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The Economics of Transportation and Communications

Effective and efficient infrastructures for transportation and communications are critical to the continued economic growth of the New York-New Jersey-Connecticut region.

Published November 1, 2001

By Fred Moreno, Dan Van Atta, Jill Stolarik, and Jennifer Tang
Academy Contributors

Image courtesy of Alex via stock.adobe.com.

The recent terrorist attacks on New York’s World Trade Center brought home more than ever the inextricable link between transportation and communications infrastructure and healthy economic growth around the world. This vital subject is the on-going focus of The New York Academy of Sciences’ (the Academy’s) Technology in Economic Development Across the Tri-State Region (TED) project. Following are highlights of the discussions that took place, prior to the attack and ensuing disruption, among participants from the Tri-State region – Connecticut, New Jersey and New York.

The relationship between transportation and communications seems obvious. Although much about the exact nature of the relationship is, upon examination, unclear, there’s no doubt that efficient communications systems can improve the transportation of people, goods and services.

As more people telecommute or obtain goods via the Internet, however, will more effective communications technology actually reduce transportation needs? Many experts believe so. Yet, while improved communications may cut down on the transportation needs of people, they may actually increase the need to transport goods and services.

Also, it is not readily apparent that communications technology reduces the need for travel. Over the past few decades, concurrent with advances in communications technology, people have been increasingly on the move.

Cutting Costs

With this increase in movement, noted Dr. Robert (Buzz) Paaswell, director of the Institute for Urban Systems at City College, people will find ways to cut costs. As regional transportation systems become more congested, for example, some people will change either the route or mode of their transport. Others may move their residence or job location. This is true for access to communications systems as well — already there are examples of people choosing to live in one neighborhood over another because the latter could not offer high-speed access. For companies choosing to locate, this is even more important.

One point is clear. Effective and efficient infrastructures for transportation and communications are critical to the continued economic growth of the New York-New Jersey-Connecticut region. To attract and retain new companies, especially those within the high-tech sector, efficiency, access and ease of use are crucial.

As Paaswell explained, information technology is changing the way people work. Typical 9-to-5 jobs become less standard as work hours become more flexible and working from places other than the office become an option.

Indeed, this is especially true of the high-tech industry. Not only is communications technology changing the way people work, it is also changing where and how they work. Being able to make accurate predictions on what type of investments will be needed and where is necessary for maintaining and enhancing transportation and communications infrastructures.

New Approaches

Forecasting must also go beyond the present perception of needs. Infrastructure no longer refers to bricks and mortar alone. Knowing how many more cell towers will be needed and where they should be placed for wireless communications is important, but having an efficient and environmentally sound energy supply to power the communications network is now equally essential and must be part of any calculation. Similarly, for transportation, new approaches to assessing the situation are needed. For example, the historical tendency has been to treat the flow of goods as separate from the flow of people.

To give a sense of how New Jersey officials are approaching transportation needs from a different perspective, Dr. Lazar Spasovic, director of the National Center for Transportation and Industrial Productivity at the New Jersey Institute of Technology, provided a brief background on the freight entering the region. He explained that the majority of freight comes in through Newark and Elizabeth ports in New Jersey. And the ports are already facing capacity problems because channels are too shallow for the more modern and much larger container ships.

With volume predicted to grow six-fold by 2020 more capacity will be needed on the roads as well, since most of the freight reaches its final destination via trucks. Rather than continuing to expand existing roadways, New Jersey is building a “port way” to connect freight, rail, seaport and airport terminals. The goal is to avoid having to transport containers on major interstate roads in the already congested areas.

Basic Research is Critical

Another way to look at things differently is, of course, to develop entirely new technologies. According to Dr. William Al Wallace, director of the Center for Industrial Innovation at Rensselaer Polytechnic Institute, transportation has had a tremendous, and in many cases unexpected, impact on our society.

Nevertheless, one thing has remained consistent. With a few notable exceptions, people have continuously sought to refine or expand current technologies, policies and institutions, rather than create entirely new means of transport. This, he argued, is a mistake: New technologies are needed to keep pace with the needs of a rapidly changing society.

