Universidade Técnica de Lisboa Instituto Superior Técnico

Digital Cities and the Challenges for a Knowledge-Based View of the Territory: Evidence from Portugal
Jose Luiz de Araujo Moutinho Neto Licenciado em Biologia e Arquitectura

Dissertação para obtenção do Grau de Mestre em Engenharia e Gestão de Tecnologia

Orientador: Doutor Manuel Frederico Tojal de Valsassina Heitor, Professor Catedrático, do Instituto Superior Técnico, da Universidade Técnica de Lisboa (Orientador científico) Co-orientador: Doutor Rui Manuel Leitão da Silva Santos, Professor Auxiliar da Faculdade de Ciências Humanas, da Universidade Nova de Lisboa

Presidente: Doutor Manuel Frederico Tojal de Valsassina Heitor, Professor Catedrático, do Instituto Superior Técnico, da Universidade Técnica de Lisboa (Orientador científico) Vogal: Doutor Pedro Manuel Barbosa Veiga, Professor Catedrático da Faculdade de Ciências, da Universidade de Lisboa Vogal: Doutor Rui Miguel Loureiro Nobre Baptista, Professor Catedrático da Faculdade de Ciências, da Universidade de Lisboa Vogal: Doutor Rui Manuel Leitão da Silva Santos, Professor Auxiliar da Faculdade de Ciências Humanas, da Universidade Nova de Lisboa

12 de Abril de 2005

Abstract ............................................................................................................................... 3 Resumo ............................................................................................................................... 4 Acknowledgments............................................................................................................... 5 Chapter I – Introduction...................................................................................................... 6 The Scope of the Work: Cities and Knowledge Networks ........................................... 11 Early concepts of digital cities: Amsterdam and Kyoto ............................................... 18 Background: Building the information society in Europe ............................................ 21 Building the information society in Portugal................................................................ 35 Chapter II – Selected Case Studies in Portugal ................................................................ 45 C3ities Methodology ..................................................................................................... 46 The Digital Cities Program ........................................................................................... 49 Alentejo Digital............................................................................................................. 55 Aveiro Digital ............................................................................................................... 60 Trás-os-montes Digital.................................................................................................. 66 Bragança Digital ........................................................................................................... 69 Chapter III – Discussion and conclusions......................................................................... 72 Mobilizing the information society with digital cities and regions .............................. 72 Fostering knowledge networks ..................................................................................... 78 Conceptual framework.................................................................................................. 82 Public policies and the social and cultural shaping of ICTs ......................................... 86 References....................................................................................................................... 102


The development of case studies in selected Portuguese cities and regions which have been engaged in “digital city and region” projects is considered in this dissertation in a way to discuss main challenges, and opportunities, for mobilizing the information society in Portugal. This dissertation grew out of the interest of understanding the processes of innovation and technology diffusion at a territorial level. It is argued that knowledge networks have the potential to attract people, energize communities and make both public administration and markets more effective, but they require infrastructures, incentives and adequate institutional frameworks. The analysis builds on the co-evolution of regional development and the endogenous process of technical change, namely in terms of the diffusion of information and communication technologies (ICTs). It is argued that the territory is a basic infrastructure that justifies and invites for the construction of several layers of information, but above all for communication infrastructures and digital contents well arranged with local contexts. It is suggested that knowledge networks as particular forms of communities of practice, interest or proximity are important drivers of larger communities of users.


O desenvolvimento de casos de estudo seleccionados sobre projectos portugueses de cidades e regiões são abordados nesta dissertação com o objectivo de discutir os desafios e as oportunidades para a mobilização da sociedade da informação em Portugal. Estes casos de estudo são analisados na perspectiva das políticas de desenvolvimento da sociedade da informação. Propõe-se que as redes de conhecimento têm o potencial para atrair pessoas, energizar comunidades e aumentar a eficácia dos mercados e da administração pública, mas requerem infra-estruturas, incentives e enquadramentos institucionais adequados. A análise é construída a partir da co-evolução entre o desenvolvimento regional e os processos endógenos de evolução tecnológica, nomeadamente em relação à difusão das tecnologias de informação e comunicação (TICs) no território. Os projectos apresentados mostram a necessidade de serem construídos sistemas interoperáveis e flexíveis que permitam o suporte a redes de conhecimento, as quais devem ser concebidas de forma holística, incorporando a mudança e o factor humano com o objectivo de promover a construção de comunidades de prática, interesse ou proximidade.


