Teleports, Cities, and Regions

Advances in technology and the deregulation of the telecommunications industry in the United States are leading to the development of a new telecommunications infrastructure designed to serve information industries concentrated in metropolitan regions. The most information intensive cities are the first to be equipped with the latest telecommunications transmission and switching equipment. The growth of information-based services and advances in communications technology are mutually reinforcing. Teleports represent a technological innovation born out of a demand for new transmission and network facilities. This paper will explore the role of urban regions as information centers and the development of teleports in large metropolitan areas.

Law firms and advertising agencies are examples of information industries that produce, process and sell knowledge. These firms are concentrated in a handful of international cities which distribute information to medium- and small-size cities. Information produced in large cities is transmitted in a variety of ways: through computer networks, over the telephone, on paper, and through face-to-face communication.

The location of office activities has been influenced by recent advances in communication technologies. These technologies do not determine where offices will locate; rather they reinforce other factors that influence office location. Today, routinized office activities often move to suburban sites, while specialized office activities are concentrating in central business districts where face-to-face access with leaders in a diversity of industries is possible. In examining the location of the nation's top advertising agencies and law firms, the hierarchy of information-producing cities becomes evident.

The location and distribution of law firms is one measure of the information activities within cities. Legal Times conducts an annual survey of the top 500 law firms in the U.S., determined by the number of attorneys in each firm. The location of main offices (Table 1), and principal branch offices (Table 2), are the two categories we looked at.

 

Table 1: Law Firms

City Main Offices Percentage New York Chicago Washington, DC Los Angeles San Francisco Dallas Houston Atlanta Seattle Miami 84 37 30 28 18 17 11 11 10 7 16.8 7.4 6.0 5.6 3.6 3.4 2.2 2.2 2.0 1.4

Source: The Legal Times Sept. 16, 1987

 

Table 2: Law Firm Principal Brances

City Branch Offices Percentage Washington, DC Los Angeles New York Miami San Francisco 123 43 38 20 23 24.6 8.6 7.6 4.0 4.6

Source: The Legal Times Sept. 16, 1987

Tables 1 and 2 show the high concentrations of law firms in the cities of the Northeast, and in Chicago and Los Angeles. Table 1 snows that New York has the highest concentration of main law offices, with 15.9% of all offices in the United States. Los Angeles, Chicago and Washington D.C. are the only other cities in which more than 5% of (U.S.) law firms have located main offices. The rest are dispersed throughout smaller American cities.

The location of all domestic law firm branch offices (Table 2) highlights the concentration of information producing industries in the US. Once again, Los Angeles, Chicago, Washington. D.C. and New York emerge as the principal cities where offices firms located branch offices. Large concentrations of law firm branch offices are found in San Francisco, and Miami as well.

Advertising agencies are in the business of producing information about goods and services. Because advertising agencies require access to skilled professionals (marketing, graphics, and research) they are highly clustered in the main information hubs, selling their products to businesses often located in medium size cities. Like Legal Times. Advertising Weekly surveyed the top 500, advertising agencies city by city. We have broken down the firms into main offices and branches. Tables 3 and 4 exhibit the trend of concentration in this industry. New York is the site of 32% of all advertising agencies headquarters in the United States, followed by Los Angeles with 11%, Chicago with 9%, and Dallas with 6% of the main advertising agency offices. It is significant that over 50% of all advertising agencies are located in three American cities.

Table 3: Advertising Agencies

City Main Advertising Agencies Offices Percentage New York Los Angeles Minneapolis Chicago Boston Baltimore Dallas Portland Tampa San Francisco 83 19 17 16 13 12 12 11 11 10 12.65 2.90 2.59 2.44 1.98 1.83 1.83 1.68 1.68 1.52

Source: Advertising Age Feb. 26, 1987

 

Table 4: Advertising Agency Branch Offices

City Main Advertising Agencies Offices Percentage New York Chicago Los Angeles San Francisco Houston Atlanta Dallas Washington, DC Pittsburgh Philadelphia 99 44 40 31 22 18 17 13 12 11 19.68 8.75 7.95 6.16 4.37 3.58 3.38 2.58 2.39 2.19

Source: Advertising Age Feb. 26, 1987

Information intensive industries make extended use of advanced communications infrastructures to move information from point to point. It is a paradox that as technological innovations such as teleports allow firms to communicate with the world, the information-based activities continue to cluster in a handful of cities. The development of fiber optics systems, smart buildings, and teleports are related to the growth of the economy's information sector. These technologies do not in directly compete with each other, but serve different purposes in the movement of information. Teleports, specifically, play an important role in a region's overall pattern of telecommunications infrastructure development.

The growth of fiber optical systems since the deregulation of the telecommunications industry has greatly enhanced the communications capacity of cities. The concentration of fiber optical systems reflects the locational pattern in cities of law firms, accounting firms and advertising agencies in cities. The development of fiber optic long distance point-to-point communications systems, differs from the development of communications satellites which primarily serve traffic flow from point to multi-points. (Moss 1986)

Smart buildings, often called intelligent buildings, are defined as technology-enhanced real estate. The enhancement is based on a tenant shared, inner-building communications network. This technological development is a response to the demand for a more cost effective way to transmit voice and video data to and from and throughout office buildings. The concentration of technology enhanced real estate developments also parallels the identified Information hubs discussed above.

