Habitat to weary long-haul truckers, U.S. 58 crosses the south of Virginia at its widest point, from Virginia Beach to Cumberland Gap, passing some 500 miles through the Old Dominion's most threatened and impoverished areas. Along Southside's rolling hills, tobacco fields are under attack by health lobbies and lawsuits. In manufacturing towns such as Danville and Martinsville, global trade pacts are decimating the apparel and textile, and perhaps furniture, industries. In the hollows of the far Southwest, coal mines are in jeopardy from environmentalists or simply because their coal seams have played out.

While the future of U.S. 58 may not be lined with gold right now, that may soon change if it is lined with electrons. Plans are afoot to build very high capacity, extremely high-speed data-voice-video networks connected to the outside world via virtual "roads" made of hair-thin fiber optics. If so, a way could be found to span the so-called "digital divide" by linking areas along U.S. 58 with high-tech telecom services in the developed, urban parts of the state. The big questions: Could this new digital highway bring prosperity to the Old Dominion's poorest sections? Or will it just add to the glut of fiber optics infrastructure that has made many Virginia-based telecommunications firms such as Teligent and XO Communications road kill?

Known either as "e58" or as "eCorridors," the project would be funded in part by millions of dollars in grants and loans from Virginia's Tobacco Indemnification and Community Revitalization Commission. This body was created in 1999 by the General Assembly to allocate the Commonwealth's $4.1 billion share of an estimated $206 billion that will be given to states by tobacco companies over the next 25 years to forestall potential litigation. Besides compensating tobacco farmers for losses, the commission aims to promote economic growth in tobacco-dependent communities in Southside and Southwest Virginia. "If the Tobacco Commission is trying to lift up these communities, it makes sense for them to put some - not all, but some - of their money in a project like this," says Jack Reasor, president of Old Dominion Electric Cooperative, which has lobbied in favor of the effort. "One person's pork is someone else's economic-development initiative. I equate this to an interstate highway system, or even earlier, to the railroads. Fiber-optics [networks are] a critical tool in today's economy."

Advocates believe e58 is no dead-end route, but a way to establish a different kind of prosperity and directly compete with other, richer areas of the commonwealth. "Instead of sitting around saying, 'woe is me,' we're trying to develop a game plan that brings in [telecommunications technology] as part of an overall strategy," says Danville City Manager Jerry Gwaltney. "We realize full well this isn't a panacea. But with the loss of jobs, especially in textiles, we have to think in different ways, use technology to our advantage. We're making the old newer and building new besides."

Dubbed "eDan," Danville's technology project is a large piece of the e58 initiative encompassing the city of Danville and Pittsylvania County. Similar projects are underway in southwestern Virginia, in Bristol, as well as in the counties of Lee, Scott and Wise and the city of Norton. Under legislation approved by the General Assembly, the fiber-optics networks so created will remain the property of the municipal builders until private-sector firms can offer comparable services.

For Danville and environs, the new economy could take shape around what insiders call a distributed multimedia services access point, or MSAP. With a MSAP, local e-traffic stays that way by not being routed through a major telecom hub hundreds of miles away. Communities gain their own dedicated, broadband network for access to all Internet, voice and video traffic, while routinely interconnecting homes, schools, businesses and government offices. MSAPs in Danville and Chatham would operate at billion bit-per-second rates, 1,000 times faster than the download speeds of 1 million bits per second possible with cable modems. Danville also has broken ground on a technology-education center and a technology park that it's developing in concert with Pittsylvania County.

The project echoes familiar goals: Train the next generation of students in the whys and wherefores of technology, keep local businesses happy and growing, while enticing promising startups and established firms with good jobs and even better pay. Officials also plan to push the slower, more outdoorsy lifestyle that their regions offer to those stressed-out by big cities. "Look at what was done for the Research Triangle [in North Carolina] in the early 1960s," says Erv Blythe, Virginia Tech's vice president for information technology and eCorridors' program director. "They were able to get into the advanced computing business. Ten, 15 years later, people didn't see a visible difference. The real effects didn't hit until the mid-1980s and really took off in the '90s. It was a long-term return."

