Path to Rural Broadband: Electric Co-ops

Service territories of Virginia electric utilities. The CVEC territory is shown in bright blue in the center of the state. (Click for larger image.)

The Central Virginia Electric Cooperative has been delivering electricity to the inhabitants of 14 Central Virginia localities for 80 years. Now it’s planning to provide high-bandwidth Internet connections. The company has announced a plan to invest $11o million to connect all 36,000 co-op members.

Co-op members will be able to purchase 100 megabits per second (mbps) access for $49.99 a month or 1 gigabit per second (gbps) for $79.99 a month, reports the Fluvanna Review.

Keeping the pricing reasonable was important to CVEC President Gary Wood. “I didn’t want this to become a premium service or a luxury service,” he says. Continues the Rivanna Review:

Wood said the project is anticipated to lose money for the first seven years and reach the break-even point in about 11. He admits that “give me $100 million and in seven years, I’ll start bringing you your profits,” hasn’t been the easiest argument to sell, but he believes it can be done with a combination of  loans, grants, state and federal funding and tax rebates.

CVEC is also asking for financial support from each of the counties in its service area.

For a for-profit business, eleven years would be a slow payback. But for an electric co-op, owned by its customers, that might seem like a reasonable proposition.

One objection, I would expect, would revolve around opportunity cost. By taking on a financial obligation of this size, the co-op might be limiting its ability to pursue other projects such as, say, grid modernization or solar energy. Another objection would be risk. What if rural residents aren’t willing to pay $50 to $80 per month for broadband access? Could disappointing revenues put the co-op in financial jeopardy?

But let’s face it, no one else is likely to want to deliver broadband to the rural residents of Central Virginia. This seems like a project that is custom-made for CVEC, and it could provide a model for other co-ops, who cover roughly a third of the geographic expanse of the state.

Broadband Boondoggles in Southwest Virginia

Throughout the Central Appalachian region — Virginia, West Virginia and Kentucky — community leaders have a keen understanding that they must find new industries to replace coal. And there is a near universal conviction that any hope to diversify local economies requires high-bandwidth connections to the outside world. This conviction has led to a series of initiatives, some misguided and some on target, to bring broadband to this isolated region.

Ronald Bailey with Reason Magazine has visited Central Appalachia to examine these efforts and concludes pessimistically, that they’re not accomplishing much. The article’s headline says it all: “The Noble, Misguided Plan to Turn Coal Miners into Coders: Expensive high-speed internet and job training will not transform Appalachia into ‘Silicon Holler.'”

The story begins in 1999 with the decision of Bristol Virginia Utilities (BVU) to build a fiber-optic network connecting its eight electric substations and all of the city’s public facilities. In 2002 BVU OptiNet began deploying a fiber-to-the-home network with the help of state and federal grants, tobacco settlement money, and revenue bonds — $132 million all told for 13,000 customers. (That’s a capital investment of about $10,000 per customer.) The end result:

Cash inflows from successive government grants enabled OptiNet to function like a Ponzi scheme, masking the fiscal rot at the heart of the enterprise. Eventually in 2013, an audit found extensive misuse of funds—personal trips, bribes, and kickbacks—by board members, officers, and contractors. In 2016, nine people associated with the BVU Authority, including its CEO, chief financial officer, and board chairman, were sent to prison for conspiracy and fraud. The state government’s 2016 final report noted that the OptiNet division was operating at a net loss, that this was expected to continue, and that therefore it was unlikely to generate enough cash to pay both the principal and interest owed on $45.5 million in bonds it issued in 2010.

The audit also found that the BVU Authority used an improper methodology to account for and cancel debt when it became an independent entity, and as a consequence it now owes the Bristol city utility division nearly $14 million. The auditors’ blunt assessment: “These conditions raise substantial doubt about OptiNet’s ability to continue as a going concern.”

Now a Southwest Virginia entity, Sunset Digital, has negotiated a deal to acquire OptiNet’s assets for $50 million. As the author Bailey notes, that’s a “smart move” for Sunset Digital and its owner Paul Elswick, who are backed by a Miami, Fla., based private equity firm.

Meanwhile, in nearby Dickenson County, the county also has been investing in building a fiber-optic cable network. In 2004 the board of supervisors created the Dickenson County Wireless Integrated Network (DCWIN). Next year  DCWIN issued $1.5 million in bonds to build 10 cell towers. To pay off the bonds, the network had to sign up 1,500 customers. Never happened. Five years later, the county board dissolved the authority, assumed its debts, and sold the wireless network to a local company for $277,000.

