Table of Contents, Chapter 1

In 1913, G.F. Warren wrote what is still sage advice for U.S. agriculture.

Forecasting the impact hypercommunications will have on agriculture is difficult. According to the 17^th Century philosopher Thomas Hobbes, "No man can have in his mind a conception of the future, for the future is not yet. But of our conceptions of the past, we make a future" [In Foner, 1998, p.38]. Agricultural history is replete with examples in which both optimists and pessimists ignored commercial and behavioral reality (because of excitement, fear, or pure boosterism) to yield highly erroneous predictions. Now, in the information age, a "forward looking" view dominates the discussion of how businesses will be almost instantaneously altered by high technology. Often, such predictions turn out to be far from the slower-paced reality because human adoption behavior tends to be backward looking. No matter how new hypercommunication services and technologies try to penetrate agribusiness, they must be solutions to real world problems in order for existing managers, employees, and stockholders to adopt them.

Experience is but one basis for predicting effects from the rapidly occurring changes in production, marketing, and communication stemming from the use of information technologies. Foner insists that institutional and value changes are forecasted better than forward-looking predictions of specific new technologies:

The U.S. economy has been a giant laboratory where economic, marketing, and regulatory theories have been honed academically and tested empirically. Economic tools developed in this real world laboratory will be used in this study to draw an understandable map from an extraordinarily complex and dynamic set of services and technologies. Economic reasoning will provide clarity about what hypercommunications are bringing to Florida agriculture.

Florida has come a long way since before World War I when Warren wrote his advice on farm management. Changes in the agricultural economy have led the way. Hardy pioneer farmers, new settlers, a long growing season, widespread land reclamation, and the ready acceptance of new crops and ideas have driven Florida's agriculture. Florida's diverse agriculture has spawned a thriving agribusiness sector, which today employs over 15 percent of Florida workers[USDA, ERS, "Florida Fact Sheet", 2000]. Florida's farms and agribusinesses are second only to tourism in dollar value in the state's economy.

The transformation from backwater corner of the Deep South to a center of international agricultural trade has taken hard work. Plenty of investment, new farming technologies, and a communications-transportation network have rescued Florida from relative isolation. In 1920 for example, fewer than 10 percent of Florida farms had telephones compared to a national average of 50 percent [United States Census Bureau, 1924, p. 305]. Since then, urbanization has brought a better communications infrastructure while bringing greater pressure on land and water for agriculture, congestion problems for transportation, and a changing political climate regarding environmental concerns. Hypercommunications represent a way for many agribusinesses to operate more efficiently and profitably in the face of these constraints. In many cases, hypercommunications alter the constraints themselves by changing relative prices, expanding markets, and altering the possibilities for production, distribution, and marketing.

Generalizing, hypercommunication is defined as the ongoing technical and economic convergence of existing communication services into a single service, due (in part) to the interconnection of low-cost digital transmission networks. Hypercommunications also connote an "extensive domination" of "our social, economic, and political futures" because of its pervasiveness and currency [Stone, 1997, p.1]. Hypercommunications messages include (alone or in combination) telephone calls, voice mail, images, videos, faxes, text, digital pages, animations, data, sharing of computer applications, and e-mails. Hypercommunication services carry or create these and other kinds of messages using inter-networked hypercommunication technologies.

Hypercommunications connect businesses to circuit-switched networks such as the Public Switched Telephone Network (PSTN) and to packet-switched networks like the Internet. The PSTN carries a broad array of enhanced voice and data services in addition to long-distance and local telephone service. The Internet is an inexpensive (but often less reliable) packet-switched alternative that can provide voice, text, data, video, and graphic communications. The Internet allows both customers and suppliers worldwide to obtain information about businesses very cheaply, contact those businesses, conduct e-commerce, and more. Businesses also use private voice and data network services modeled after the Internet (such as Intranets, Extranets, and Virtual Private Networks or VPNs) to securely conduct internal communications. New hypercommunication services will continue to result from interconnection of previously separate devices such as telephones and computers, as in the case of CTI (Computer Telephone Integration).

Both new technologies and deregulation (brought about by the 1996 U.S. Telecommunications Act) are creating an imaginative, competitive market. Businesses are provided with affordable domestic and worldwide communication with customers, suppliers, and branch locations, even to individual salespersons in the field or telecommuters. Local and long-distance telephone companies, cable television and Internet providers, and even electric utilities are in the hypercommunications business.

Agribusiness refers to "the full scale of operations related to the business of agriculture" [Herren and Donahue, 1991, p. 9]. Information-intensive agribusinesses (especially those beyond the farm gate) have been early adopters of hypercommunications in agriculture. Hypercommunications can help agribusinesses obtain information needed to evaluate and implement improved technologies. Effective and efficient use of those improved technologies, in turn, enables agribusiness to profitably operate on larger scales and scopes than ever imagined. Hypercommunications management is at the strategic center of an economy where profits and growth are fueled by information and technology.