Will the gamble pay? Earl Bishop, executive vice president of the Virginia Telecommunications Industry Association, has doubts. He takes issue with the need to build what he calls "speculative parallel infrastructure." There's already too much unused fiber, he says, and technological advances - next-generation equipment and software improvements that add and speed channel-carrying capacity - will enable a single fiber strand to carry even more information.

Not only that, but serviceable high-speed hubs are already in place and can be accessed in even the most remote locations. "They're already connected," Bishop asserts, "through Washington, maybe, but the connection is already as efficient as it's going to be." As to the issue of cost, providers are already offering reasonable prices for access that are at or below national averages. And if the private sector doesn't see its way clear to recoup potential broadband investment, how will municipalities unused to operations, maintenance and accounts supervision manage those tasks cost-effectively?

According to Bishop, the real issue is the "last mile": that is, how to provide high-speed, high-capacity access to the home. It won't happen inexpensively, at least at current labor and installation rates; retrofitting would run at least $2,000 per home. Why not, Bishop asks, take whatever de facto subsidies the state is providing and share them with the private sector to expand what is already in place? "The objective should be enhancements to and better utilization of existing infrastructure, rather than overbuilding," he says. "Right now you're building a second road parallel to the first, because you don't like the guy who owns the first road. The technology moves so fast that if you put speculative investment out there it may be obsolete before it's ever utilized."

That's all well and good, replies Republican R. Steve Landis, chair of the Rural Virginia Prosperity Commission and a General Assembly delegate from the 25th House district. But private-sector telecom firms were approached and their input solicited before the Assembly bill authorizing municipal ownership of fiber networks was penned. There's a simple explanation why rural communities are going in the direction they are: disinterest.

It's true, Landis concedes, that telecommunications providers do have a reasonable infrastructure, even in many rural areas. But not in all areas. Nor is the existing system as accessible, powerful or affordable as the providers might indicate. Because the telecommunications companies don't see reasonable profits in the relative short term, they've elected to concentrate their energies elsewhere. "Rural areas just can't afford to wait," Landis says "We've been trying for two years to work with the telecommunications industry. The problem is they don't want to come in to provide high-speed, high-capacity networks. If they're so interested, why aren't they here?"

Despite the financial risk, rural areas could ironically find themselves in the driver's seat, as they become early adopters of more sophisticated telecom technology, according to David Gross, senior analyst for optical networking for Communications Industry Researchers Inc., based in Charlottesville. In some cases their utilities are municipally owned, so they may be able to solve the last-mile issue before their more populous sister localities. If so, rural areas would develop the economic-development equivalent of a "killer app," an application so attractive that users will stand in line for the chance to sign up.

Nevertheless, says Gross, "these projects are still in their infancy. There isn't data yet to tell whether or not they'll be able to pull in new companies or lower unemployment. It will take at least five years to figure out if there will be a net positive impact."

Meanwhile, the communities along U.S. 58 could leap ahead of aging technologies with next-generation systems that bypass existing infrastructure in more developed areas. Efforts are already underway to expand and enhance wireless speeds and capacities, which could bring tremendous advantages over hard-wired connections. Even so, fiber has enormous potential; its present theoretical signal-capacity throughput of 30 trillion bits, or 30 terabits, is 30 million times greater than a cable modem's current present downstream capability of 1 megabit, or 1 million bits. Additional tweaking and enhancements seem likely. It's not unreasonable to suppose that fiber will continue to play a significant telecom role for the foreseeable future, making e58 a worthy effort.

Given its hard-nosed requirements for grants and a growing preference for loans, the Tobacco Commission is looking more like the World Bank than the Salvation Army. So its investment in so-called parallel infrastructure may be a savvy move. With fiber in the ground, rural areas have an asset that, even counting redundancy, will likely appreciate. Money in the pockets of rural areas means less general-funds outlay from the cities and the suburbs. And there are provisions for a decent sale: the Assembly bill mandates that if three or more telecom providers are able to offer comparable services as those provided by the new rural nets, municipal owners must sell within a decade of build-out, but at fair-market value. As always, taxpayers will either be stuck with the bill or the benefits of canny investment.

Return to Virginia Business - July 2002