Developing new modes of transportation, however, requires investment.

Lack of Basic Research

Support for basic research in this area is sorely lacking. In fact, Wallace pointed out, there is virtually no basic research on surface transportation at this time, though the U.S. Department of Transportation and the National Science Foundation are in the process of developing such a research initiative.

Together with Sue McNeil of the University of Illinois, Chicago, and Thomas Humphrey of the U.S. Department of Transportation, Wallace organized and participated in the initial workshop to develop the basic research program on surface transportation. The workshop produced a long-term vision of moving people, services and goods via an integrated surface transportation system. The system would be responsive to customers, safe, well managed and efficient.

Advances in communications technology will be integral to successfully implementing this vision, since information will be required for customer support, mobility and accessibility. Yet, in this area too, there is often a tendency to build on older technologies, rather than moving ahead on entirely new ones.

Other technologies will also be needed — those that help make tunnels, build bridges and communications towers, for example. Dr. Elliot Sander, director of the Rudin Center for Transportation Policy and Management at New York University’s Robert F. Wagner Graduate School of Public Services, explained that such technologies are exceptionally important to making sure that projects come in on time, and on budget.

Size as a Key Factor

It’s important to recognize that the New York-New Jersey-Connecticut metropolitan region is larger than any other in the country — in terms of the number of people moving in and out of the region daily, the number of miles covered by transportation and communication networks, and the financing needed to sustain these systems and meet both current and future demands.

This multifaceted largesse presents opportunities. In terms of communications technology, for example, high concentrations of people reduce installation costs, thereby increasing profits. Indeed, this is one of the reasons that this region initially led much of the growth in communications technology.

There are also drawbacks, however, in terms of the financial and political challenges faced when trying to meet both communications and transportation needs. Such limitations are compounded by the fact that dealing with the networks in this metropolitan region means coordinating with a multitude of agencies in three states.

Institutions and Policies

Current institutions present obstacles in this region for both communications and transportation technology development and implementation. Some of the current institutions governing transportation were created soon after World Wars I and II.

Initially, they were developed to play two key roles: build supply to fill the demand, and find legitimate ways to fund necessary projects (often through debt financing). Today, however, the needs have changed. New financing means are needed and, in addition to supply, other factors are important, including improved quality of life and environmentally acceptable modes.

Sander said we must recognize that the region is approaching a crisis in transportation. The system is presently functioning beyond its capacity in terms of access into Manhattan, and the outer-county roadways are already at capacity. Forecasts by the New York Metropolitan Transportation Council, the region’s metropolitan planning organization, point to an even greater need. The region will risk its future economic leadership if additional capacity and new technologies are not found and implemented.

In addition to the institutional weaknesses, there are numerous policies that need to be reexamined to remain competitive. For example, while New York City is currently ahead of its competitors around the nation in terms of communications technology, it risks falling behind because of regulations that make it more difficult to lay new optical fiber here than in other regions. Moreover, there are few incentives to provide access to side streets or outer boroughs, where the concentration of businesses and residents is lower.

Data is the Key

From session to session, the need for data was repeatedly stated. In terms of communications infrastructure, just comparing costs of installation and monthly fees from region to region is difficult. Added to this is the difficulty in identifying exactly who is making use of the system, since accounting practices have not yet entered the high-technology world. Computers are labeled as office equipment, for example, so trying to research exactly how many computers and modems are being used in a given area is difficult.

Transportation faces similar issues, but also has a problem with the timeliness of data. Often, experts are still making use of data from a decade or more ago, even though patterns of usage have changed substantially since then. Where the needed data is available, it is collected by more than one agency and is rarely exchanged or integrated for analysis.

The key to making effective decisions in any area lies in knowing the facts about what exists, what is possible and what will potentially be needed. For both communications and transportation infrastructure in this region, such facts are hard to come by. Clearly, a coordinated, on-going effort is needed to make effective decisions that will meet anticipated demands.

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