Bloomberg Takes On 'Digital Deserts' To Support Local Tech Startups

At 21st Street and 6th Avenue in Manhattan's Flatiron District, at least five tech startups have offices within a single block.

But these companies at the heart of New York City's burgeoning tech corridor face a problem that is central to their very existence: Their Internet service is not reliable.

One company on the block, Hunch, a technology recommendation company acquired by Ebay, has tried to find a dependable connection, but to no avail. Verizon's FiOS service is unavailable in the company's building. Wireless service suffers outages after heavy rainstorms. And cable Internet can go weeks in a row with daily, hour-long outages, according to Chris Dixon, co-founder of Hunch.

For a tech startup, losing an Internet connection is more than an inconvenience. Every hour Hunch goes without web access amounts to $1,000 of wasted salary, according to Dixon.

"It's embarrassing how bad Internet access in Manhattan is," Dixon said in a blog post in December.

Dixon's company may find some relief in a plan announced last week by city officials to address the problem. Their strategy includes giving office buildings grades based on the reliability and speed of their Internet connections; creating a map detailing connectivity in buildings and neighborhoods; and hosting a competition to wire hundreds of buildings across the city with state-of-the-art broadband over the next two years.

"The growing technology industry is diversifying the city's economy and creating the jobs of the future," New York City Mayor Michael Bloomberg said in a statement after the announcement. "To support those jobs, we need to help the industry get the resources it needs -- whether that means more qualified engineers or broadband connections."

The effort to boost the city's bandwidth comes as the local tech sector continues to grow.

Between 2005 and 2010, employment within New York City's tech industry increased 30 percent, according to city officials. There are now 120,000 people employed by the city's tech industry. Google, Facebook, Twitter and Apple have all recently expanded their operations in New York. And in December, Cornell University was selected to build a new tech campus on New York City's Roosevelt Island to further establish the city as an alternative to Silicon Valley.

But the lack of high-speed Internet has become one of the most frequently cited obstacles to the city's continued tech expansion, second only to finding more talented engineers, according to a report issued last month by the think tank Center for an Urban Future.

Several tech startups have said their Internet connections go out "on a relatively consistent basis," according to the report. Some said they abandoned plans to relocate to former industrial districts, such as the Brooklyn and Queens waterfront, because they couldn't get reliable high-speed web access, and Internet providers wanted to charge them thousands of dollars to cover the cost of installing broadband.

"Without a fast Internet connection, buildings in these districts become a nonstarter for tech companies," the report said.

City officials call such unserved neighborhoods "digital deserts." Most were never wired because they were inhabited for years by manufacturers who didn't need to go online, so Internet service providers never built fiber-optic lines to serve them, according to Jonathan Bowles, a co-author of the report and executive director of Center for an Urban Future.

Now, such buildings are attracting tech startups because they offer cheaper rents than buildings in Manhattan. For most of the startups, losing Internet access is not a daily occurrence -- but that doesn't minimize the problem, Bowles said.

"For a tech company, even if the Internet goes down once a month, that's too much," he said.

"For a city that is trying to be the number one or number two tech center in the U.S., if not the world, the speed and reliability of broadband is not up to par," he said.