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Date: Wed, 22 Apr 1998 10:25:26 -0300
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The Internet Capital

Virginia, with its wealth of tech jobs and skilled candidates, is
poised to cash in on a profound shift taking place in the computer

By JUBE SHIVER JR., Times Staff Writer


McLEAN, Va.--As Southern California and other regions compete to raise
their profiles as technology centers, an unlikely place has emerged
as a high-tech citadel: Virginia.

Long famous for a rich history that spawned eight U.S. presidents and
helped shape the nation, Virginia this times finds itself as an
intellectual mecca of a different sort.

With its 2,500 high-tech firms, the state is home to a world-class
concentration of Internet businesses ranging from America Online Inc.
([Current Quote][9][Company Capsule][10]) to domain-name issuer
Network Solutions Inc. Earlier this month, WorldCom Inc. ([Current
Quote][11][Company Capsule][12]), the telecom Goliath that is the
nation's biggest Internet access provider, announced plans to build
an office complex for 30,000 employees in northern Virginia that will
be about three-quarters the size of the Pentagon.

About 350,000 Virginians work in the high-tech industry, which has
accounted for nearly 30% of the state's growth in personal income
since 1991, according to a study by the College of William and Mary
in Williamsburg.

Virginia ranks among the top 10 states in terms of tech jobs, and its
growth rate is among the highest in the country, according to the
American Electronics Assn.

Job growth is so hot that one northern Virginia software firm made
headlines recently when it hired a teenage dropout, Doug Marcey, as a
part-time programmer for $50,000 annually. Nonetheless, Virginia's
well-regarded university system, established by Thomas Jefferson, is
key to nurturing the state's job force.

Virginia has a very good pool of skilled workers, and we invested
heavily in attracting technology companies," said former Gov. George
Allen, who left office in January. "People have started calling us
the Silicon Dominion."

Virginia's appeal is due largely to initiatives launched by the
Pentagon about 20 years ago. Federal money and know-how helped
develop the Internet and created a pool of experts who transplanted
the network to the commercial sector.

At the same time, the intelligence and national-security agencies
were developing other communications technologies such as satellites
and nurturing a vast contractor base to support their worldwide
communications--and espionage--systems.

Whose early developments put Virginia in a position to capitalize on
a profound shift now taking place in the computer industry:

Its personal computers have evolved from mere number crunchers to
communications tools for managing e-mail, Web pages, faxes and other
information coursing through data networks, Virginia has emerged as
the world's electronic nerve center. The state boasts a large
community of Internet service providers, computer systems managers,
software developers and networking consultants.

This is a new medium with new rules," observed Steve Case, chairman
of America Online. "The Internet has created an environment that is
less location-dependent," allowing places like Virginia to compete
effectively with traditional industrial capitals.

There is considerable momentum [in Virginia] that will drive the
creation of more start-ups," Case said.

The state also is benefiting from the government's breakdown in
modernizing its information technology. Federal agencies are being
forced to downsize and out-source billions of dollars' worth of
technology projects, many of which are going to firms in the Virginia
suburbs of Washington. They include the massive computer
modernization program at the Internal Revenue Service and huge
contracts to supply the government with local telephone,
computer-networking and other services.

Indeed, the migration of high-tech firms to Virginia recalls a
similar sea change that occurred a generation ago, when personal
computers began to supplant large mainframes, resulting in a
geographic shift in the industry.

The change undermined Boston's Route 128 corridor and sparked an
explosion of software and semiconductor firms in Silicon Valley.
Similarly, by some estimates, about half of U.S. Internet traffic
passes through Virginia today.

Virginia is clearly now the networking capital of the nation, if not
the world," said Mark Warner, a Virginia venture capitalist who ran
unsuccessfully for the U.S. Senate in 1996. "With companies like AOL,
[WorldCom unit] UUNet, PSINet and others, we've become a magnet for
high tech."

Until recent years, Virginia's economy had suffered from a dearth of
high-wage jobs. Although the state was the intellectual center of the
nation at the time of the Revolutionary War, it has lagged
economically through much of the century following its defeat in the
Civil War.

Even today, the state often seems at odds with a high-tech image:
Many corporate chiefs, such as Black Entertainment Television
Chairman Bob Johnson, live on country estates where they collect
horses rather than fancy sports cars.

