Defining the Netplex
Connections -- both electronic and political -- will turn the Washington, D.C., region into a world technology capital
Some 2,000 years ago, all roads led to Rome. An international network of stone and gravel carried the wealth of an empire spanning most of the known world. Today, information has surpassed gold as the world's most precious commodity, and the roads that carry much of this commodity are built of fiberoptic cable. As this mushrooming network transforms the globe into a ball of fiberoptic yarn, one could well argue that all roads now lead to Washington.
The District lies at the heart of a region that is, in turn, home to a cluster of industries that promise to dominate the global economy of the 21st century.
Welcome to the infobahn's busiest intersection. Some call it the "Netplex," others call it "Telecom Valley," but most important, more than 2,300 infotech companies call it "home." Residents include telecommunications companies, network hardware manufacturers, computer systems integrators, consumer online services, Internet access providers, and a host of other vendors proffering high-tech goods and services. They sell to the private and public sector, domestic and international markets, and to each other.
This electronic entrep?t's center of economic gravity encompasses the District of Columbia, parts of Maryland and Northern Virginia.
A recent paper by Kingsley Haynes and James Riggle -- both with the Institute of Public Policy at George Mason University -- contains a tidy encapsulation of the region's transformation into a world-class infotech capital.
"Significant deregulation in the telecommunications industry began in the late 1970s, followed by a trend toward privatizing the provision of many public services, including information and communications. One important result of these policies has been a blurring of the distinction between the public and private sectors, a fact made clear by ubiquitous calls for public-private partnership," the policy paper says.
"The outcome of these twin trends of deregulation and privatization has been the emergence of what Fortune magazine has called the "Netplex," more than 1,200 telecommunications and information technology firms in the national capitol region -- most in Northern Virginia -- that have formed the foundation of the nation's information infrastructure."
Besides Northern Virginia, Maryland boasts - depending on the data you use - a hefty number of high-tech firms as well. The Suburban Maryland/Montgomery County Technology Council counted some 600 technology firms in the metropolitan area in 1993, while Maryland Information Technology Center estimated some 1,200 information technology-related companies in Maryland alone. Either number underscores the undeniable importance of infotech in Maryland, particularly along its I-270 "Technology Corridor," the state's answer to Route 128 in Massachusetts.
The common thread linking all these concerns is the warp-speed transmission of data. Appropriately enough, the world's most ubiquitous exchange for electronic information, the Internet, was born here. The Internet Society -- the "lawless" Net's referees -- the Internet Access Group and the Commercial Internet Exchange are all based in the region, as is the mainframe computer housing the master list of all Internet E-mail addresses.
Almost despite itself, the Internet has become a major force in the business world. This vital communications link renders the distance between companies scattered throughout the globe meaningless, allowing them to exchange reams of data in the blink of an eye. An estimated 50 percent of all Internet traffic between the U.S. and the rest of the world flows through the capital region. Three of the largest commercial Internet access providers -- UUNet, PSI and Sprint -- lie within minutes of each other in Northern Virginia, and are all exhibiting vibrant growth. Another, Digital Express is in nearby Greenbelt, Md. Indeed, the Net has become so indispensable, especially in the Netplex, that local business cards sans E-mail addresses almost qualify as collectibles.
On the consumer side, America Online has already introduced nearly one million Americans to cyberspace. In addition to news, weather and bulletin boards, the Vienna, Va.-based service offers consumers online versions of popular magazines and newspapers, as well as limited Internet access.
Satellite communications companies have been firmly ensconced in the region for some time. GTE Spacenet, Hughes, Intelsat, Washington International Teleport and Comsat are only a few of the more prominent members of this club. Then there are the promising local companies that are doing more than routing digital traffic. Small satellite makers like Orbital Sciences Corp. of Dulles, Va., and CTA Inc. of Rockville, Md., are bending metal on the new-age space platforms that will supply everything from remote sensing data to beeper messages from South American jungles.
Indeed, such small, lightweight satellites are the mainstay of global communications architectures-- particularly low-Earth orbit systems planned by D.C.-based Iridium and OSC's own Orbcomm. And don't forget Netplex-based rocket makers Aero Astro in Herndon, Va., OSC and CTA -- all vying to bring the price of space access down to Earth. Information includes more than just communications. Looking down on everyone is Reston, Va.-based Spot Image and Eosat of Lanham, Md., longtime rivals in the growing remote sensing market.
Maryland's booming biotechnology community generates its own kind of information -- genetic. It's linked to the National Institutes of Health, Johns Hopkins in Baltimore, and in turn, everywhere else. Science Applications International Corp., based in San Diego, became well-known as a major healthcare information systems automator. In Baltimore resides the Healthcare Financing Administration, one of the premier policy engines of automation as a cost-saver.
