TVA Rural Studies

Telecommunications Technology and American Rural Development in the 21st Century

Edward J. Malecki
Department of Geography
University of Florida
Gainesville, FL 32611-7315
July 1996

4. Telecommunications as a Factor of Production

Let us examine briefly how telecommunications makes places different. This is most easily done in the context of business firms and their efforts to operate, or have a presence, in all feasible and profitable locations. Although telecommunications as a factor in location is a relatively new concept, transportation costs have been central to the analysis of the location of economic activity for a long time. Overcoming distance for the movement of goods has led to a simple (weight times distance) calculation of total transportation costs. "Transporting" ideas via telecommunications is more difficult to consider in this way. For instance, it is easy to distinguish a train from its load by allocating the first to transportation and the second to industry, but it often is difficult to separate a message or piece of information from the software and hardware that processes it (Kellerman 1984: 229). Thus, telecommunications is interdependent with the other (computer- and electronic-based) technologies which comprise telematics.

If distance has been destroyed by telematics, the new technologies have made a "space of flows" more important (Castells 1989). In particular, the creation of networks means that anyone can be a node in the network, but what begins to matter most is to whom one has connections. This means that old-fashioned connections have begun to matter more, now that anyone can be linked to everywhere, in order to make sense of the complexity. For people in local places, it is important perhaps crucial to have links to the global networks of large firms where information, commerce, and decisions are centered. Links to global networks no longer require proximity, but they do require having links and using them to obtain and exchange information. The "links" are those of individuals' personal networks and the business networks of highly competitive firms with their suppliers, customers, and other sources of knowledge. The cost of being unconnected or remote is a higher cost of operation, usually in the form of a time penalty, rather than as a penalty. Time is often the most important variable for a person or firm to control. Local nodes (places) need know-how and skills, an adaptive socio-cultural and institutional infrastructure, and entrepreneurial traditions (Amin and Thrift 1992).

The front-line and cutting edge places are big cities. Everywhere else must rely on their connections to big cities and their capabilities in other factors, especially labor skills. Gillespie and Williams (1988) provide a useful perspective on the spatial impact of telecommunications:

Although the effect of telecommunications has the potential to collapse distance rather than just to shrink it, the effect is not uniform either between different combinations of regions or between different organisations occupying the same region. . . [T]he key to understanding the significance of telecommunications is to see it within a computer network context. The computer network innovations which are redefining the basis of competitive advantage cannot be divorced from the organisations within which they are embedded. . . Although computer networks may, or may not, incorporate parts of the public telecommunications infrastructure, each computer network is essentially private and proprietary (Gillespie and Williams 1988: 1317).

Are there technologies for the unconnected? Rural and peripheral areas face special challenges, to which the paper returns after discussing the imperatives of business location.

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