Those are relatively small potatoes compared to the shenanigans in eastern Kentucky, which Bailey describes in considerable detail. The author came away impressed by some of the entrepreneurs who want to bring broadband to the region, but not so impressed by the efforts of local government officials, who don’t know what they’re doing. He calls into question the entire premise of trying to rejuvenate the economy by pumping money into highways, broadband, and other infrastructure.

It is hard to see the seeds that are supposed to someday sprout and grow into a nascent Silicon Holler.

It’s difficult to tell how many employers, if any, have decided to relocate to Southwestern Virginia due to better access to high speed data networks. As with the highway construction project before it, the internet infrastructure push has not created a detectable boom. Population in the counties covered by various government-subsidized broadband networks continues to fall, dropping from 334,000 in 2000 to 324,000 now. Between 1980 and 2000, by contrast—without any high-speed internet to speak of and with the highways uncompleted—the area’s population dropped by a smaller amount, from 336,000 to 334,000.

For more than 50 years, the feds have poured billions in job training and infrastructure funds into central Appalachia with the goal of spurring economic growth and reducing endemic poverty. There is very little to show for all that effort.

Bacon’s bottom line: I kinda sorta agree with Bailey. But not entirely. I share Bailey’s skepticism about how local governments have tried to jump-start broadband connectivity. Clearly, Bristol and Dickenson County lost a lot of money they could ill afford to lose. If local governments are going to get into the broadband business, they need to be better stewards of scarce public dollars..

But I sympathize with the desire of Southwest Virginians to salvage their economy, and I agree that having broadband connectivity is a necessary condition to achieving that revitalization. In other words, without broadband, there will never be an economic revival. Unfortunately, investing in broadband is no guarantee that new jobs and opportunities will come. It’s the ticket the region must buy to get into the game.

Hat tip: Jack Lucas

Living with Slow Internet in a Broadband World

Ashley Fisher (left) and Vickie Barker run an independent insurance company in Halifax County. Their slow Internet connection, which frequently goes out, hampers customer service. (Photo credit: Roanoke Times)

If you don’t live in a small town or rural community, you probably don’t have a clue how difficult it is to participate in the 21st-century economy. But a Roanoke Times article paints a vivid picture of life in South Boston and Halifax County in Virginia’s Southside region.

Television producer Kevin Peade started his business when everything was on film and a remote location was not a handicap. But the rest of the world has moved to digital, and local broadband connections are so slow during the day, when others are online, that he literally works at night.

Brenda Short got rid of her computer years ago because there wasn’t any point in keeping it around anymore. If she absolutely, positively needs to access the Internet, she drives six miles to her office to get a connection.

A local church canceled its internet service when a pastor left, only to find out it couldn’t get back online later because the network was so overloaded that it wasn’t taking new customers.

Roanoke Times reporter Jacob Demmit compiles other examples of how a small town struggles when the rest of the world does business with a faster, high-broadband metabolism.

There’s a local DMV Select office that struggles with a connection so slow that it often can’t process credit cards. A farmer said he tried satellite internet for a while but ultimately decided he was paying too much for a connection that was hardly usable. One Halifax County resident runs an entire lumber business, including billing for international orders, from his cellphone.

Nationally, only four percent of urban dwellers lack access to a 25 Mbps connection, according to 2016 data from the FCC, the Roanoke Times says. In rural America, the number is 20 percent. But in the Halifax County community of Nathalie (population 183) it’s closer to half. Laying fiber optic cable doesn’t make economic sense in sparsely populated areas. But the improving economics of wireless provides reason for hope.

The county has engaged SCS Technologies, a local Internet Service Provider, to cobble together a network using the small amount of fiber in the ground with a series of antennas mounted on cell towers, water towers, church steeples and anything else tall enough to see above the trees. SCS plans to offer 10 MBS (megabytes per second) service – about five times the speed most people are getting — for $35 a month. Halifax County is contributing $103,000 for phase one of the project.

Meanwhile, Microsoft has selected Halifax County as the proving ground for a service built upon the unused frequencies between television channels known as TV white spaces. One white-spaces tower could in theory cover a 10-mile radius with up to 400 MPS connections. The technology giant, which is partnering with Salem-based B2X Online to provide the local service, hopes to connect 1,000 homes in Halifax and neighboring Charlotte counties by early next year. Microsoft’s goal is to reach 2 million people across the country by 2022, beginning with 12 test sites like Halifax.