Economic concepts (such as informational advantage and economic efficiency) are vital in formulating hypercommunication strategies to give individual firms a competitive advantage. Agribusiness managers may be familiar with supply, demand, prices, and profits in their own markets. However, they also need to understand technical and economic essentials of hypercommunication markets to grasp the inherent opportunities and challenges of the information age. To examine the impact and usefulness of hypercommunications in agriculture, each chapter builds on preceding ones as shown by the pyramid in Figure 1-1.

Economics will help clarify how (and why) changes in information technologies are affecting farms, ranches, nurseries, processors, and vertically and horizontally integrated agribusinesses. However, economics cannot predict precisely where, how, or when changes in agribusiness because of hypercommunications will occur in Florida. Economics can help to identify what can go wrong and what can go right as the information superhighway reaches fields, processing plants, and agricultural marketing enterprises statewide.

The complexities of hypercommunications often lead uncertain managers to avoid formulating overall strategies, instead of relying on technical staff to propose short run contingencies. However, the sheer importance of information to profitability and growth now requires that agribusiness managers see the basic economics of how agriculture and hypercommunications fit together. Then, they can formulate integrated solutions that will yield positive results.

Figure 1-1: Overview of Florida agribusiness-hypercommunications.

This investigation seeks to contribute to knowledge in an important, timely area. One part of that contribution comes from defining terms, beginning in section 1.2 with twelve essential concepts. Then, in section 1.3 the problem is defined to make the investigation possible. Research objectives and economic hypotheses are presented in section 1.4. Section 1.5 covers the scope and methodology, while section 1.6 provides justification for the research from within the paradigms of economics, agricultural economics, and the two marketing paradigms (agricultural and business). The final section of Chapter 1 gives an organizational overview of the remaining chapters.

Now, definitions of twelve essential terms (including communications and hypercommunications themselves) are presented in Table 1-1, along with the location of their development in the text.

Table 1-1: Twelve essential definitions and their location in the text.

Taken together the concepts in Table 1-1 form the foundation of an elementary hypercommunications vocabulary. Further discussion of these and other essential terms is presented later where their importance to agribusiness hypercommunications can be presented in the appropriate context.

The definitions in Table 1-1 demonstrate the breadth of hypercommunications. While the role of hypercommunication in the economy is important to agriculture, the focus of this research is on the role of hypercommunication in agribusiness. Therefore, specific agribusiness hypercommunications-related problems rather than general problems will be addressed. This research is confined to three essential problems:

1. To counteract the attitude that agriculture does not need hypercommunications.
2. To understand agriculture's unique communication needs.
3. To focus agribusiness hypercommunication strategies and decisions by applying economics and marketing of hypercommunication technologies and services.

Agribusiness' unique communication and information needs form the second problem. If celery from Florida fields sits un-refrigerated in the sun at a railroad transfer point for one day, it goes bad and cannot be resold. Yet, a shipment of books from amazon.com can easily be restocked into inventory if it is waylaid. The uniqueness of agriculture generates a set of unique agricultural hypercommunication needs.

Agriculture's uniqueness stems from factors such as seasonality of supply and demand, weather and pests, quality variation, storability, price instability, international trade, transportation logistics, labor, and food security. Since food is essential to human life, agriculture is an indispensable industry with a unique set of government and public relations as a direct result. Together these factors help create a unique interlocking structure, conduct, and performance of input and output markets that form the agribusiness complex.

Figure 1-2 shows how agriculture's uniqueness creates a unique set of communication needs. The figure shows some representative agribusiness communication needs based especially on the level of horizontal and vertical integration. Note that factors such as size of firm, unit value of product, nature of selling process, search costs, and a variety of other factors specific to each agricultural sub-sector and region also create unique communication needs.

Within the second problem is an unresolved policy issue that confronts all businesses with rural communications lifelines: availability and cost of advanced hypercommunication services in rural locations. This is most critical the closer to the farm gate an agribusiness operates. There is a rich history of regulation, deregulation, re-regulation, subsidy, and taxation underscoring federal and state "universal access" policies mandating that advanced communication services be provided affordably to rural areas. Although some agribusinesses have offices inside class A "smart buildings" in urban Florida, their weakest and most expensive communication links tend to be rural or international. In addition to agribusiness' ability to horizontally communicate, the economic futures of the small communities in which they operate are affected by agribusiness communications as well.

Figure 1-2: Unique agribusiness communication needs based on horizontal-vertical integration.

The first problem was to address the attitude that hypercommunications are not needed in agriculture. The second problem went beyond equating agribusiness hypercommunication needs to other industries, to identify the unique communication needs of agribusinesses. If businesses generally need hypercommunications and if agribusinesses have unique needs to be served, then the third problem is to help agribusinesses understand how to develop customized hypercommunication strategies and decisions in an economic and marketing context.

