America 2.0: Why It’s Time for a Technology Upgrade – Knowledge@Wharton

The Trump administrations proposal for transforming Americas infrastructure provides no details about where funding for projects would come from or exactly where the money would go over the proposed 10-year life of the plan. While roads, railroads and seaports seem like obvious candidates for upgrading, some experts stress that huge investments will be required for a less visible but equally pressing facet of infrastructure: technology.

When it comes to upgrading the nations infrastructure, Gad Allon, Wharton professor of operations, information and decisions, says that strategic emphasis should be placed on the nations major airports and high-speed trains. But he also believes that it is important for long-range prosperity and competitiveness to make sure that every person in the U.S. has access to high-speed internet, ideally fiber optic. Only a fraction of the U.S. has LTE [wireless coverage]; most people have 4G. When people come from [South] Korea to the U.S., they cannot bear the speed here, so they stop connecting to the internet while they are here. This is, for me, first order.

Allon argues that the impact of such an internet upgrade would be transformative because many people in geographically remote regions in the U.S. have the feeling of being left behind in the social and political narrative about progress and modernity. The technology gap further deepens other social and political rifts between economically deprived regions and those regions that have advanced infrastructure of all sorts. Bridging that gap would allow a much larger portion of the populace to enjoy more and more educational resources that are online, including those provided by Coursera, Udacity and Kahn Academy. Innovation would be positively impacted as well: Access to the internet makes it easier for people to start and manage their own businesses, he notes.

We have such a high concentration [of high speed internet] in cities, and not such a viable ecosystem outside cities, Allon says. He points out that Google tried for a while to put fiber optics in smaller, secondary cities but stopped the project in part because of high costs.

If you put advanced internet infrastructure in places like Nebraska or wherever, you will get employment in more advanced technologies in those locations, Allon adds. That will spark a healthier distribution of innovation, penetrating many cities and towns that currently dont have the tech infrastructure to attract and host any viable firms. Americans should use the fact that we are behind in these places to catapult ourselves forward into the future, he argues.

We have such a high concentration [of high speed internet] in cities, and not such a viable ecosystem outside cities. Gad Allon

Wharton real estate professor Gilles Duranton is not so sure. While many say that boosting the federal budget for infrastructure may improve the efficiency of the American economy; may trigger a new wave of property development, both residential and commercial; and may provide a short-term boost to the economy, his own research has led him to conclude that increases in infrastructure spending are no panacea for lagging job growth. Rather, they will have not much of an impact on employment in technology and other sectors.

In fact, Duranton views the prospect of increased jobs and an era of infrastructure renewal technology or otherwise as being mostly overblown. This whole dream of [infrastructure spending] generating a huge number of new jobs is insane. Politicians always talk about jobs and job generation. You can get some if you do massive re-pavements of the American interstate system. You may indeed create quite a few jobs, but only in the short run, he says.

If good infrastructure were key to boosting prosperity, Japan and France would be world economic leaders, Duranton adds. Although there is often a correlation between infrastructure and prosperity, South Korea and Spain built their infrastructure after many years of prosperity, not the other way around, he notes. The scientific literature has failed to uncover major effects of infrastructure on growth.

Right to Access

While the benefits to the economy from technology infrastructure upgrades can be debated, access to that infrastructure remains a fundamental issue for many. Much like the debate over health care in the U.S., Allon notes that there is significant disagreement over whether access to the internet is an essential right that should be available at an affordable price to everyone. He compares the advent of the internet to the creation of the U.S. postal service in 1775, which enabled every American citizen to send a letter or parcel to anyone else in what was then the cheapest possible way. To me, access to the internet is almost as important as access to public transportation, he says. If I have access to high-quality internet wherever I am, I can potentially reduce the amount of time I need to travel back-and-forth to the office, which will reduce energy [costs].

If good infrastructure was key to boosting prosperity, Japan and France would be world economic leaders. Gilles Duranton

Technology infrastructure has helped level the playing field in health care, as well. I can call my physician, and using my wearable device, they can take my pulse. A small mobile device [thus] enables them to measure my heartbeat. That saves a lot of time, only bringing me into the [doctors] office when it is essential. Likewise, any individual with a health problem can go online to Web MD to see whether the symptoms they have are actually indicative of a disease.

Although high-profile advanced technologies such as the internet will continue to be vital, the often neglected deficiencies of U.S. infrastructure for water and energy systems built in the 1950s and 1960s when people had vastly different needs than now have a first-order effect primarily on health, education, and innovation, notes Allon. These are three things that, the moment you lose your grip on them, you basically create a hole for 10 or 20 years.

Intelligent Construction

A national upgrade in technology infrastructure could, in fact, help propel other infrastructure projects forward in a more cost effective way. Recently, while traveling down a congested road leading to Dulles Airport in Virginia, Dennis Slater, president of the Association of Equipment Manufacturers, witnessed bulldozers working on a highway project that were controlled from satellites 11,000 miles away in space, he told attendees at a recent Bloomberg Government conference on infrastructure renewal. Those data-driven, networked machines were measuring the face of the earth with enough precision to complete their tasks to a high standard of accuracy.

In Japan and the U.K., governments have mandated the use of so-called intelligent construction technology on 20% of public-works projects in 2017, and 100% by 2020, noted conference speaker Ray OConnor, president and CEO of Topcon Positioning Systems. He added that the British government claims to have saved between 15% and 20% of the cost of public works as a result of such initiatives. With the sensors [installed in] vehicles today, we can measure the size of potholes, the lines on a street, or the signs on a guard rail that is broken. Those vehicles are seeing everything, and matching what they see with the plans they have designed on 3-D modeling devices. Engineers at Topcon, which makes measuring instruments for civil engineering, figured out that if we make the measuring instruments and connect them to the machines, we could automate the process and make it go much faster, said OConnor.

To me, access to the internet is almost as important as access to public transportation. Gad Allon

Although intelligent construction technology remains obscure to the general public, Charles Jahren, a professor of civil, construction and environmental engineering at Iowa State University, explained during the Bloomberg event that electronic data can be used to manage transportation infrastructure all the way through its life cycle from the initial stages in which initial sketches can be digitized to precise three-dimensional models, and then the fabrication process. Jahren noted that some of the first attempts took place around 2000. Later, Caterpillar and Trimble Positioning started working together on this concept. Its been gaining momentum ever since.

Another major benefit is on the maintenance and monitoring of infrastructure. The idea is that a lot of the data that you need in order to maintain the infrastructure is the same data that you built it with, says Jahren. In a typical highway department, the people who maintain the roads and the people who built the roads are in completely different, large departments and dont communicate with each other. A technology network can bring them together and create efficiencies that didnt exist before.

Much remains to be done in order to maximize the benefits of intelligent construction technologies in the U.S., but Duranton does not expect a lot of investments to be made in infrastructure technologies by the current administration. There are a few big areas where the government could do something upgrading roads, for example but what remains to be done is not sexy. The Trump administration probably wont want to go there, he predicts.

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America 2.0: Why It's Time for a Technology Upgrade - Knowledge@Wharton