Bacon’s bottom line: It’s hard to imagine rural communities pulling themselves out of their economic doldrums if they lack the high-speed broadband connections to communicate with the rest of the business world. It is tempting for local boards of supervisors to consider subsidizing broadband service under the theory that, like electricity, telephone, water and sewer, broadband is indispensable for modern life. On the other hand, new technologies and business models are emerging that could render any existing rural-broadband solution obsolete.

Should the  Halifax Board spend thousands of dollar subsidizing a broadband service that is marginally superior to copper-line connections when Microsoft might introduce a vastly superior service that could roll out county-wide within a couple of years? Tough question.

Disaster + Fiscal Insolvency = Puerto Rico

Lights out in San Juan. Photo credit: Los Angeles Times.

I can watch only so much CNN and MSNBC before I get nauseated, but I have seen enough the past day or two to be appalled at how the media are spinning the post-hurricane disaster of Puerto Rico: It’s another Katrina. The Trump administration hasn’t responded fast enough or aggressively enough to help the battered territory, where two hurricanes shut down electric service, cell phones, the transportation system and government services. Others can engage in the blame game if they want to, but I want to point out the obvious: Puerto Rico illustrates the incapacity of a bankrupt government to carry out basic functions under highly stressful circumstances.

And let that be a warning to everyone. Puerto Rico is the future of many U.S. states unless we get our acts together. Garnering less attention than the human tragedy in Puerto Rico, the states of Pennsylvania and Connecticut have made headlines, too, in the past week. After Pennsylvania passed a budget without enough revenue to pay for its spending, S&P Global Ratings downgraded the state’s debt to A+, down two notches from the coveted AAA rating. Meanwhile, despite having the highest median household income in the country and the second highest tax burden (taxes as percentage of income), Connecticut faces a $3.5 billion biennial deficit. The state, notes the Wall Street Journal, is groaning under heavy debt load, large unfunded pension liabilities, and a shrinking population. S&P has placed nine Connecticut localities on negative credit watch.

Those two states have a long way to go before they achieve Puerto Rico-levels of insolvency, but they indicate the direction the U.S. is heading. On a national level, Republicans have abandoned any pretense at crafting a tax reform plan that will shrink the deficit (something that can be pinned on the Trump administration). The national debt is $20 trillion and growing, even in the absence of a recession, at a rate of more than $600 billion a year. It’s not a question of if we will share Puerto Rico’s fiscal fate, but when.

So, what happens when governments approach fiscal insolvency? One thing they do is starve infrastructure maintenance. Puerto Rican roads were in worse physical condition than roads in any U.S. state. Of the island’s 2,280 bridges, 55.8% were considered structurally deficient or functionally obsolete before the hurricanes struck. The territory has chronically under-invested in its water systems, which also failed during the hurricanes, and the government-owned electric system, the Puerto Rico Electric Power Authority (PREPA), has been a disaster-in-waiting for years now.

Reports the Los Angeles Times:

As of 2014 the government-owned company was $9 billion in debt, and in July, it filed for bankruptcy under the provisions set by the Puerto Rico Oversight, Management, and Economic Stability Act, a law signed by President Obama in 2016.

Problems accumulated. Cutbacks in tree pruning left the 16,000 miles of primary power lines spread across the island vulnerable. Inspections, maintenance and repairs were scaled back. Up to 30% of the utility’s employees retired or migrated to the U.S. mainland, analysts said, and the utility had trouble hiring experienced employees to replace them.

The neglect led to massive and chronic failures at the Aguirre and Palo Seco power plants. The three-day blackout in September 2016 underscored how fragile the system was, and that the company was “unable to cope with this first contingency,” the Synapse Energy report said.

No wonder the island’s electric grid collapsed. No wonder officials say it will take four to six months to restore electric power.

If you want your city, county or state to show resilience in the face of natural disasters, you need to have governments and utilities that are fiscally resilient. Entities hobbled by excessive debt scrimp on maintenance and upgrades, leaving roads and utilities more vulnerable to disruption and depriving authorities of resources with which to respond to emergencies.

Puerto Rico would be in terrible shape no matter what. Hurricane Maria wrought devastating destruction, and recovery is impeded by the fact that the island, unlike Houston and Florida, is inaccessible to help by land. But the incapacity of bankrupt government and utilities have made the challenges immeasurably worse.

Northam’s Affordable, Not-So-Ambitious Plan for Reviving Rural Virginia

Ralph Northam, Democratic Party candidate for governor, grew up on the Eastern Shore, so it’s not surprising that he has given considerable thought to the challenges of economic development in Virginia’s small towns and rural communities. Earlier this week, he unveiled his plan for economic growth in rural Virginia.

