The rise of the Intelligent Community is a response to one of the greatest economic transformations in history. "Globalization" is the commonly accepted term for it. At the Intelligent Community Forum, we don't feel that the word does justice to the scope of this transformation, and to the way it is reshaping the economic lives of people around the planet. Nor does it explain why this transformation is taking place. Instead, we call it the broadband economy – an economy in which for all intents and purposes the hard-working people of Bangalore and Beijing live right next door to the hard-working people of Boston, Brussels and Buenos Aires.

Origin and Impact

The broadband economy is the product of the build-out of low-cost, high-speed communications and information technology on both the global and local levels. It began in the 1970s, when the carriers began linking the world's economic centers with fiber optic networks. These made possible collaboration and cooperation across time zones and cultures that opened markets, boosted productivity, created employment and improved living standards.

The pace of development has not slowed.  In 1992, 100 gigabytes of data crossed the world's networks every day.  By 2014, 16,000 gigabytes of data was crossing those networks every second.  

 

A simple set of numbers captures the power of this transformation. During the hundred years from 1870 to 1970, the number of people living on more than US$1 per day, adjusted for inflation, grew by 157 million. At the same time, however, the number living on less than 1 dollar a day also grew by 45 million. That's not bad: a net gain of over 100 million people who moved out of the most abject poverty. But compare that to the decade from 1990 to 2000. The number of people living on more than 1 dollar a day grew by 890 million, while the number living on less shrank by 139 million. What made the difference? The explosive growth of global networks that reduced costs, boosted trade volumes and made us all more productive.

Global and Local Impact

Using the broadband infrastructure, companies began to look for opportunities to locate their facilities where they could gain the greatest advantage in terms of costs, skills and access to markets. The deployment of global broadband also made capital investment highly mobile. Trillions of US dollars move around the globe weekly in pursuit of a competitive return, and when trouble strikes a nation's economy, that mobile capital can also flee at devastating speed.

For communities, local economic success has come to depend on the global economy in ways never before imagined. But while global business may be mobile, communities are not. Communities everywhere have the same goal: to be a place where people can raise their children and give those young people enough economic opportunity to allow them to stay and raise children of their own. In the Broadband Economy, that task is more challenging than ever.

The Broadband Paradox

Geographic location and natural resources were once the key determiners of a community's economic potential. In one person's lifetime, they changed seldom if at all. But in the Broadband Economy, it is increasingly the skills of the labor force, and the ability of business and government to adapt and innovate, that power job creation. And these are assets that must be continually replenished.

Why has this change occurred? As economic centers are connected, it becomes possible to manage distant facilities as though they were across the street. That means, in the broadband economy that every worker is exposed to wage and skill competition from every other worker in similar industries around the world. This has shifted demand for low-skilled labor – the kind used in extracting resources from the Earth and basic manufacturing – to low-cost countries in the developing world. When you visit those booming countries, however, the business press is full of worry about lack of skills and innovation. Even nations in the early stages of industrial growth are feeling the same competitive pressures that have become acute in industrialized ones.

Employment insecurity has risen and will continue to increase worldwide as businesses face global competition and go global in search of talent. The only jobs that are immune to the pressures of the Broadband Economy – local retailing and services from plumbing and heating to real estate – do not bring new money into a community; they merely move it around from pocket to pocket within the community. A sustainable community must have inputs and outputs, which means external markets for the skills, services and products it provides.