Building the Silicon Dominion

Building the Silicon Dominion
By Courtney Macavinta
Staff Writer, CNET NEWS.COM

WASHINGTON--When travelers cross state lines into Virginia the "Welcome" sign might as well read: "Thank you for leaving Silicon Valley."

At least, that's the message Virginia Gov. Jim Gilmore wants to send.

Gilmore envisions San Francisco Bay Area companies pulling up stakes and setting up shop in his native state, where he says they could have easier access to federal lawmakers, lower housing costs, and numerous tax incentives.

Since he was elected last January,

the former state attorney general has gone into overdrive to lure new high-tech companies to the state, and to keep existing establishments sweet on the so-called Silicon Dominion.

The state's technology sector already is growing three times faster than its overall economy, and the industry is expected to employ 413,000 people with more than 24,000 firms by 2002, according to the governor's office.

Northern Virginia is especially key to the state's treasure chest. Gilmore is fond of saying that more than half of all the Internet access in the world runs through the area. Once home to tobacco farms, the triangle now houses America Online, MCI-Worldcom , UUNet, and PSINet. The Net's white pages also live there--Network Solutions and its ".com" registry are located in Herndon, Virginia.

One of the Republican elect's first moves when he got into office was to appoint a Secretary of Technology and a Council on Technology Services to promote public and private IT initiatives. The Virginia Economic Development Partnership also is beefing up "pro-business" outreach to out-of-state firms, emphasizing perks such as its low unemployment-insurance premiums and utility costs.

It seems to be working.

ISPs aren't the only firms carving paths to the state. Oracle Corporation, for example, is setting up a $65 million campus that will create up to 3,500 jobs in Virginia. MCI WorldCom plans to build a $200 million information technology facility that will employ 4,000.

And many of these IT firms' chief executives sit on Gilmore's Commission on Information Technology--which is quickly making Virginia a bellwether state when it comes to Net policy. In December, the group proposed a seven-point Virginia Internet Policy Act, which takes on online child pornography, consumer privacy, fraud, and unsolicited bulk email.

Last month, the commission saw results when Gilmore signed the first criminal law to curb spam, which is a boon to online service providers who say the messages clog their networks. Under the law, "malicious" spamming--causing the recipient more than $2,500 in losses--could be prosecuted as a felony. In addition, ISPs can sue the sender for $10 per message or $25,000 per day, whichever is greater.

For his tech-savvy blueprints, Gilmore is gaining national attention. For example, he was named to the U.S. Advisory Commission on Electronic Commerce by former speaker of the House of Newt Gingrich to study Net taxation issues.

But the state's Net policy track record isn't without controversy. Civil liberties groups have made Virginia a constitutional test bed for laws that regulate online speech.

The American Civil Liberties Union, for one, is expected to appeal to the Supreme Court a Fourth Circuit Court of Appeals decision that upheld a law prohibiting the state's employees from accessing online "sexually explicit communication," even if doing so is job-related. In addition, another federal judge overturned a library's policy to screen Net access for all patrons in Loudoun County, Virginia.

Gilmore recently sat down with CNET News.com at the WTOP radio station in Washington, where he takes call-in questions from listeners at least once a month. Gilmore talked about his efforts to stoke the state's high-tech fire, and about the closely watched court cases that have put Virginia at the center of the Net free-speech debate.

CNET News.com: You've taken a lot of steps to be on the forefront of Net policy issues. Do you use the Net in your everyday life?
Gilmore: I sure do. We have several computers at home. I go on the Net almost every day. I have a chance to visit places that I think are interesting, to communicate with people, and to do email. Both of my sons are on the Internet every day, and working with it they're obviously very tuned in to the uses of information technology and high-tech. And my wife Roxane is especially using the Internet. She's a teacher and has actually formed a Web page for education to give teachers an opportunity to dial in and use the Net and register their lesson plans towards the standards of learning that we're doing in Virginia. I think we're all doing pretty well, but little Ashton is really on top of it.

Did you and Roxane do any online shopping this holiday season?
Oh, sure we did. I know Roxane bought books over the Internet. You can imagine who those might have been for.

NEXT: Mapping out high-tech growth

Mapping out high-tech growth

What is your vision for Virginia's economy?
My emphasis is on information technology in Virginia. I intend for Virginia to be the No. 1 information technology state in the entire United States. We have that opportunity. Most of the Internet connections in the world go through Northern Virginia. We have America Online, we have major presence there with MCI WorldCom, and others as well.

We have a second component also and that's hardware. We have major chip facilities in Richmond and also Manassas. So we have pretty much every aspect of this rising information technology community, but the main emphasis is really on software production and our information technology and Internet companies. And I intend to continue to emphasize that.

What are you doing to draw companies away from Silicon Valley to set up shop in Virginia?
Well, as we have seen recently, Netscape was bought by AOL and in this morning's paper, as a matter of fact, it was announced that one of the key executives for Netscape is coming to Virginia to serve in a major leadership role at AOL. So we're going to see Virginia become more and more of an attraction to this as I continue to develop policies that put us in the forward-looking position on the Internet.