But with more states clamoring to climb aboard the high-tech boom,
Virginia's quiet success is proving instructive to regions that have
campaigned to become technology centers.

Not unlike the heated regional competition to land National Football
League ([Company Capsule][13]) expansion franchises early this
decade, tech firms are being showered with incentives to relocate to
states ranging from Arizona to North Carolina. But experts say the
multimillion-dollar bidding wars have shown only varying success and
rarely benefit taxpayers.

Any sort of targeted industrial policy is a bad idea," said Dean
Stansel, fiscal policy analyst at the Cato Institute, a conservative
Washington think tank. "The way to create and maintain a healthy
economy is keep the tax burden low."

Your community needs to be relevant to the economic activities you
are targeting," said Steve PonTell, president of the La Jolla
Institute in Claremont. "A region has to have the raw ingredients: a
qualified work force with the relevant skills. Companies are not
going to go to a community just because they saw some clever

To be sure, Virginia has enhanced its fortuitous location and skilled
work force with good old-fashioned boosterism and by introducing
educational programs to prepare a new generation of tech workers.

Speaking at a gathering celebrating one such initiative--Virginia's
High-Technology Partnership Program--Federal Communications
Commission Chairman William E. Kennard said the state's focus is
already paying off.

Virginia continues to lead the nation into the future," Kennard said.
"Tech companies are falling over themselves to find
technology-skilled workers to keep pace with expansion. One estimate
predicts that over the next five years, there will be 112,000 jobs in
Virginia awaiting qualified applicants."

But if Virginia does not yet spring to most people's minds as a
technology stronghold, a glittery Fairfax County event called the
World Congress on Information Technology could finally put the state
on the map.

Hosted by the Information Technology Assn. of America, the June
gathering will bring such political luminaries as former British
Prime Minister Margaret Thatcher and former Soviet President Mikhail
Gorbachev together with more than 1,500 industry captains, such as
Netscape Communications Chief Executive James A. Barksdale and Dell
Computer Corp. ([Current Quote][14][Company Capsule][15]) Chairman
Michael S. Dell.

This will definitely make more people aware of Virginia as a center
of high technology," said Harris Miller, president of the technology

The challenge for Virginia won't be getting on the high-tech map, but
staying there. To that end, experts say, the state must build on its
strength in computer networking by diversifying into other high-tech

The challenge is whether we can take all of the raw information
flowing through networks here--stuff from the national government,
the Smithsonian and other sources--and also become an effective
content capital," said venture capitalist Warner.

Such an expansion would put Virginia in direct competition with
content strongholds such as Southern California, however.

Los Angeles and Orange counties already boast more than 242,600
high-technology jobs, many of which are concentrated in entertainment
and the lucrative multimedia content area. Experts are encouraging
Virginia to develop its own multimedia industry.

By some measures, the state is already well on its way to
diversifying beyond its core networking franchise.

Former Gov. Allen helped persuade Motorola Inc. ([Current
Quote][16][Company Capsule][17]) and a joint venture of Toshiba Corp.
([Company Capsule][18]) and IBM Corp. to build three semiconductor
manufacturing facilities in the state. And he cajoled PC maker
Gateway 2000 to locate an assembly plant in Hampton that now employs
1,450 people.

But for the most part, Virginia's tech industry has been domestically
nurtured rather than imported.

Patricia M. Woolsey, chairwoman of the Fairfax County Economic
Development Authority, said nearly two dozen high-tech companies
based in the county have gone public over the last two years. Growth
has been fueled by the expansion of companies already doing business
in the county.

It's just recently gotten to the point where the concentration of
telecom and information technology companies here is starting to have
a ripple effect of attracting companies," she said. "Most of our
success has been home-grown."


[7] http://www.latimes.com/hoovers/

[8] http://www.latimes.com/HOME/BUSINESS/gloss.htm

[9] http://fast.quote.com/fq/latimes/quote?symbols=AOL

 e =15558

[11] http://fast.quote.com/fq/latimes/quote?symbols=WCOM

 e =15160

 e =40330

[14] http://fast.quote.com/fq/latimes/quote?symbols=DELL

 e =13193

[16] http://fast.quote.com/fq/latimes/quote?symbols=MOT

 e =11023

 e =41888

"If journalists have any decent tradition, it's in siding with the
powerless. But what happens when they identify with rock stars and bankers
-Rick Salutin in Globe & Mail, Oct.17th, 1997, p.A19.

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