This dissertation would never been completed without the help of many people. My first acknowledgement goes to my family. All along this study, they shared my enthusiasm for studying and trying to better understand the world where we live. I’m also grateful to all the teachers of the Master program for providing information and sharing their knowledge with me, in particular I would like to express my appreciation to Rui Santos for his extraordinarily useful comments and criticisms. One very special word of gratitude goes to Manuel Heitor. Without his deep involvement in this project and continuous support during the last two years it would be literally impossible to finish both my Master program and this dissertation. I’m also deeply indebted to a large number of people directly involved in the Portuguese Digital Cities projects, namely, Lusitana Fonseca (Aveiro Digital), Armando Marques (Alentejo Digital), Rui Tocha (Centimfe – Marinha Grande), José Bulas Cruz, Arsénio Reis (Trás-os-montes Digital), José Adriano and João Paulo (Bragança Digital). They provided me with raw materials and insightful suggestions upon which I have build this dissertation. I also would like to thank Jaime Quesado and Pedro Martins from POSI for introducing me to the details of public funding and letting me work closely with the next generation of Portuguese Digital Cities. One last word is reserved for my extraordinary friends from the Master program: not only they helped me to survive the classes, but they made me feel 20 years younger.


Chapter I – Introduction
When I searched for “digital city” at www.yahoo.com on February 25th, 2004, the result was a list of about 805,000 links. I could add another 160,000 links for “virtual city” or 517,000 for “virtual community”. The ever growing number of information published on the Internet confirms the increasing interest on the co-evolution of territorial development, local community building and the diffusion of information and communication technologies (ICTs). Browsing through the results list, right on the top, I’m invited to visit AOL Digital City (www.digitalcity.com). This is a collection of city guides, privately owned by the biggest Internet Service Provider in the world, “delivering local entertainment, commerce, news, community resources, and personal interaction to residents and visitors in many cities across the USA”. More than 300 regions and metropolitan areas in 41 US states are covered. Number two on the list is Digital Bristol (www.digitalbristol.net), promoted by a public / private sector partnership led by Bristol City Council. It aims to “stimulate the provision of a sustainable and visually appealing Internet resource which represents the community that makes up the City of Bristol”, including local information, opportunities for community and individuals, free Webspace, training to local community groups, and the electronic provisioning of local government administrative services. These services include, for example, reporting abandoned vehicles for investigation and removal, reporting damaged or faulty street lighting for repair, paying council bills on-line through a secure service, searching catalogues of many records held by Bristol Record Office, filling application forms for council


taxes, housing registering, planning applications, searching the city wide library catalogue, and finding information about Bristol schools. Third on the results list, I find the link to the Digital City Kyoto Prototype (www.digitalcity.gr.jp/index-e.html), one of the most famous and well studied experiences of digital city projects, that includes, among other ideas, 2D scalable maps (KyotoSEARCH), 2.5D omnidirectional photorealistic images (TownDigitizing), and 3D VRML based models (FreeWalk) of the real city (Koda, 2003; Ishida, 2003). I will have the opportunity discuss that particular project further on in this dissertation. If I jump over a few redundant links to AOL’s Digital Cities (New York and Chicago), next on the list is Aruba Digital City (www.arubadigitalcity.com), with “detailed information about the island of Aruba”. Although the last updated information seems to be the carnival of 1999 and the election of Miss Aruba 1999, it gives a warm “welcome to Aruba Digital Community: a place to celebrate culture, network, share your thoughts, and make a friend”. Promoted by a local cybercafé, Café Internet NV, this community building website is “a distributor (and not a publisher) of content supplied by third parties and subscribers. [It] exercises no control over, and accepts no responsibility for the content of the information passing through Café Internet NV’s host computers, network hubs and points of presence”. Further down the list, number five on our counting, as long as I skip more redundant links to AOL’s city guides (Travel & Booking and MapQuest Maps), I can visit Kingston upon Hull Digital City (www.hullcc.gov.uk/digitalcity), a local e-government initiative that is “rapidly transforming [Hull] into a World Class Digital City. The City has its own telecommunications company, Kingston Communications, a world-class technology and infrastructure, and a strong commitment across the