While hypercommunications is a highly technical subject, this research is business oriented. Therefore, an applied economic and marketing business focus on agribusiness hypercommunications cannot give the whole picture. Figure 1-3 dramatizes this by showing a technical-business continuum along which hypercommunication decisions are made. The economics and marketing orientation of this research establishes a philosophy firmly on the "business" end of the imaginary continuum. Assume that a business philosophy was used to establish an overall hypercommunications network strategy, which guides decisions along the continuum. The technical aspect is used to achieve the mission and objectives of the agribusiness rather than molding the agribusiness to fit technology.

Figure 1-3: Technical-business hypercommunications decision continuum.

Figure 1-3 is not meant to imply a precise cutoff between decisions that are in the realm of engineers and computer personnel from those that are in the realm of business managers (represented in this research by economics and marketing). The entire enterprise will have to be involved in decision-making based on an overall hypercommunications strategy. This research is designed to acquaint management with some technical fundamentals while focusing on managerial competencies in marketing and economics. Additionally, technical personnel must be acquainted with business fundamentals while focusing on their technical competencies.

While the left (purely technical) end of Figure 1-3 contains activities like equipment programming and installation of Wide Area Networks (WANs) and LANs, such topics are outside the realm of this research but still within the realm of business judgment. Those on the far right such as capital budgeting, along with front and back office hypercommunications procedures, are likely to stem directly from economic and marketing considerations. In the center panel of decisions and activities in Figure 1-3 are examples of a wide middle ground between the technical and business ends of hypercommunications decisions. This research focuses on helping agribusinesses to make decisions in the center of the continuum based on the interaction between economics and technological change. However, this research does not seek to provide the technical, engineering or computer science expertise needed to sharpen business strategies into specific technical tactics.

1.4.1 Objectives

The investigation has six chief objectives:

Objective two is to conceptualize hypercommunication services and technologies understandably. This is done by providing technical descriptions of services and technologies and by clearly defining terms. With the Federal Government's own admittedly incomplete "Glossary of Telecommunications Terms" containing over five thousand terms [GSA, 1996, FED-STD- 1037C], selectivity is important. Twelve significant terms have already been introduced. An understanding of these, along with elementary technical descriptions of services and technologies, will simplify the complexities of hypercommunications into usable agribusiness hypercommunication strategies. More detailed economic and technological conceptualizations translate the what of hypercommunications into specific solutions of unique agribusiness communication needs. Additionally, a glossary (in the appendix) helps the reader become conversant in both hypercommunications terminology and acronyms.

The third objective focuses on implications for agribusiness from federal and state policies that are designed to help rural areas preserve their economic bases, while creating the developmental chain reaction necessary to adapt productivity and infrastructure to the information age. The first link in the chain is a high-speed hypercommunications infrastructure to provide state-of-the-art access to the information superhighway. Next, workers and businesses will have to learn the benefits of adoption, be trained on hypercommunications hardware and software, and, most importantly, improve their information literacy skills.

Agribusiness adoption of hypercommunications is a catalyst for an information chain reaction that will spur economic growth in many sectors of rural Florida's economy. Economic and marketing models of technological change can help explain and analyze past, current, and future extension of hypercommunication services to rural and agricultural Florida. Additionally, under this objective, possible losses to agribusinesses in under-served areas from lack of infrastructure and local multiplier effects are considered.

The fourth objective concentrates on showing how agribusiness hypercommunication needs depend on factors inside and outside the individual firm. Outside the firm, traditional agricultural sub-sectors and marketing channels as well as innovative new business activities of competitors influence a particular firm's needs. Inside the firm, the degrees of vertical and horizontal integration are especially important to hypercommunication needs. Additionally, departments inside each agribusiness have their own strategic concerns regarding hypercommunications. Advertising and marketing, administration and production, recruiting and human resources, transportation and logistics, research and development, receivables and payables, and (of course) computing and telecommunications each have needs. Unless managers are careful, the hypercommunications strategic process can lead to turf wars and infighting in large firms. For smaller firms without distinct departments, a lopsided strategy can still harm specific functions. Another part of this objective is to help hypercommunications carriers understand the geographical diversity and potential profitability of serving agribusinesses.

The usefulness mentioned in the fifth objective depends on the needs identified through the fourth objective. Importantly, the usefulness also depends on the sixth objective because agribusinesses will function differently because of information technologies since agricultural input and output markets are themselves altered by hypercommunications. Cost is also linked to the changes in hypercommunications market structure mentioned next in objective six. The operative term in this objective is "real world". This research is designed to produce hypercommunication solutions (with an idea of the economic costs and benefits involved) that are directly applicable to Florida agribusiness needs.