Teleports, fiber optic systems and smart buildings, predominantly serve large cities with information-based economies. Teleports encompass various types of technology, corresponding to the needs of the particular region. Though teleports may draw upon real estate developments they are characterized by three major components: satellite earth stations, optical fiber networks, and communications centers. In addition, teleports offer specialized services that compete with other providers. There are three categories of users: the on-premise tenants, users who are interconnected to the local fiber network, and those interconnected to satellite facilities. The teleports described below are those which correspond to the cities in our top ten lists.

New York; The Teleport-Staten Island

The Teleport, the largest teleport project to date, is located on Staten Island, one of New York City's five boroughs and the one most accessible to both Manhattan and New Jersey. This project was initiated by the Port Authority of New York and New Jersey which saw the teleport as a means to further strengthen the New York region's economy. The Teleport is a public/private partnership consisting of, Merrill Lynch Telecommunications Inc. Western Union Communications Systems, the City of New York, and the Port Authority of New York and New Jersey. Construction began for this real estate-based Teleport project in 1983, with 17 satellite earth stations for domestic communications and regional hook-up to regional fiber optic systems that serve downtown and Midtown Manhattan, Metro Tech in Brooklyn, Astoria Studios in Queens, and Princeton, Newark, Jersey City, and Somerset County in New Jersey.

The Teleport also includes a large office park, with one million square feet of office space planned for the first phase. Currently the structure includes over 200,000 square feet of office space used by tenants, primarily for back-office operations. Nomura Securities International, the largest securities company in the world, maintains a data center on the premise. Other tenants include Catholic Telecommunications Network of America, the Port Authority of New York and New Jersey, and Teleport Communications. Teleport Communications subleases space to Contel and ASC International, in November 1987, a consortium of Japanese businesses made plans to develop 160,000 feet of office space. Businesses included in the consortium are Kokusia Densnin Denwa Co. Ltd (KDD), the largest telecommunications firm in Japan, Kajima Corporation, and Nomura Computer Systems and 16 other companies. Additionally, Merrill Lynch recently announced plans for the construction of a data center on the site.

Customers who utilize the technology fall into three categories: financial services, long distance carriers and broadcasting companies. The largest users are long distance carriers, such as ATST, MCI, US SPRINT, TRT, ITT, Coastal, RCA, GTE, and Contel AFC. The financial services firms that use the teleport include Merrill Lynch, Morgan Stanley, Bear Steams, Bankers Trust, Security Industry Automation Corp. and First Boston. Moreover, there are 17 broadcasters including ABC, CBS, NBC, and the Private Satellite network, a corporate broadcaster. All of these customers are in the information producing, selling or transmitting business.

Los Angeles: Pacific International Teleport (PIT)

This teleport is a stand-alone common carrier divided between two sites. Owned by Mitsubishi Corporation and Wold Communications, this teleport is an extension of Wold's communication satellite facilities which have been in operation since the 1970s. Local and regional interconnects are provided through microwave systems. This teleport maintains satellite earth station facilities in the Washington D.C. and New York areas, both of which are information hubs. This teleport does not include office facilities.

San Francisco; Bay Area Teleport: (BAT)

In contrast to Los Angeles's PIT, the Bay Area Teleport is a real estate-based project located in Alameda, Ca., across the bay from San Francisco. The office park will eventually include Telecommunications enhanced real estate providing easy access to the teleport. Cities around the bay will be linked up to the teleport via a microwave system. Consumers will use the facility for video conferences, with access to INTELSAT Business Services serving the Pacific and Atlantic regions.

Chicago; Teleport Chicago

This stand-alone teleport is located north of Chicago and has five transmit and receive satellite antennas. Midwestern Relay is the owner of the teleport, which is connected to an extensive microwave system that links the Midwest. This facility is a good example of a teleport which transmits information from Chicago, a main information hub to smaller second tier cities in the Midwest.

Washington D.C.: The National Teleport

The National Teleport is located in downtown Washington D.C., on top of the National Press Building. This downtown location does not permit the teleport to take advantage of a suburban, low radio frequency environment and instead will have to use Ku-band. Owned by Videostar Connections Inc. and Pyramid Video communications, the National Teleport has room for eight earth stations. This facility will use fiber optics, microwave, and coaxial cable for the regional interconnects.

Conclusion

Communications technologies such as teleports can have profound consequences for future patterns of urban development. The growth of information-based firms and the development of new telecommunications demonstrate the reinforcing role of technology in strengthening major urban areas.

 

Originally published in Teleports and Regional Economic Development
K.A. Duncan, J.R. Avers (eds.)
Elsevier Science Publishers B.V. (North-Holland) 1988