private and public sectors to take maximum advantage of our unique position. [Their] vision is to become a world top ten information age city by 2005”. Hull is proud to be considered "the capital of broadband Britain". BBC is reported to be investing “25 million pounds in Kingston upon Hull to develop its new local digital service Vision". Not surprisingly, the first five results (Figures 1-6) correspond exactly to the most common approaches to the development of digital cities (Schuler, 2002). From

bottom-up five basic design patterns can be identified: (a) digital city as a highly wired territory (Hull Digital City); (b) community network (Aruba Digital City); (c) 3D or 2D representation of physical cities (Kyoto Digital City); (d) local government portal (Digital Bristol); and (e) commercial city guides (Digitalcity.com). While the first example concentrates on digital infrastructure, the other four are manifestations of different aspects of urban everyday life on the Internet. Recombinations as well as whole new patterns that emulate the vast diversity of real cities are also emerging. Building on case studies of selected Portuguese cities and regions which have been engaged “digital cities and regions” projects, this dissertation will go beyond the patterns above mentioned and it will discuss the main challenges and opportunities for mobilizing the information society in Europe, with emphasis for the conditions affecting Portugal. Moreover, it will also explore the convergence of

telecommunications and computers networks within the urban context as a new city infrastructure supporting everyday life and mobility.


Figure 1 – digitalcity.com

Figure 2 – Digital Bristol

Figure 3 – Kyoto Digital City Prototype List

Figure 4 - 3D Kyoto (Shijo Area)

Figure 5 - Aruba Digital City

Figure 6 – Kingston upon Hull Digital City

In the remaining of this chapter, I will first introduce the present the scope of the work. Then, I will quickly present the examples of Amsterdam Digital City and Kyoto Digital City. Probably, expressions like “digital city” will disappear over time, as it has happened with “industrial city” and “garden city”, but presently, it is important to


link these terms, considered here collectively as geography based knowledge networks, with possible scenarios for the future of our cities and countryside. The text follows with the discussion of some of the currents concepts of information society, namely in Europe, and provide a brief comparison between the different European member states early action plans and agendas for the development of the information society. There is one important reason to introduce European public policies in the discussion of digital cities from the very beginning: the mix of the first projects and initiatives in Portugal was somehow designed and entirely funded by the Portuguese Government following European policies with the help from European structural funds. With the benefit of hindsight, it is clear that to understand the context and the conditions for the development of the first Portuguese digital cities and regions it is necessary to frame in time and space the beliefs and constraints surrounding the Internet boom and its expected effects on economy, social behaviors and politics. I will close the introductory chapter presenting the research question and developing some hypothesis to frame the discussion of the research findings and results. In the second chapter, after introducing the methodology, called C3ITIES, I will present 4 selected case studies of Portuguese digital cities and regions: Alentejo Digital, Aveiro Digital, Bragança Digital and Trás-os-montes Digital. Three other cities (Marinha Grande, Guarda and Castelo Branco) were involved in the first phase of the Portuguese Digital Cities Program, but except for some very specific initiatives (e.g. the broadband connection for swapping CAD files among firms in the mouldingforming industry at Marinha Grande), empirical data wasn’t reliable and/or could not be obtained.

In the last chapter I will discuss the findings and present my conclusions. First, I will summarize and bring together the main areas covered in the dissertation and then present the final comments. They will include recommendations for future public policies as well as suggestions for futures work.

The Scope of the Work: Cities and Knowledge Networks
This dissertation grew out of the interest of understanding the processes of innovation and technology diffusion at a territorial level. As an architect, I’ve learned that, throughout the history of mankind, society and technologies co-evolve shaping, and being shaped by, the places and spaces where we live. The variety and intricacy of these recombination processes contribute profoundly to the current diversity of spatial structures and meanings of cities and countryside. Information and communication technologies (ICTs) afford new scenarios for territorial development and provide a new kind of networked infrastructure that will have a profound and lasting effect on patterns and shapes of urban areas. The analysis builds on the development of human and social contexts at a regional level and on the endogenous process of technical change, namely in terms of knowledge networks. The first generation digital cities have shown the need to build flexible and interoperable technological infrastructures, yet robust and user friendly, to support information exchange. Yet, new approaches seem to be needed to respond to the increasing complexity and heterogeneity of users’ expectations, technologies, and urban environments. In previous work (Heitor and Moutinho, 2004), digital cities were presented in terms of a knowledge-based view of the territory to foster institutionally organized