I have appointed a Secretary of Technology. No other state in America has that. I also have developed an information technology major leadership council and advisory council, including people like [AOL CEO] Steve Case and [MCIWorldCom vice chairman] John Sidgmore.

We would like to have companies from Silicon Valley locate either subsidiaries here or branches here or their whole companies here. And you would be happy here. The quality of life in Virginia is very high--it balances a lovely environment and lovely greenery and the mountains and the beaches, one of the greatest histories in the entire world with wonderful tourist opportunities, but mostly a tremendous tradition of freedom of people, the entire legacy of Thomas Jefferson and James Madison and George Washington, and the opportunity to come here and to live in a free society that is on the cutting edge of progressiveness.

What will the Secretary of Technology, Don Upson, be doing?
The Secretary of Technology is a unique position. I've appointed [him] to find ways to make Virginia the most appealing and successful state for high-technology and information technology. We have a major presence here, and we want to continue for that to grow and develop.

Secondly, he ought to look and see how information technology should be used in government. And thirdly, he should be a major producer of thinking and policy regarding what is going to be in the best interest of Virginia and the United States in the 21st century. He's working with me as I have become the appointee to the congressional commission on Internet commerce.

Do you have any specific ideas about economic incentives that would lure companies here?
We utilize economic incentives in a sound business approach for all types of industries and information technology is no exception. We have been very successful in the past with bringing major companies to Virginia, such as Volvo. But now I want to add an additional component--and that is to focus some attention on companies that are already here. We have so many good things going on in the state--if there's an expansion, we want it to be here. If they're going to be adding new jobs and creating new production lines or creating new subsidiaries, we want it to be here. So this is an approach that encourages people who are already here to grow and Volvo was the first example of that. We're offering incentives to an existing player who is going to add a major production line and we will produce more Volvo trucks than you could imagine here. That's going to be good for Southwest Virginia--an opportunity to build jobs and that are high paying that will also utilize technology.

A lot of high-tech manufacturers, despite the booms, have laid off a lot of workers in the past year. What are you doing to prepare and retrain people to be part of an ever-changing workforce, especially in this sector?
In terms of workforce, I've directed the Secretary of Commerce and Trade to draw together all the workforce programs so that we can in fact prepare our workforce to fill these wonderful jobs that are available here in the Commonwealth of Virginia. We hope others will come to the state, too, to fill these jobs too. We would like to see that. Finally, I've placed a special emphasis on information technology training at both George Mason University in Fairfax and Old Dominion University in Norfolk so that we can continue to develop this type of education and training so we can fill these jobs.

You supported the three-year national Net tax moratorium that passed in October. As part of the Congressional Advisory Commission on Electronic Commerce you'll study when and if online services or access should be taxed. What will you propose?
Well, I am not a pro-tax person to begin with. I am a believer that people are better off if they can keep more of their own money and have an opportunity for entrepreneurship and economic activity. I don't believe that we ought to be taxing access to the Internet, [but] I think all views ought to be listened to. I am aware of the concerns of state and local people who are concerned that sales taxes can be threatened by the burgeoning growth of e-commerce. At the same time I am concerned that we try to give incentives for this industry to grow. So we have to find the correct answer on this.

One idea that has come up is a flat tax on e-commerce for sales, which was sparked by the problems states and localities have had with collecting sales tax on mail-order items. What do you think of that idea?
I have heard that there's a proposal that all 50 states each should have their own separate taxing ability and their own separate tax authority and tax rate, or the idea of a national flat tax certainly ought to be considered, but at the same time I would not assume any particular result. We don't want to lay additional taxes on any sooner than we have to or any more than we have to.

We should be liberating the people of this country to engage in commercial activity with the fewest taxes possible. We are sensitive to the concerns of the needs of revenue for government, but at the same time we ought to be liberating people to conduct their private enterprise to the greatest extent that they can in the fairest way.

Based on the Commission on Information Technology's recommendation, you preliminarily endorsed open Net access at public libraries. Recently a U.S. District Court decision in Virginia found the practice of filtering Net access in libraries to be unconstitutional. Do you think there is ever a case when a library should screen certain online content?
There are major issues that have to be addressed. In addition to commerce, privacy issues are very important, free speech issues are very important, pornography issues are very key. I don't think anybody thinks that pornography is protected speech, and therefore we have a right to protect our children from pornography. I am certainly a person that believes in the maxim of freedom of speech, so we have to find technical ways to be able to interact and to make all of these values come into fruition at the same time.

Should libraries have at least one computer with open Net access for adults to use?
I can't answer that yet. I think that we have to study the question of library usage and availability. It may be that we ought to just be recognizing that people have access in their homes and we maybe ought not to have in libraries, but I think that's an open issue that remains to be discussed and I'm open to discussion on it.

Since you have a young child, do you use any filtering programs at home?
We believe in parental responsibility. I supervise my children directly, but I believe that there are a variety of ways that parents can choose and I believe that we ought to be discussing all options and possibilities.