Telecommunications is unquestionably destined to become one of the world's paramount industries in the next century, and local telecoms represent one of the most dynamic sectors of the Netplex.
Companies like Washington, D.C.-based MCI, the nation's second-largest long distance carrier, are at the vanguard of the information revolution. These corporations are spending billions of dollars to build the infobahn, facilitating the seamless transfer of voice, data and video over fiberoptic cable and through thin air, ? la wireless.
More than a few telecom heavyweights have local area codes, including AT&T, Sprint, Metropolitan Fiber Systems, and Cable & Wireless Inc. Bell Atlantic, the enfant terrible of the Baby Bells, dominates the Netplex's local exchange -- at least for now.
The telecom industry also provides lesser-known Netplex firms with rich opportunities. Fairfax, Va.-based American Management Systems, for example, was just awarded a $20 million contract to develop a billing and customer service system by Telia Mobitel, a Swedish cellular telephone company.
The local Scandinavian connection doesn't end there. Ericsson, a $7 billion Swedish telecom that owns 30 percent of the U.S. cellular systems market, recently opened an office in Reston, Va., to take advantage of Concert, the new global joint venture company formed by MCI and British Telecom, also headquartered in Reston.
Concert, MCI and BT's $1 billion joint venture, isn't the only global telecommunications alliance in the Netplex. Alcatel Data Networks, a joint venture between number three long distance carrier Sprint and Alcatel, the world's largest telecommunications equipment supplier, has offices in Reston as well.
Companies that manufacture the powerful switches that connect public and private telecommunications networks are in abundance locally as well -- Newbridge Networks, Northern Telecom, Netrix and FastComm, to name a few.
Newbridge, one of the hottest stocks in the already hot telecommunications industry, is a telling example of the growing attractiveness of the region. Though headquartered in Canada, the bulk of Newbridge's business is conducted from Northern Virginia.
This is no coincidence. The Netplex contains adequate airports, one of the highest concentration of people with Ph.D.s in the country, the world's largest and most technologically sophisticated employer -- and the world's largest infotech customer, the U.S. government -- not to mention access to the policy-makers that can make or break a business. But neither is it a coincidence the region continues to suffer from an inferiority complex. Washington is the information capital of the world. It has wired just about everything -- from Senate office and government contractors and the White House to spy agency and media giant -- into one gigantic, pulsing zip-zap of knowledge exchange.
But other than reports, it has never really manufactured much of anything. And though venture capitalists have begun to ply the area for budding entrepreneurial talent, this has traditionally been a region dominated by government contracts and taxpayer money.
The combination of the two -- a lack of private startup capital and a reputation for no manufacturing -- have made the region appear to many outsiders as a kind of legitimate-business no-man's land. The perception is that companies either live out of the public trough or provide related ancillary services -- from taking out the trash at Fort Belvoir to delivering and plugging in the new PC at EPA.
If one measures the region by the standards of cyberspace, that conclusion is flawed. For starters, digital pathways are an ideal medium for information exchange. So if Washington's stock-in-trade is information, then it is only natural its denizens should become the most avid consumers of technology promoting its efficient transfer. And this in turn would, and has, spawned all manner of supporting services -- infrastructure, to use the byword of the digerati: EDS, GE Information Services, Comsat and Hughes Network Systems, to name but a few. These companies are increasingly joining forces with government-oriented professional services firms, defense contractors and systems integration companies. BDM, CSC, Martin Marietta, PRC, TASC and assorted other companies have long played the role of think-tank-cum-problem-solver. They design networks. They add computers to them. They provide appropriate encryption. They even manage the networks.
The Netplex isn't complete or possible without the buyers and users of information. Here a wide variety of technology-based businesses flourish. On the environmental side are mega-players like ICF Kaiser and Ogden Environmental and Energy Services, both of Fairfax, Va., and smaller shops like Versar Inc. in Springfield, Va.
The rise of the Netplex should not come as a surprise, at least for those familiar with the early theory and practice of computer science. Way back in 1948, Norbert Wiener, the brilliant MIT mathematician and founder of modern information theory, coined the now de rigeur term "cybernetics."
What he meant by that was this: The transfer and encoding of information, rather than the manipulation of energy, that underlies all processes. Wealth, by this definition, is measured in the ability to process information rather than the skills or infrastructure for, say, building cars or widgets. If there is any truth to this logic, then the future of the Washington area as a locus of economic activity is great indeed.
Randy Barrett and Andrew Jenks contributed to this report.