metropolitan systems of innovation (Fischer, Diez and Snickars, 2001), and competence building (Conceição, Heitor and Lundvall, 2003). Mobility technologies and urban development were also addressed in previous work (Conceição et. al, 2005) building on the work about mobile regions (Mc Knight et al., 2002). This dissertation mainly addresses public policies promoting digital cities as a mobilizer for the construction of the information society in Europe. It is argued that the territory is a basic infrastructure that justifies and invites for the construction of several layers of information about cities and regions were people live, visit or do business. Digital cities schemes may encourage the global legibility of the information architecture of the territory and promote broad and informed participation in the decision-making process of the future of its entire influence area and not only within city limits. Furthermore, Portuguese digital cities projects may become one of the basic building blocks for competence building and public appropriation of technologies in Portugal with the ultimate goal of attracting new communities of users and building the necessary infrastructure for connectivity. Community building and demand creation for digital services are two of the most important the critical factor for implementing digital cities, requiring proper incentives and institutional settings (Moutinho and Heitor, 2004). Although we are still in a very early and limited stage of what Mitchell (1995) called ‘cities of bits’, it is clear that it has become a “commonplace” to discuss the diffusion of knowledge, and the information society in general, in close association with the introduction and use of information and communication technologies (Mansell and Steinmueller, 2000; Castells, 2001). In this context, the European agenda for the Information Society aimed to achieve three broad objectives: (a) bringing every citizen, home and school, every business and administration, into the digital age and

online; (b) creating a digitally literate Europe, supported by an entrepreneurial culture ready to finance and develop new ideas; (c) ensuring the whole process is socially inclusive, builds consumer trust and strengthens social cohesion. (European Commission, 2000). The evidence calls for our attention for the critical role of public funding and the dynamic adaptation and development of the context necessary to facilitate digital cities. The scope of this work focus on a specific set of projects developed in Portugal between 1998 and 2000. Seven projects for the development of digital cities and regions were submitted to and approved by the Ministry of Science and Technology. Each one of the 7 projects included a broad range of loosely coupled initiatives associated with local electronic government, telemedicine, Internet access in schools, local economy (telework and e-commerce), and accessibility for citizens with special needs (Veiga, 2005). As we could hint from the examples mentioned in the first section, there is not a unified understanding about digital cities. The first Portuguese digital cities projects were also much diversified. Perhaps, their diverse interpretations reflect the relative infancy of this concept. Innovations are often fuzzy at the beginning, and it takes a while before they establish their own evolutionary paths from preexisting ones or simply fade out. Maybe instead, these varied readings about digital cities simply mirror the different views about real cities and they will still coexist for a long time. Architects, urban planners, engineers, economists, politicians, residents, businessmen, historians, philosophers, sociologists and geographers, each one of them has a different perspective, sometimes conflicting with others, about the urban phenomenon. But I assume that most of them would agree that technology has always transformed

somehow urban forms and meanings through history. Sewage systems, motorways, electric grids, subways, water plumbing, skyscrapers, and now telecommunication networks have shaped and have been concurrently shaped by urban processes. My point of view is that the rapid co-evolution of cities and technologies blur all categorizations, therefore, as innovations become embedded in the routine of urban life, occasionally even invisible to city dweller, concepts like “digital cities”, as “industrial cities” or “garden cities” before that, tend to be unfairly consigned to oblivion. Mobilization is simultaneously driver and outcome when building the information society. Cities, and in our case digital cities, are places of dense and energized crowding, using Kostof’s (1991) image about the urban processes, that can provide an adequate environment for creativity and innovation, knowledge spillovers, through intensive virtual or face-to-face contacts and word-of-mouth (O’Sullivan, 2003). Cities are complex structures that come in all sizes, shapes and configurations. Their varied forms and functions are the outcome of several urban processes – physical, social, institutional and economical – that dynamically contribute across time and space to create dense and heterogeneous concentrations of population and buildings in particular places. Consequently, there are different perspectives to read the making or the evolution of the urban life. Architects and urban planners usually concentrate on form, patterns, structure and relationships among the various components, living and non-living, of a city (Kostof , 1991). Engineers mostly give attention to infrastructures, utilities and artefacts that make cities work. Urban economists prefer to analyze the spatial aspects of decision making of firms and households (O’Sullivan, 2003). Sociologists and geographers are

inclined towards studying interactions among people and communities within the urban environment and their effect in the production of the urban spaces and places (Castells, 1898; Valentine, 2001). Most of these perspectives tend to enhance one or another aspect of urban life to explain or to predict, at least partially, the outcome of planning, implementation or living strategies. At one point however, most of the perspectives converge: cities are currently the foci of creativity and innovation that continuously co-evolve with the economic, social, cultural and political society, institutions and technology.