If you’re looking for a “Marshall Plan” to reinvigorate rural Virginia, this is not it. The plan is not ambitious, and there may not be enough in it to get rural Virginians especially excited about Northam’s candidacy. But it has this virtue: Proposals don’t require spending vast sums of money, so they are at least feasible from a budgetary perspective. This is a plan that Northam, if elected, has a realistic chance of implementing.

Personally, I distrust “Marshall Plan” approaches to chronic social and economic challenges. Instead, in our fiscally constrained era, I’m a fan of low-cost, low-risk initiatives that will likely yield a positive return on investment. In that spirit, I’ll start by illuminated the most promising ideas in the Northam plan and work my way down the list.

Virginia’s Rapid Readiness Program. Northam proposes a “rapid readiness program” similar to successful workforce training programs in Georgia and Louisiana. “We could get this program started here in Virginia with a ten million dollar investment, with funding tied to business participants, number of projects delivered, and individuals successful trained,” states his plan.

Assuming that Northam is drawing upon the thinking of Virginia Economic Development Partnership CEO Stephen Moret, who set up the Louisiana program, the program would function as a extension of Virginia’s economic development effort by offering a workforce-training solution as an incentive for corporations to invest in Virginia. The program would differ from existing educational/training offerings by creating a team capable of providing customized training within a time frame required by corporations to get their operations up and running.

While the rapid readiness program would be applied across the state, rural areas arguably would benefit the most because such training applies most frequently to light manufacturing projects that typically locate in smaller communities.

I’m not sure $10 million is sufficient to fund this program properly. Regardless, there is a readily available pot of money — Northam and Moret no doubt would disagree with me about this — and that is the Commonwealth Opportunity Fund, which the state dips into to provide “incentives” for economic development projects. But as Moret himself said in a presentation to the State Council of Higher Education for Virginia two days ago, workforce is one of the top three factors (and often the No. 1 factor) that corporations consider when deciding where to locate. Incentives are a secondary factor. Shifting money from incentives to workforce training looks like a no-brainer to me.

Expanding renewable energy. Expanding solar generation is viable rural economic development strategy. Solar farms may create few permanent jobs, but they do increase the tax base, and they often pay streams of royalties to landowners (depending on how particular deals are structured).

“In my home county of Accomack on the Eastern Shore,” says Northam, “the commonwealth’s largest solar farm is in the process of being built, which will ultimately power several data centers owned by Amazon.”

Northam says he is committed to working with Virginia’s electric utilities and the General Assembly to “remove barriers that stand in the way of developing and expanding clean energy efforts.” Note the phrase “remove barriers.” Northam is not asking for new subsidies or tax breaks. Solar doesn’t need subsidies; market forces increasingly favor solar. Rather, Northam wants to remove obstacles that inhibit businesses, entrepreneurs and homeowners from building rooftop solar and solar farms.

Utility-scale solar like the Amazon Web Services farms in Accomack need little help — Dominion Energy and Appalachian Power have ample incentive to deploy solar on a large scale. The barriers exist at two levels: local zoning codes and state regulatory policy. Local governments need to make their zoning codes more solar friendly. Meanwhile, state lawmakers need to craft “net metering” legislation that balances the interests of independent solar producers with those of electric utilities who maintain the electric power grid that everyone depends upon.

Broadband for all. Most people would accept the proposition that broadband Internet service is critical infrastructure for economic development today. The problem is that sparsely populated rural areas are not attractive markets to Virginia’s big broadband providers.

Northam points to a pilot project in Southside Virginia in which Virginia’s Tobacco Commission, Microsoft, and the Mid-Atlantic Broadband Company utilize unused portions of the television broadcast spectrum to push out high-quality wireless broadband. So far, more than 100 households have been connected, and the number could reach 1,000 by year’s end.

“Under this innovative public-private program, Virginia’s share of the cost is $500,000, leverage private investment for a total investment of $1 million,” states the Northam plan. “This commonwealth should look to replicate this successful program across rural Virginia.”

How so? He would pull together disparate broadband initiatives across the commonwealth under the direction of a cabinet official “who will be responsible for getting more people connected.” Northam also advocates legislation similar to that adopted in Minnesota that creates a clear set of metrics, including upload and download speeds, to evaluate broadband access. Whatever else you say about these proposals, it doesn’t sound like they will break the bank.

