Are we prepared for the economic risk resulting from telecom hotel disruptions?

Abstract

Large and small businesses in Seattle, Washington, as in most urban centers across the United States, increasingly rely on telecom hotels and related telecommunications centers to conduct business operations. What would be the economic impact to these businesses if a natural or man-made disaster were to make this infrastructure unavailable for a significant period of time? How long would it take for the owners of small businesses, which provide the foundation for economic recovery, to give up and move away? Are metropolitan regions prepared for this risk?This paper draws on publicly available reports of telecom hotel investments to examine the economic risks that such telecommunications hubs pose at the regional scale. New York City and Seattle are two urban areas that depend on key investments in telecom hotels. In the Pacific Northwest, these assets are located downtown, primarily in the center of the urban real estate market of Seattle. Although the terrorist attacks of September 11, 2001 were directed at the World Trade Center in Lower Manhattan, collateral damage to a major telecommunications hub brought outages during and after the attacks that highlighted the serious risk posed to small- and mid-sized businesses from disruptions in telecommunications service. The Seattle case study illustrates the potential to learn from the experience in Lower Manhattan and apply this knowledge across the United States. Regional economic analysis of the benefits of and the means to protect small- and mid-sized businesses can provide the basis for strategic investments that minimize economic loss and reduce the recovery time.