Figure 7 – Evolution of world’s urban and rural populations; Source: United Nations, 2002.

For the first time in human history, the urban population is matching the rural population (Figure 7). While in 1950, 29.76% of the world population lived in urban areas, this value rose noticeably to 37.95% in 1975, 47.28% in 2000, and is expected to reach 60.22% in 2030. The total urban population will actually grow more than six fold from 0.74 billion in 1950 to 4.98 billion in 2030, when about four fifths of city dwellers will reside in less developed regions. In fact, most of the expected world

population increase from 2000 to 2030, which is expected to amount 2.21 billion new inhabitants, will be concentrated in urban areas, namely on less developed regions, where it will exceed 2 billion new residents. For the same period, the average annual growth rate of 1.85% for population in urban areas will almost double the annual rate for the total population of the world (1.04%). Also, seventeen megacities, exceeding 10 million inhabitants each, can be found in the world today (United Nations, 2002).The image of the city has evolved accordingly, from socially coherent and spatially circumscribed entities to complex juxtaposition of boundless urban processes (Amin, 2002). In his seminal book, Peter Hall (2002) renders some theoretical visions of the urban phenomenon starting with the influential ideas of Ebenezer Howard (Garden Cities) and Patrick Guedes (Regional City) at the turn of the nineteenth century and developing contemporary views, including: Corbusier’s cities of towers; autonomous communities; automobile suburbs; institutionalized land-use planning and its counterpart; and the city as a machine of wealth creation. But at the end of the twentieth century, a new paradigm has emerged with Castells’ “Informational City” (1989). As pointed out by Susser (2002), “the restructuring of capitalism involved, first the concentration of knowledge as the source of profit and, secondly, the export of production to increase profitability”, requiring “a flexible organization of manufacturing and greatly increased subcontracting, so that, as a consequence, horizontal, loosely connected networks directed by elite experts at the centre replaced the vertical integration of the industrial era”. While these visions enhance one or another aspect of the urban daily life, most agree that cities are characterized by dense and heterogeneous singularities of people and buildings in a specific place, or as proposed by Spiro Kostof (1991), “cities are places where a certain energized crowding of people takes place”. And he adds that a city

has “nothing to do with absolute size or absolute numbers: it has to do with settlement density”. This density, among other possibilities, increases the opportunities for social networking (Breheny, 2001), one of the main enablers of localized innovation and entrepreneurship. As pointed out by Zook (2001), “despite the space transcending ability of Internet technology, […] the commercial Internet clustered in a few regions within the United States during the period from 1994 to 2000. The existence of these agglomerations runs counter to expectations that the Internet would bring the “end of geography”.

Figure 8 – Percentage of population living in urban areas for Europe and Portugal for the period between 1950-2030 (estimates since 1991); Source: (United Nations, 2002).

Portugal explosive urbanization rate, as indicated in Figure 8, linked to the late development of urban networked infrastructures, e.g. information and

telecommunication infrastructures, may represent an interesting case study to pursuit. The current Portuguese urban growth pattern of simultaneous metropolization and overall reduction of population density in urban areas has a significant effect on the economies of scale of telecommunication services based on cable networks or on fiber,

requiring considerable capital investments. Therefore, competitive access to telecommunication services in these areas is likely to be only provided through the use of unbundled network elements of the incumbent carrier(s). New business models and innovative regulation frameworks associated with emerging mobile technologies can play a disruptive role in pricing and may accelerate the diffusion of new products and services in the telecommunication market (McKnight, Vaaler and Katz 2002).