Expanding the University of Virginia-Wise. Northam proposes increasing the educational offerings of the University of Virginia-Wise to encompass high-need, high-growth disciplines such as cybersecurity, unmanned aerial systems, energy, and computer engineering and programs. Expanding UVa-Wise would cost about $15 million initially, Northam says, with a possibility of scaling up funding over time.

We have a unique opportunity … to transform UVA-Wise into an international destination for students and researchers. This will have a tremendous effect on the regional economy because when you can attract students and top talent from around the world for research and development, grants will follow. And with grants and applied research, business opportunities will soon follow. And structured correctly, these businesses will not only start up in Southwest Virginia, but they will remain and grow.

The idea of creating “innovation districts” around college campuses is a hot one right now, and anyone who has seen the Virginia Tech Corporate Research Center can readily understand the potential for economic development near college campuses. But Tech is the top research university in the state. Whether its success can be replicated on even a modest scale by a tiny, largely unknown newcomer is questionable. Tech has invested hundreds of millions, maybe billions, of dollars, over decades building academic programs, hiring star faculty, recruiting graduate students, and assembling the administrative infrastructure it takes to win research contracts.

Competing for research dollars is tough. Well established institutions such as Old Dominion University and the College of William & Mary have seen their research programs falter in recent years. It is a stretch to suggest that a $15 million investment in Wise would spark the miraculous transformation that Northam describes.

Startup tax plan. To help attract and retain new business in rural and economically depressed regions of Virginia, Northam proposes a “zero BPOL and merchant’s capital tax for new startup and small businesses .. for the first two years. This will drive economic activity and startups to rural areas, and result in no loss in existing revenue to local governments.” Once local businesses take root, they will start paying taxes — a win-win.

It’s good to see a Democratic Party candidate advocating tax cuts! But the proposal lacks crucial detail. BPOL and merchant’s capital taxes are local taxes. How does Northam propose eliminating those taxes for two years? Will the state just command localities to change their ordinances? Will the state reimburse them for lost revenue? Does he have the remotest idea of what the initiative would cost? Finally, while the BPOL and merchant’s capital taxes are near the top of the list of things that small businesses in Virginia hate, is there any body of evidence suggesting that a mere two-year reprieve will stimulate more startups?

There’s more to Northam’s plan, but the other proposals, which address workforce development, are statewide in nature and don’t address peculiarly rural issues. So, I won’t dwell on them here.

Perhaps the best thing that can be said about this plan is that Northam isn’t making extravagant promises that he can’t keep. These narrow-bore proposals won’t exactly spark a rural Renaissance, but for the most part, they seem politically and fiscally feasible.

Virginia Beach, Emerging World-Class Data Hub

Speaking of Virginia Beach…. Here’s a more promising approach to economic development than building arenas in the hope of wrangling big-name concerts and basketball tourneys for 30 years into the future. Reports the Virginian-Pilot:

A Dutch company wants to create a new data center park to draw the likes of Snapchat, IBM and Uber. NxtVn will spend $1.5 billion to $2 billion to build a hub off General Booth Boulevard to attract companies that seek high-capacity connections from the U.S. to Europe.

The company also plans to invest in a third trans-Atlantic high-speed data cable – Midgardsormen – that would link Virginia Beach to a data center park in Eemshaven, Netherlands.

This news follows an announcement made last year that a consortium including Facebook, Microsoft and Telefonica would build a 4,000-mile trans-Atlantic cable capable of transmitting 160 terabytes of data per second, the first transoceanic fiber cable station linking to the Mid-Atlantic. The existence of these two transoceanic cables, plus a third connecting Brazil and Virginia Beach, could spur development of the city into one of the nation’s largest data-center hubs.

How has Virginia Beach scored this economic-development coup? By handing out subsidies and tax breaks? No, by tending to basics. Writes the Pilot:

Over the past two years, the Virginia Beach Broadband Task Force has laid out steps that appeal to technology-driven companies, including advancements to a high-speed fiber optic network connecting municipal buildings and laying a fiber ring across the city, said Councilman Ben Davenport, chair and founder of the task force.

“We have worked with Dominion Virginia Power to make sure all power requirements could be met at these sites, which is very important because these data centers are huge power users,” said Davenport, who said that when NxtVn was told about the task force’s work on the fiber network, “this sealed the deal.”

There is no mention in the Pilot article of how much it cost to lay that fiber ring across the city. Perhaps the expenditure represents an implicit subsidy for broadband companies like NxtVn. If so, the project certainly appears to be paying off. I’m willing to wager that the Return on Investment is vastly superior to payback from an events arena.

(Hat tip: Paul Yoon)