Technology - November 2000

Nevada’s High-Tech Sector

Building a New Nevada

by Richard Fitzpatrick

The high-speed growth of Nevada’s economy has lasted so long that it has become a way of life. We’ve all nearly grown numb to the superlatives: the "fastest growing" this and the "biggest" that. However, there is a whole new segment of our economy that is emerging and setting its own records - the burgeoning community of Internet and information technology companies.

The Internet Business Alliance of Nevada (IBAN) has identified more than 500 firms statewide whose primary business is within the Internet. This is not counting an established store that also sells its products via a Web site; but, rather, companies whose principal business is involved with Internet commerce. In terms of Web sites, Nevada has more registered domain names per capita than any other state in the country, except for California. According to the most recent files tabulated by Network Solutions, 78,325 separate and unique Web sites are registered in Nevada.

The state’s high-tech businesses are concentrated in Las Vegas, Henderson and Reno, but they can also be found in nearly every rural community. When high-speed fiber-optic service is available in our rural areas, an even greater upsurge of growth can be expected there. A fiber line now being built to connect Sacramento and Salt Lake City is providing the ability to access this new technology to people in many Northern Nevada counties. A route being planned by Sierra Touch America, which will provide a direct fiber-optic connection between Reno and Las Vegas, will, along the way, create the opportunity for businesses in Nye County to leapfrog into the 21^st  century with state-of-the-art telecommunications.

The Web itself is growing at an astonishing rate. There are now nearly 2 billion unique, publicly available Web pages, an 88 percent increase from 1998. This suggests 1.9 million Web pages are created each day. By late in 2002, it is projected that the total will hit 8 billion pages, exceeding the world’s population.

Last year, information technology companies accounted for an estimated one-third of U.S. economic growth, driving up salaries and employment. Nevada provides the nation’s optimal climate for growing a technology business. High-tech companies are choosing to locate here where taxes, bureaucracy and clouds are rare, and innovation, creativity and risk-taking are encouraged and rewarded. Unfortunately, this visible success provides irresistible bait for many politicians and tax collectors. Their desire to regulate it, manipulate it and tax it can put the new economy at risk.

During the past couple of months, these issues have been the topic of heated debate in California, where the legislature passed a measure to significantly expand collection of taxes on Internet sales. Governor Gray Davis vetoed the bill; however, its proponents have pledged to come back with another version after the first of the year. On the surface, the tax increase seemed appealing. It was projected to give the state $184 million in additional sales tax revenue the first year, alone. "Think of all the good things the state could do with this money!" its supporters said. What they ignored - but Governor Davis saw - was the documentation that it could also cause the loss of more than 45,000 jobs in 2001. A study by the Pacific Research Center concluded, "If Internet sales are taxed more broadly, more than 100,000 California jobs could be permanently destroyed by 2002. And, even under the highest Internet sales projections, taxing the Internet will generate less than one-half percent of the state’s total tax revenue."

Nevada’s technology industry is not as firmly rooted as California’s. It’s reasonable to assume that it would be even more vulnerable to such taxation. Taxing and over-regulating the proverbial goose that lays the golden eggs would be a mistake that would cost Nevada dearly. As our lawmakers begin to prepare their agenda for the new legislative session, we hope they will listen to Nevada's information technology, networking, communications, and e-commerce businesses as well as their employees, suppliers and investors - the creative, talented individualists who are building a New Nevada.

Richard Fitzpatrick
Richard Fitzpatrick is President/C.E.O. of the Internet Business Alliance of Nevada (IBAN), a non-profit association of information technology companies.