Early concepts of digital cities: Amsterdam and Kyoto
The convergence of fresh interpretations of the urban processes and the new promises of ICTs, particularly those related with virtual communities and virtual reality, created the necessary background for the development of a novel imagining of the contemporary city: the “digital city”. This original concept proposes “to build an arena in which people in regional communities can interact and share knowledge, experiences, and mutual interests. Digital cities integrate urban information (both achievable and real time) and create public spaces on the Internet for people living/visiting the cities” (Ishida, 2002). In this dissertation I will extend this definition and present a more comprehensive definition of digital citiy. The first known “digital city” was based on Amsterdam’s well studied community network experiment in 1994 (DDS – De Digitale Stad), based on the FreeNets and Community Networks in the USA and in Canada (see Figure 9). The goal was to provide an electronic space for political discussion and participation in the ten weeks that preceded local elections. The initial success (10,000 registered users in the first weeks) quickly transformed a “grassroots and subsidized initiative [...] into a nonsubsidized not-for-profit organization, with a turnover (in 1997) of about $ 500,000, and employing (in 1998) more than 25 persons (all together filling 17 full time

positions)”. The revenues, at that period, came mainly from services like consulting, hosting, sponsorships, and advertisement. Despite the increasing number of registered users (150,000 by January 2001), the demand for these services declined steadily due to, among other factors, the ever growing competition, and, consequently, the sustainability was threatened. The lack of funding prevented some strategic functional or technological upgrades and contributed decisively for the downward spiral that forced some of its most important assets to be either discontinued (content production) or sold (school portal, Internet access and Web hosting services) until the DDS became a stripped-down commercial Internet Service Provider in 2001 (http://www.dds.nl/). As brought out by van den Besselaar (2000), “…similar initiatives were undertaken in the Netherlands. Some of these failed, while others remained much smaller, less developed, and less visible. This indicates that the success of the DDS was highly contextual, based on timing, and on the local Amsterdam cultural setting” (see Besselaar, Melis and Beckers, 2000).

Figure 9 – Example of an interface of Amsterdam Digital City. Source: (Besselaar, 2000)


Another very well known early experience was based in the “Kyoto Digital City” project, as launched by NTT and Kyoto University in 1998 aiming to “create nextgeneration systems for digital communities and to explore basic research issues” (Ishida, 2004). A three-layered model, strongly connected with the real city, was proposed and consisted of three layers, namely: (a) information layer (real-time data acquisition and databases); (b) interface layer (2D maps and 3D virtual reality); and (c) interaction layer (community building and communication). The first phase of the Kyoto Digital City was developed and housed in the NTT Open Laboratory, aiming to “promote research without restraint”, and where the subjects “were discovered while doing it, the research papers were published afterwards” and the “norm was “move then think”. Nevertheless, as clearly noted by Ishida (2004), this open environment failed to solve institutional issues, including research ownership, and “this misunderstanding terminated the project, which was initially supposed to run for three years, after one and a half years” (see Figure 10). Then, the Digital City Kyoto Experimentation Forum was founded in 1999, including universities, local authorities, other organizations and individuals. Its web presence (http://www.digitalcity.gr.jp/indexe.html), the “Digital City Kyoto Prototype”, provided 34 services divided in four categories (information, community, showroom, and laboratory), including personal websites, a georeferenced city guide (i.e., GeoLink, with more than 5,000 links) and a virtual representation of shopping streets (i.e., 3D Kyoto). After two years and only 150,000 accesses, this second phase ended in September 2001 (see also Ishida, Aurigi and Yasuoka, 2004).


Figure 10 - Example of an interface of Kyoto Digital City. Source: (Ishida, 2002)

The two projects mentioned above has influenced over the last decade many city developments and still guide “digital city” projects over the world. However, context creation, mobilization, sustainability and adequate organizational and institutional frameworks seem to be critical while designing, implementing and exploiting digital cities (Moutinho and Heitor, 2004, 2005) and have raised the process of looking for best practices. The question is that analysis has shown us to reject the notion of the “one best way” and that networked places need to be designed holistically, coping with change and continuously assessed in order to accommodate humanity.

Background: Building the information society in Europe
To understand the circumstances that gave birth to the Portuguese Digital Cities Program in 1998, it is necessary to follow a series of events and ideas that include a