As agribusinesses purchase hypercommunications inputs from a fast-changing market where computer and telephone networks are converging, there are enormous implications on the profit maximizing quantity of hypercommunications to be bought, depending on the competitiveness of the hypercommunications market. Hypercommunications is often characterized as a decreasing cost industry in which an increasing number of competing services are sold based on technologies that offer increasing returns to scale and size. Yet, the number of hypercommunications firms is falling with frequent merger announcements. In many cases, only one or two firms serve a particular local marketplace, so that an agribusiness may have few competitive choices when buying services. This research will examine these apparent tradeoffs.

Hypercommunications can help agribusinesses sell output directly to the public to achieve a degree of product differentiation and provide convenient ways around traditional middlemen. The same is true for input purchases. This reality is dramatically transforming other industries ranging from travel agents to stock brokerages. This objective applies the experiences from other industries to examine the transformation in agriculture. Examples range from honey producers with e-commerce websites to sophisticated CTI call centers selling the wares of gift fruit stands or greenhouses. In other cases, farms and ranches have created new profit centers such as u-pick fields and agri-tourism destinations such as guest ranches and farm bed and breakfasts. Such ideas can actually help marginal producers remain in business by changing the product and the target market. However, an e-agribusiness must be able to use hypercommunications to attract and communicate with customers.

1.4.2 Economic Hypotheses

Hypotheses are conceived a priori, without certainty that they can be measured. Hypercommunication services, technologies, and market conditions are evolving so rapidly that there is little time series data available to statistically test economic hypotheses. Therefore, most hypotheses will not be statistically testable. Nonetheless, a contribution to the agribusiness field will still be produced. Pertinent literature will be reviewed, a hypercommunications technology and service taxonomy devised, and useful research objectives achieved.

Four hypotheses have important implications for agribusiness hypercommunications:

1. The roles of infrastructure development and hypercommunications adoption rates in future economic growth: today's low infrastructure growth (or lack of adoption) is tomorrow's decayed competitive position.
2. Regulatory barriers and unequal tax treatment of hypercommunications sub-industries: asymmetric regulation and taxation produce hypercommunications supply market inefficiencies that are, in turn, transmittable to agribusiness input and output markets.
3. Technologically induced time compression means shorter periodicities: decision periods are increasingly shorter time intervals. Rapid technological change (as transmitted through hypercommunications and information technology) means delay in adopting technology is more costly now than when decision periods were longer. Furthermore, while there is less time to adjust to new information and technologies, plant and animal growth cannot be sped up into shorter periodicities through information technologies.
4. Networks and information each have unique economic properties: costs and benefits of information networks (made easier through hypercommunications) are not explicitly priced in markets.

1.5.1 Scope

There are several dimensions to the scope of this research including place, market definition, academic field, time, and technical level. This study considers hypercommunications in general and then focuses on Florida agribusiness hypercommunications. Many such markets (which are just beginning to emerge from deregulation and infancy) consist of the general supply and demand for hypercommunication services and technologies. Services will be supplied by current and potentially available bandwidth delivery technologies ranging from traditional narrow-band telephone copper wiring to fiber optics and wireless. Also, the supply of hypercommunications includes services (ranging from local and long-distance telephone to Internet access and e-mail) and their current and potential availability to the agribusiness target market. Strengths and weaknesses of Florida's current hypercommunications infrastructure are emphasized.

On the demand side, the scope includes potential and current agribusiness hypercommunication needs and benefits. The options available to agribusiness will be discussed within the contexts of profit maximization and marketing strategy. The result, hopefully, will be useful extension-style "descriptive" research that is accessible but detailed enough to give theoretically oriented readers ideas for future work.

The scope within the field of agricultural economics covers topics from many sub-disciplines. Topics from the literature of these sub-domains of agricultural economics will help accurately describe the agribusiness hypercommunications situation in Florida generally and in particular topical areas. Table 1-2 shows the scope of thought from within agricultural economics to be brought to bear on the problem.

Table 1-2: Scope of agribusiness hypercommunications research within agricultural economics sub-disciplines.
 

Sub-Discipline	Topicality for Agribusiness Hypercommunications
Production economics	Hypercommunications as input, hypercommunications production.
Agricultural policy analysis	Analysis of taxation and regulation of hypercommunication services.
Transportation economics	Networking, flow-management models. Source of agribusiness communication needs.
Environmental economics	Source literature for network externalities, tragedy of the cyber commons.
Agricultural marketing	Source of agribusiness communication needs, locational theory, market definition and segmentation, market channels, derived demand, etc.
Agricultural finance	Sources of agribusiness communication needs, cash flow analysis of hypercommunications inputs, outputs, and infrastructure project analysis.
Land economics	Valuation of property because of accessibility of hypercommunications, fixity of assets argument.
Industrial organization	Market structure, conduct, and performance.
Agribusiness management	Internal and external communication needs and hypercommunications strategy development.
Rural development	Regional development implications based on telecommunications and geography.

