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The Internet Capital

Virginia, with its wealth of tech jobs and skilled candidates, is poised to cash in on a profound shift taking place in the computer industry.


McLEAN, Va. — As Southern California and other regions compete to raise their profiles as technology centers, an unlikely place has emerged as a high-tech citadel: Virginia.

Long famous for a rich history that spawned eight U.S. presidents and helped shape the nation, Virginia this times finds itself as an intellectual mecca of a different sort.

With its 2,500 high-tech firms, the state is home to a world-class concentration of Internet businesses ranging from America Online Inc. to domain-name issuer Network Solutions Inc. Earlier this month, WorldCom Inc., the telecom Goliath that is the nation's biggest Internet access provider, announced plans to build an office complex for 30,000 employees in northern Virginia that will be about three-quarters the size of the Pentagon.

About 350,000 Virginians work in the high-tech industry, which has accounted for nearly 30% of the state's growth in personal income since 1991, according to a study by the College of William and Mary in Williamsburg.

Virginia ranks among the top 10 states in terms of tech jobs, and its growth rate is among the highest in the country, according to the American Electronics Assn.

Job growth is so hot that one northern Virginia software firm made headlines recently when it hired a teenage dropout, Doug Marcey, as a part-time programmer for $50,000 annually. Nonetheless, Virginia's well-regarded university system, established by Thomas Jefferson, is key to nurturing the state's job force.

"Virginia has a very good pool of skilled workers, and we invested heavily in attracting technology companies," said former Gov. George Allen, who left office in January. "People have started calling us the Silicon Dominion."

Virginia's appeal is due largely to initiatives launched by the Pentagon about 20 years ago. Federal money and know-how helped develop the Internet and created a pool of experts who transplanted the network to the commercial sector.


At the same time, the intelligence and national-security agencies were developing other communications technologies such as satellites and nurturing a vast contractor base to support their worldwide communications--and espionage--systems.

Those early developments put Virginia in a position to capitalize on a profound shift now taking place in the computer industry: networking.

As personal computers have evolved from mere number crunchers to communications tools for managing e-mail, Web pages, faxes and other information coursing through data networks, Virginia has emerged as the world's electronic nerve center. The state boasts a large community of Internet service providers, computer systems managers, software developers and networking consultants.

"This is a new medium with new rules," observed Steve Case, chairman of America Online. "The Internet has created an environment that is less location-dependent," allowing places like Virginia to compete effectively with traditional industrial capitals.

"There is considerable momentum [in Virginia] that will drive the creation of more start-ups," Case said.

The state also is benefiting from the government's breakdown in modernizing its information technology. Federal agencies are being forced to downsize and out-source billions of dollars' worth of technology projects, many of which are going to firms in the Virginia suburbs of Washington. They include the massive computer modernization program at the Internal Revenue Service and huge contracts to supply the government with local telephone, computer-networking and other services.

Indeed, the migration of high-tech firms to Virginia recalls a similar sea change that occurred a generation ago, when personal computers began to supplant large mainframes, resulting in a geographic shift in the industry.

The change undermined Boston's Route 128 corridor and sparked an explosion of software and semiconductor firms in Silicon Valley. Similarly, by some estimates, about half of U.S. Internet traffic passes through Virginia today.

"Virginia is clearly now the networking capital of the nation, if not the world," said Mark Warner, a Virginia venture capitalist who ran unsuccessfully for the U.S. Senate in 1996. "With companies like AOL, [WorldCom unit] UUNet, PSINet and others, we've become a magnet for high tech."


Until recent years, Virginia's economy had suffered from a dearth of high-wage jobs. Although the state was the intellectual center of the nation at the time of the Revolutionary War, it has lagged economically through much of the century following its defeat in the Civil War.

Even today, the state often seems at odds with a high-tech image: Many corporate chiefs, such as Black Entertainment Television Chairman Bob Johnson, live on country estates where they collect horses rather than fancy sports cars.

But with more states clamoring to climb aboard the high-tech boom, Virginia's quiet success is proving instructive to regions that have campaigned to become technology centers.

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