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High Technology Good for South Dakota City |
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"Our mission is to create primary jobs within the community or region of Aberdeen," says Chris Haar, technology coordinator of the Aberdeen Development Corporation (ADC). A private nonprofit organization, ADC is working with the city, the local council of governments, and other public and private organizations to implement a strategy that will attract new businesses to the area. Over the past decade, the addition of local high-speed Internet access, fiber-optic videoconferencing capabilities, and improved telecommunications infrastructure has helped Aberdeen attract 12 new businesses to the area, create nearly 300 jobs, and diversify its economy. Study identifies telecommunications niche. Located in northeastern South Dakota, Aberdeen's primary industries have long been in agriculture and manufacturing. However, the number of farm jobs had decreased over the past few decades, and many local college graduates left the area to find work. In 1989 after a major employer, Magnetic Peripheral, Inc., closed and left 2,000 residents unemployed, the city commissioned a study to determine a strategy to create jobs and diversify its economy. The study, released in 1992, identified a potential market niche for Aberdeen in telecommunications that would take advantage of the relatively low cost of doing business and the availability of a well-educated workforce. A major barrier to attracting business, however, was Aberdeen's slow, low-capacity telecommunications infrastructure, built to serve the needs of a rural, sparsely populated area. The Dakota Interconnect Committee, an informal working group of representatives from the business community, local government, and community groups, implemented the study's recommendations. In 1995 Dakota Interconnect received a $900,000 grant from the U.S. Department of Commerce's National Telecommunications and Information Administration (NTIA) to strengthen the region's telecommunications infrastructure. This grant enabled the city to acquire high-speed Internet access over cable, add videoconferencing studios to public buildings and schools, and increase the telecommunications capacity of Aberdeen's Presentation College and Northern State University. Dakota Interconnect's partners, which included ADC, as well as the city, county, educational institutions, local cable, and public utility companies, contributed nearly $1.6 million to the project to improve Aberdeen's telecommunications infrastructure. Helping new businesses get started. Part of the NTIA grant was to support the Smart Connections Center (SCC), which would be the focal point for all the technology. "The only problem was that this place did not exist," says Haar. ADC received a grant from the U.S. Department of Commerce's Economic Development Administra-tion to build SCC as an offshoot of the Dakota Interconnect project. They then used the NTIA grant for equipment and Internet connections. ADC manages SCC, which is located in an industrial park overseen by ADC. ADC markets SCC as an incubator to technology-based businesses. The small business incubator includes office space, computers with software, fax machines, and videoconferencing equipment. When new businesses move in, ADC leases the space to them below market value and gradually increases the space to a price at the market's rate after 3 to 5 years. Consequently, new businesses working out of the incubator can keep their capital costs low. "We have had three businesses go through the incubator in the last 3 years," says Haar. In addition to the small business incubator, the 11,536-square-foot state-of-the-art SCC houses ADC staff, videoconferencing equipment, the local Small Business Development Center, and the Value-Added Agricultural Development Center, a nonprofit, economic development group focusing on agriculture and value-added processing of agricultural goods in the state. A 1,300-square-foot digital videoconferencing studio is available for public use. Studio equipment allows video and voice interaction with other studios. Local companies can use the videoconferencing equipment to hold meetings with their corporate headquarters or to conduct training programs. SCC generates revenue by leasing office space and renting office and videoconferencing equipment. Technology serves region and state. "Telecommunications has been a good niche for the city. It has made Aberdeen a leader in the state in this area," says Haar. "The companies bring technologies to Aberdeen that are then expanded to the state." In 1996 a local company successfully tested cable modems in Aberdeen, which led to new high-speed Internet access for the region and state, including rural areas. Eight school districts from the region came together to take advantage of SCC's videoconferencing equipment. The schools, most of them small and rural, use the technology to offer electives and high-level courses to their students. "Without this equipment, these schools could not offer these types of classes. Every school in Aberdeen from elementary to college has been wired for 5 years—prior to the statewide effort to wire every school," says Haar. Attracting businesses. ADC and Dakota Interconnect's efforts to enhance the telecommunications infrastructure has helped recruit telecommunications-based businesses to the area. Like residents of many other rural communities in the early to mid-1990s, Aberdeen's residents could only reach Internet providers via long distance. The extra cost to residents kept Aberdeen from successfully competing for high-technology businesses. To solve this problem, ADC and Dakota Interconnect negotiated with US West and the Public Utilities Commission to install a digital switch in Aberdeen, allowing high-speed data transmission and making available Integrated Service Digital Network Basic Rate Interface service, which facilitated simultaneous use of voice and data. With this basic infrastructure in place, local companies then could add their own necessary investments in telecommunications. Today, Aberdeen's residents and businesses have Internet and telecommunications services that rival those available in large metropolitan areas. For example, SCC's tenants have their choice of three Internet service and telephone providers, each with its own communications lines; businesses and Aberdeen residents can select one provider for Internet service and another for telephone service. US West already had lines throughout the community, Northern Valley Communications is installing its own infrastructure, and Mid Continent Communications is providing telephone service over its broadband system. "These are truly independent systems running on separate infrastructures and are giving people a choice," says Haar. In addition to Web-based and Internet-oriented businesses, the city has attracted financial and insurance companies that are using the new high-capacity communications lines to process information. Haar believes that the telecommunications industry jobs are helping to reduce the out-migration of Aberdeen's college graduates. "Although the city still has some underemployment issues, I believe graduates are becoming more likely to stay in the area," says Haar. For more information, contact: Chris Haar, Technology Coordinator, Aberdeen Development Corporation, 416 Production Street, Aberdeen, SD 57401, (605) 229-5335, chrishaar@midco.net. Or see: Innovative Local Economic Development Programs, U.S. Department of Commerce, November 1999.
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