 

The academic scope is even broader than the fields within agricultural economics listed in Table 1-2. A recent explosion in general economics sub-disciplines including regulatory economics, Internet economics, network economics, and research agendas in the economics of technical change has produced additional relevant literature. Business and agricultural marketing team together to produce an interesting literature overlap on topics like pioneer entry. Another theme is the study of innovation management in industries that are often dominated by the ubiquitous genius-entrepreneur, popularly described as a technical expert, but a novice in marketing, management, and finance. The general marketing literature is consulted in the areas of services marketing, entry advantage, the adoption process, and diffusion of innovation. The results will rest on a positive synergy of multi-disciplinary work. Such a wide academic scope helps the research overcome the lack of data and long-term experience in the exponentially growing hypercommunications industry. However, the width of the scope means that important work will have been missed in each field.

The research also has a geographical scope in terms of the rural infrastructure and its impact on Florida agribusiness hypercommunication needs. It is important to realize that the word rural and the word agriculture are not synonyms. Much agribusiness (especially the nursery-greenhouse industry and the transportation, processing, and retail functions) is situated in Florida's urban areas while less than 3 percent of Florida's rural residents are farmers [University of Florida, 1993, p.5]. Much of rural business activity is not agriculture-related. Hence, the communication needs of agriculture take place in urban, suburban, and rural locations.

The focus of the study is the period after the 1996 TCA (Telecommunications Act) was adopted. However, the history of hypercommunications and Florida agribusiness will prove a useful brake on the excesses of a forward-looking scope. As Taylor and Taylor mentioned in 1952:

Time and budget prevent the application of this research beyond Florida's borders. While considerable effort has been put into studying national and international trends in hypercommunications and agribusiness, no effort will be made to generalize results to U.S. or international agribusiness. Other limitations include a rapidly changing amount of technical and market information, lack of freely available proprietary information, and the necessity of providing confidentiality to background sources within both agribusiness and hypercommunications industries. The lack of time series and econometric data is hardly surprising in such a new and developing industry, but are limitations nonetheless.

1.5.2 Methodology

According to some philosophers of science, the scope of admissible inquiry is limited by demarcation criteria that separate intellectual activity into mutually exclusive classes of science and non-science [Popper, 1959]. Indeed, these demarcation criteria are behind one definition of methodology given by Fritz Machlup:

There are five general research methods: literature reviews, collection of data, reduction of those data into information used, examination of hypotheses, and reproducibility of results. Each general research method attempts to achieve one or more research objectives by considering the appropriate hypothesis.

A set of broad literature reviews is the first general research method, rather than an intensive review of one particular strain of literature around which a conceptual model is developed for rigorous statistical testing. Because of the relative newness of the subject area and the rapidity with which hypercommunications convergence, structural change, and technological changes are occurring, the set of reviews is mainly confined to surveys and seminal articles in several areas. Where the topic itself is so new that peer-reviewed literature is not yet established because of reviewing lag time, timeless economic foundations are applied to available working papers and other academic sources.

Data collection is a second general research method. Both primary and secondary data were collected. Most data were secondary (collected by someone else) with primary data consisting of confidential personal interviews or summaries resulting from the organization and sorting of secondary data. The data collected were of several kinds: factual, observational, geographical, or numerical. Factual data were generally secondary, including technical properties, details of services and technologies, current and planned availability of hypercommunication services throughout Florida, and scientific definitions. Observational data include characterizations given by firms and regulatory agencies, results of researchers, and the personal observation of hypercommunication services and technologies. Reviews of academic literature, other scientific publications, and other material used data that could best be characterized as factual and observational depending on the nature of the sources.

Almost all geographical data were gathered from secondary sources including franchise areas of over a thousand cable TV service areas, hundreds of local telephone exchanges, coverage zones of other service providers, and other important boundaries. Sources of these data were primarily from regulatory agencies and filings.

Secondary numerical data concerning prices, customers, and descriptive statistics of Florida agribusiness were gathered from many public and private sources. Asymmetric regulation has created an asymmetry of data about market services, prices, and service locations. There is enough public information regarding services provided by telephone monopolies to describe their operations in detail, but the public availability of pricing and other operational data for other hypercommunications firms varies.

Reduction of these data into economic generalizations for agribusinesses is the next general research method considered. Since the task of enumerating fast-changing hypercommunications supply is vast, it is impossible to provide a precise snapshot of services, prices, and technologies available in every locality. Instead, an overall economic analysis of data generally affecting agribusiness in all areas of Florida was made. For each service and technology, technical material, legislative and regulatory publications, industry sources, and trade publications were consulted to yield reasonable summaries. Reduction of data into specific suggestions for agribusinesses focused on summarizing and filtering a dense set of prices, service bundles, and hypercommunications suppliers into a summary.

