Eight years ago, as Virginia began to emerge from a severe recession, a broadly-based group of business people in Virginia who were concerned about the state’s deteriorating competitive position, came together under the banner of the Virginia Chamber of Commerce. They identified strategies the Commonwealth should adopt to reestablish its economic leadership in the U.S. Labeled "An Economic Vision For Virginia," this simple yet timeless statement provided a clear blueprint for policy makers and business leaders. It is remarkably relevant today. Let me iterate just a few of its strategies, as written in 1993:

• Instill a new spirit of respect and pride in Virginia, a statewide sense of community, while minimizing parochialism.

• Establish the business community as a partner in directing Virginia’s economic growth, providing constancy and stability to the process.

• Install Virginia as a national leader in education and training.

• Recognize Virginia’s regional diversities in culture, topography and economic opportunity, and create regional strategies to capitalize on them.

• Modify the structure of Virginia’s inter-governmental system to remove impediments to regional and statewide cooperation.

• Invest in Virginia’s transportation and physical infrastructure to support the attraction (and retention) of business and industry.

Today we would add to these one extremely critical strategy:

• Revise Virginia’s tax structure to accommodate the realities of the information economy and the needs of the state and localities for reliable revenue streams to provide essential services.

Virginia needs to revisit the effort from eight years ago and recreate an atmosphere that encourages candid discussion and fosters some consensus on how to achieve revenue streams. This atmosphere does not exist now, and none of us has done much to overcome the obstacles to putting it in place. If our chief objective is to minimize government spending at all costs, we will placate some in the electorate but we will not provide the resources to solidify Virginia’s greatness. We probably have to make some investments that create a foundation for a better Virginia that transcends not just four-year terms of politicians but generations. By doing so, however, we should not abandon fiscal discipline, long a treasured Virginia hallmark.

A quarter of a century ago my chief mentor, the former director of the Virginia Division of Industrial Development, J. Frank Alspaugh, hired me as the "PR Guy" for the state’s marketing arm. Since then, in a number of different capacities culminating with this one, I have been an unabashed cheerleader for Virginia as a business location. And for the first time in that long, evolutionary span, I have some doubts. Do we as a citizenry have first the vision and then the will to keep Virginia great? Do we understand the competitiveness of the marketplace for business investments? Are we sensitive to what makes business investors satisfied customers? Are we willing to delay short-term gratification for long-term gain? We have to find answers to those questions and more.

A few ideas: Virginia’s regional economic disparity begs for creative thinking. Proficiency testing in schools is here to stay. We need to rethink having a one-term governor. Work force development and worker productivity gains require persistent infusion of capital, technology and innovation at every level. We are already 46th in the nation in tax revenue as a percent of personal income, a fact suggesting that Virginians may be able to invest a little more in fundamental needs. Finally, the suburban sprawl growth issue looms larger everyday. Nobody likes sprawl but they don’t want economic stagnation, either.

We need a large dose of collective wisdom, perhaps what the Founding Fathers called "enlightened self interest," to spark fresh, insightful discussions of these issues. And let’s open those discussions in an atmosphere that lays aside finger pointing and eschews mistrust in pursuit of what former Gov. John Dalton often characterized as "what is good for Virginia." Otherwise, as I’ve told a number of audiences in recent weeks, our only source of pride in all this is that eight of ten Virginians can now spell "impasse."

The writer is president of The Virginia Chamber of Commerce

Wireless Nation, The Frenzied Launch of the Cellular Revolution
James B. Murray Jr.
Perseus Publishing
352 pages. $27.50

by Peter Galuszka

Fifteen years ago, Mark R. Warner was about to launch a career as a wheeler-dealer in high-technology finance. He eventually became a multi-millionaire venture capitalist with big political ambitions, including his run this year as Democratic candidate for governor of Virginia. At the time, though, Warner was something else — a rangy 31-year-old not far out of Harvard Law with a "huge, toothy grin and an aw-shucks manner." He drove a battered car and slept on the floors of friends’ apartments.

Mark Warner parlayed a gamble on cell phone technology into a fortune and a shot at the governor's mansion.

What helped make it for Warner, writes his former venture capital firm partner James B. Murray Jr. in an entertaining new book, was a 1986 meeting of more than 100 individuals who happened to hold shares of the embryonic market for cell phones. Most had won their shares in lotteries held by the Federal Communications Commission. They had little idea of how the technology worked and even less of how to put together the necessary infrastructure. The locations of many of their markets made no logical sense. So, a meeting was arranged at Washington’s Westin Hotel to decide what to do.

Sensing big opportunity, Warner stepped in. As Murray writes in Wireless Nation, The Frenzied Launch of the Cellular Revolution, Warner, then a low-level Democratic Party gofer, brazenly sought a spot on the agenda. Warner boldly announced that he wanted to be everyone’s broker. For just 5 percent of the sale price, he would match up deals so spectrum holders could unload unworkable markets. The buzz of the crowd turned into silence. Finally, a man from Louisiana broke the ice, announcing: "God dammit Mark, I think we should do it with you!" Warner was on his way to fame and riches.

Murray’s book is peppered with other revealing anecdotes. Curiously, there wasn’t much magic to the cell phone industry — no rocket science. Bright engineers developed the gear needed to tap the right radio spectrums, but what really set up cellular for its 1990s boom years was a strange combination of federal bureaucracy ineptitude, flagrant hucksterism and some far-sighted tycoons.

What makes Murray’s work especially relevant is that many of the characters have ties to Virginia. One, for instance, is John Kluge, then a suave septuagenarian who is now worth $11 billion and maintains a huge farm near Charlottesville. As head of his Metromedia conglomerate, Kluge saw the emergence of cellular before most, invested heavily in it and then bailed out, leaving a string of deals so brilliantly complex it took others years to figure them out. Another is Daniel Akerson, who once headed MCI, which had busted up the old AT&T monopoly. Then, of course, there’s Murray himself, who recently left Columbia Capital, the Alexandria-based venture capital company he had with Warner to start another private equity firm in Charlottesville. After locating in Virginia because of its proximity to FCC regulators in Washington, these early-day gurus set the stage for Virginia’s emergence in the next decade as a major center of the Internet.

If any group comes off as buffoons, it is the bureaucrats of the FCC. Time after time, they were flummoxed by hucksters who realized that radio waves could be used for mobile telephones and not just police radios. Somehow the FCC never quite caught on that ever-tinier microprocessors would make cell phones viable.

At first, the FCC used cumbersome applications to award all-important spectrum. But since spectrum is public and wireless, anyone could play and not just the giants of the landline phone industry. Sharpies crafted applications and sold them to people who had no idea how to run a phone company. After learning it was being had, the FCC turned to lotteries for market shares, with equally-ludicrous effect. Scams galore popped up as hundreds of average Joes, including truck drivers, bought tickets for the lotteries.

It was young hot shots such as Mark Warner who brought order to this Turkish Bazaar. Yet, they did so by slick deal-making and not by being high-tech Einsteins. As Murray writes about Warner’s brokerage back in 1986: "To many the very idea of Warner’s auction was a travesty — not because Warner was breaking any laws or deceiving anyone, but because the U.S. government had given away the public radio spectrum for free, and now the winners were promptly flipping it for a huge profit."

The eerie thing about Murray’s depiction of the early cell phone industry is that the same pattern emerged with the arrival of the Internet. A major difference, though, is that cell phones are always cell phones while the Internet was elevated into a magical New Economy with laws all its own — that is, until the market crashed and took billions of dollars with it.

Return to Virginia Business - July 2001