The general method used to state and develop hypotheses is another concern. Here, the research method used is clearly closer to McCloskey's "rhetoric of economics" than to any formal logical construction of theorems, lemmas, and proofs. Specific research methods used to gather and reduce data supporting a particular conclusion will be given in context.

Finally, the reproducibility of these results is an important general research method. Typically, consultation of appropriate references is all that is needed to clear up a particular point. Such references may include reports or other information from web pages or other unpublished material. In these cases, a hard copy has been kept of all relevant documents and data. While some implications for agribusiness strategy are supported by proprietary sources that cannot be revealed, in no case is such evidence necessary or sufficient for the conclusions given. The recommendations will not hold identically forever because of the extreme volatility of hypercommunications. However, it is for this reason that implications have been kept objective and timeless as possible.

Many argue that the ultra-modern hypercommunications market does not play by outdated economic rules. It breaks them. Such critics of traditional economics contend that the boundless, exponential growth of unconventional hypercommunications is opposite the simplistic, ceteris paribus world of conventional economic thought. Bill Gates seems to support this view in his 1995 book The Road Ahead (meant literally to refer to the hypercommunications information superhighway) "You can't count on conventional wisdom. That only makes sense in conventional markets" [Gates, 1995, p.35]. The theory is that somehow the computer and hypercommunication markets are so different from other industries that economic theory is too simplistic and dated to apply. Rectification of this error forms one justification of this research.

Others argue that agriculture is doing quite well without high-speed Internet access, IP multicasting, and other hypercommunication services and technologies designed for the complexities of urban living and information-based businesses. Another justification of this research is to show that (in spite of opinions to the contrary) advanced hypercommunications is economically necessary for Florida agribusiness.

Another justification comes from possible contributions to hypercommunications economics from the domain of agricultural economics. Production economics has long been in the agricultural economist’s domain. In the information economy, populated with e-businesses, it would almost appear as though production economics was passé. After all, virtual space seemingly has no physical limits. However, production is essential to hypercommunications suppliers and customers alike because of the tradeoff between QOS (Quality of Service) and price. America Online before the Netscape and Time Warner acquisitions is one example. Federal authorities forced the company to run corrective advertising disclaimers in the mid-1990's that admit that the company oversold its modem lines and warn customers to expect busy signals. The profitability of an ISP or other bandwidth carrier depends on balancing "busy hour" customer usage loads with plant expansion and system downtime maintenance within certain known failure-success rates. Hypercommunications is a service with QOS easily measured with applied production technology models such as statistical multiplexing and Poisson distributions.

Agribusiness needs justify the research as well since hypercommunications are purchased inputs and sometimes provide direct revenues to agribusinesses. Web sites for Florida agribusinesses such as www.kingranch.com or www.southerngardens.com show agribusiness has a hypercommunications presence on the World Wide Web (WWW). However, the wide geographical communications footprint of many agricultural operations and their relative distance from urban information centers populated with "smart buildings" and fiber-optic backbones sentences many agribusinesses to poor communications networks compared to non-agricultural firms.

Just to survive, many agribusinesses will have to become e-agribusinesses depending on product mix, attitude towards innovation, actions of suppliers and customers, horizontal-vertical integration, and the information literacy of staff. Optimizing the quantity of hypercommunications a profit-maximizing firm should purchase from a set of competing sellers is not a simple problem. Whether the discussion centers on bandwidth or broadband, terminology and pricing are confusing and complicated, sometimes deliberately so. Economic research is justifiably brought in to simplify these complexities into prices, markets, and constraints, all three readily understood by agribusiness managers.

Because of the protracted time it takes to understand another technological transformation of agribusiness, decision-makers are slow to adopt untried, new hypercommunication solutions because of the inherent risk. This research may help identify strengths and weaknesses of business hypercommunication strategies, thus lowering the risk that comes from fear of the unknown.

Chapter 2 and Chapter 3 address why hypercommunications originated. The separate communication markets that are converging into a single hypercommunications market were born because of specific economic reasons. Chapter 2 defines (and gives economic conceptualizations to) three foundations of the information economy: communication, technology, and information. The roles played by data, information, and communication in creating economic growth and innovation are discussed along with some implications for agriculture.

Hypercommunications' place in the information economy also requires some understanding of the economics of information. A hypercommunications service contract between a buyer and seller requires a legal "meeting of minds". However, perfect knowledge of every underlying technical detail is not needed for such markets to function. For example, consumers and businesses are able to purchase new automobiles without understanding the physics of the engine. On the other hand, if one party to a transaction has consistently superior information, there is an opportunity to earn excess economic profit. Agribusinesses (like other businesses) often end up paying more than necessary when their unfamiliarity with hypercommunications is transparent to vendors. For a variety of reasons to be discussed in Chapter 2 and Chapter 3, poor decisions about hypercommunications can ricochet through an entire company, region, or industry. This is also true of good decisions. Note that with superior hypercommunication strategies, an agribusiness can gain advantages in its own agricultural markets, even if the firm has an absolute or relative informational disadvantage.

Chapter 2 will use several methods to support the discussion. First, economic conceptualizations of information, technology, hypercommunication, and communication will be developed. Second, a discussion of the economic implications of several popularly held views of the "unlimitedness" of hypercommunications will be developed. Third, literature reviews of economics papers will cover path-breaking results in the economics of information and technology. Ideas in the chapter are developed from endogenous growth literature, induced innovation hypothesis, evolutionary school and path dependent development literature. In addition to peer-reviewed literature, scholarly books, working papers available on the WWW, reports from think tanks and trade associations, and material from regulatory agencies help to develop the chapter.

Chapter 3 discusses the economic and technical foundations of hypercommunication networks. On the technical side, the fundamental properties of networks are discussed. This technical discussion gives an overview of the economic underpinnings of telephone and computer networks. Results from operations research and network engineering further the coverage, helping to show the technological basis behind the convergence of voice, data, and video networks into a single hypercommunication network. A solid technical understanding of networks is important to applying relevant literature from the economics of networks to the hypercommunications case. Investigation is made of claims from the "new" economics that economic theory is useless in an information economy that is based on computer networks. Some claims are pseudo-scientific, remarkably similar to the modified production economics and popularized idea of unlimited communications, discussed in Chapter 2. Other claims that a "new" "weightless" economy has replaced the conventional industrial one are based on recent strains from the network economics literature. One example concerns positive externalities of networking whereby a business can benefit from communication networks without having to pay the full costs of information or network development. The technical discussion proves vital to understanding what part of network economics applies to hypercommunication networks, as well as what proportion of new economics is new and what proportion is actually economics.

Several methods support the discussion in Chapter 3. First, the networking literature from telephone and computer engineering is brought to bear on the technical foundations of pre-hypercommunication networking. The multi-disciplinary operations research literature is seen as the modus operandi through which voice and data networks are converging into a hypercommunication network. Throughout the technical discussion, the engineering objectives and technological constraints of many optimization models involved in hypercommunication networks are presented. Third, literature reviews develop the concept of network externalities and relate it to the role played by information networks as catalysts of the information economy. Source material is not restricted to peer-reviewed literature in the chapter. In many cases, working papers or industry white papers prove to be helpful.

If the information economy is the why behind hypercommunications and their necessity in agriculture, then more must be known about what hypercommunication services and technologies are. Chapter 3 presents technical and economic details about hypercommunication networks as it covers why hypercommunications drive the information economy. Chapter 4 expands on this foundation to create a technical introduction to hypercommunication services and technologies. Here, more detail is presented on hypercommunication sub-markets: services ranging from telephony to Internet access along with carrier and content technologies.

High technology creates new kinds of services of interest to agribusiness, putting others within budgetary reach, as hypercommunications prices fall and newly deregulated markets become more competitive. However, hypercommunications has economic constraints beyond short run accounting costs. Distance still constrains communications, but (thanks especially to packet switching) less than it did at one time.

Businesses face another important hypercommunications constraint: bandwidth. Bill Gates gives a simple definition of bandwidth as " . . . a measure of the number of bits that can be moved through a circuit in a second." [Gates, 1995, p. 31]. Bandwidth (or capacity) constrains the amount of information that can be sent or received. No business advantage can be obtained if particular location has insufficient infrastructure capacity or hypercommunication services are not affordably offered.

Several research methods support the development of Chapter 4. First, numerous technical sources (articles, texts, white papers, and standards) were consulted to provide an overview of the most important hypercommunication technologies and services. Additional understanding is acquired through review of trade publications and by informal discussions with industry sources. Where possible, deployment of services was also examined firsthand: business customers and hypercommunications suppliers were asked about their experiences and expectations. Material was gathered from websites of standards groups, technology manufacturers, service providers, and regulatory agencies.

Chapter 5 discusses the how and where of hypercommunications infrastructure and convergence. Deregulation, re-regulation, and other policy concerns such as universal access and service taxation are important to where and how hypercommunication services will be offered. Convergence and infrastructure development are extremely important to agriculture because the rate at which they occur is markedly different between rural and urban areas, or among regions of the state. Re-regulation, taxation, and other policies are meant to speed up the development of infrastructure in markets that have been missed by the uneven pace of competition. The current development pattern of Florida's hypercommunications infrastructure helps answer when agribusinesses can expect particular services to be widely available. Federal, state, and local governments have a variety of policy mechanisms designed to ensure rough parity among geographic locations in Florida. However, the regulations themselves can often lead to barriers to entry, service, and competition.

 

The development of Chapter 5 was based on several research methods. Review of academic literature provided a basic conceptual foundation. Policy options were considered using economic literature as a foundation along with regulatory staff reports and rulings, industry comments, texts, and trade press articles. A simple conceptual model of hypercommunications pricing and taxation is also introduced.

Chapter 6 covers the unique hypercommunication needs of agribusiness demanders. The main question to be considered is "How come" a specific agribusiness should employ hypercommunications. From the point of view of agribusiness, there is a derived demand for hypercommunication services, based upon profit maximization, cost minimization, or other goals of the firm. Emerging new technologies have spawned concepts such as e-agribusiness, website design, and Internet promotion. These concepts relate to unique communication needs within categories of agribusinesses that hinge on the identification of who needs hypercommunications the most (among agribusinesses and agricultural sub-sectors).

Importantly, the impact of high tech hypercommunications has important effects outside hypercommunication markets. Hypercommunication services are more than ordinary inputs and outputs. Information obtained by the firm and exchanged within it can profoundly affect input and output markets for many goods and services, including agricultural products and services. Hence, the pricing and competitiveness of Florida's hypercommunication markets have important interaction effects on Florida's agribusiness input and output markets.

The word markets is plural for two reasons that are covered in Chapter 6. First, there are many hypercommunications service markets: local telephone, long-distance telephone, Internet access, wireless telephone, and computer networking are but a few. Bundles from these individual sub-markets will eventually converge into one hypercommunications service market. Second, a different hypercommunications marketplace exists for thousands of specific locations in both urban and rural Florida. Every city, county, local telephone exchange, local cable TV franchise, and wireless service area (and all combinations) are examples of such market boundaries.

There are two chief ways hypercommunications improve agribusiness profits and growth. First, networked hypercommunications can cut the costs of supervision, control, and sales, while simultaneously allowing firms to operate on larger scales or wider scopes. Such results come from changes in the firm's front office (marketing and customer service) and back office (administration and manufacturing) technologies.

Second, information gathered through hypercommunications can change front or back office operations through technology spillovers. Technology spillovers occur when new knowledge is obtained directly and indirectly through hypercommunications, encouraging innovation throughout the firm. Innovation may be from product and systems development (such as a new invention or process that enables increased production while cutting costs or a new idea that frees resources allowing production of new items). Alternatively, the direct innovations may include the creation of information sales or other services. Hypercommunications can also create indirect innovation when new ideas help land, labor, capital, and management become better synchronized and more efficiently used.

The methods used to develop Chapter 6 are based on the extent and challenges of Florida's agribusiness market. Trade sources and secondary numerical, observational, and geographical data characterize the unique hypercommunication needs of agribusinesses in Florida.

Chapter 7 applies the topics beneath it in the Figure 1-1 pyramid to recommend specific Florida hypercommunication markets and agribusiness strategies. The next question is "How much" will hypercommunications cost. Actions of both hypercommunication suppliers and agribusiness demanders are based on managerial economics, production economics, marketing strategy, and the management of innovation. Supplier actions also depend on the number and size of firms, the conduct and performance of industry players, and regulation. Leading and up-and-coming service providers are identified in the context of local and regional service availability to help answer "From whom?" agribusinesses should buy hypercommunications.

Strategic implications for agribusinesses of hypercommunications will try to follow three maxims to produce useful recommendations. First, everyone is different and every place is different. A multi-million dollar Palm Beach county nursery has different needs and opportunities than a Jackson county peanut grower or a Miami-Dade county vegetable exporter. Therefore, most recommendations will be general and not applicable to every location or every firm. Second, strategic implications will be simple enough to avoid getting lost in technical detail, but broad enough to show the exciting, inter-related, and unpredictable nature of hypercommunications. For example, the choice of a particular telephone system or long-distance carrier can make other hypercommunication services cost more. Finally, hypercommunications are changing rapidly, increasing in complexity. No strategy can possibly keep up. However, specific implications from the economics of hypercommunications help to produce strategies that are resistant to short run change.

Chapter 7 uses numerical and geographical hypercommunication supplier information concerning hypercommunications infrastructure and pricing. Trade sources and secondary data were used to summarize leading service providers, pricing, and regional infrastructure problems in Florida. Specific recommendations were developed for agribusiness hypercommunications based on a fusion of commonly reported business experience, the conceptual pricing model from Chapter 5, and the unique needs identified in Chapter 6.

Chapter 7 contains a decision tree to provide direction for agribusiness communications decisions. The tree emphasizes how decisions differ by agribusiness size, type, and range of fundamental characteristics found in agribusiness. While agriculture's uniqueness calls for unique sector-wide hypercommunication strategies, sub-sectors of agriculture also have unique needs that call for specialized strategies. Conclusions round out the study at the chapter's end.