variety of socio-technical aspects included in several political strategies, agendas and action plans. The development of the Information Society in Europe – or as currently preferred in the European Union, the Knowledge-based Society – must be understood, as pointed out by Barry (2001), in the context of an “era obsessed by a series of interconnected technological problems: with the maintenance of technological competitiveness and the improvement of research productivity; with the need to patent and protect intellectual property; with the dangers posed by the unintended consequences of technological development; with the public understanding of science; with the prospects of e-commerce and electronic democracy; and with the need for lifelong learning in the face of rapid technical change”. There are several interpretations and connotations for the term “Information Society” since it was coined by Yoneji Masuda in a futurology study published in 1972 entitled "The Plan for Information Society: A national goal toward the year 2000” (Finneman, 1999). Therefore, it is important to present at this point the exact meaning used in this dissertation. But first, some of the most common definitions will be discussed. Webster (2002) identifies 5 categories of definitions of an information society: technological, economic, occupational, spatial and cultural. About the first category, he points out that “is not that this is unavoidably technologically determinist – in that technology is regarded as the prime social dynamic – and as such an oversimplification of processes of change. It most certainly is this, but more important is that it relegates into an entirely separate division social, economic and political dimensions of technological innovation”. The economic approach considers that the explosive growth in information activities will quantitatively surpass other economic

activities and in a certain point of time “we may speak of an information society. [Nonetheless,] behind the weighty statistical tables that are resonant of objective demonstration, there is a great deal of hidden interpretation and value judgment as to construct categories and what to include and exclude from the information sector”. The occupational approach is associated with the “decline of manufacturing employment and the rise of the service sector employment […] interpreted as the loss of manual jobs and its replacement with white-collar work. The spatial definition derives from the “emphasis on information networks which connect locations and in consequence can have profound effects on the organization of time and space”. This perspective is implicit in most of the digital cities projects. The dialects of “space of places” and “space of flows” (Castells, 2000), where the constraints of time and space were challenged, would open up the path for the global networked society. About the last category, Webster argues, that “from the pattern of our everyday lives, that there has been an extraordinary in the information in social circulation” creating an “information environment” and a “media-laden society”. In fact, it is always possible to add other perspectives, for example, political (Mattelart, 2001), sociological (Katz and Rice, 2002; Wellman and Haythornthwaite, 2002) or even skeptical views about the information age (May, 2002). I will consider the definition of information society an open issue in this dissertation and use a very broad approach to accept as useful most of the meanings and categorizations above mentioned.


European Perspectives on the Information Society
The development of the information society in Europe follows a dual strategy. While member states are stimulated to address national challenges and opportunities with local and/or regional initiatives in a bottom-up approach, the European Commission plays an important role defining top-down strategies, policies and standards for the European Union as a whole (Dearnley and Feather, 2001). Therefore, to fully realize the varied aspects of the information society in Europe, it is important to follow both national and European paths, namely by revising the strategic documents that establish visions, goals, demonstration projects and respective evaluation frameworks. At the Lisbon Summit in March 2000, European governments agreed that Europe should become “the most competitive knowledge-based society in the world by 2010” (European Commission, 2002). The push towards the institutional development of the Information Society in Europe started nonetheless much earlier, in 1993, when the European Commission published a White Paper on “Growth, competitiveness, and employment: The challenges and ways forward into the 21st century”. It considered that: “Throughout the world production systems, methods of organizing work and consumption patterns are undergoing changes which will have longterm effects comparable with the first industrial revolution. This is the result of the development of information and communications technologies. Digital technologies, in particular, have made it possible to combine transmission of information, sound, text and images in a single high-performance system. This will have far-reaching effects on


production structures and methods. It will spell changes in the way companies are organized, in managers' responsibilities and in relations with workers. Small businesses will benefit most: the new communication services will enable them to make savings of, on average, 4% of their turnover; they will also be very much in evidence on the major markets opening up. Working conditions will be transformed by the greater flexibility possible with regard to working hours, the place of work itself (teleworking) and, inevitably, terms of contract and pay systems. According to some estimates, six million Americans already work at home. New data transmission systems will enable companies to globalize their activities and strategies, forging forms of partnership and cooperation on a scale never possible before. The need for physical mobility will be reduced by the availability of products and services combining the advantages of mass production with consumers' specific, and even individual, requirements. A new, far richer range of novel services in the form of information, access to databases, audiovisual, cultural and leisure facilities will be opened up to everyone. More specifically, it will be possible to gain access to general information directly, without any complicated technology, via a portable computer connected, if need be, to a television set or telephone”. The white paper reflected the belief that ICTs, when stimulated by political initiatives, adequate incentives and institutional frameworks, could alone help fighting unemployment and the social divide. It was followed by another important document, the “Bangemann Report”, prepared in 1994 for the European Council by Members of the High-Level Group on the Information Society, urged:

“The European Union to put its faith in market mechanisms as the motive power to carry us into the Information Age, that actions must be taken at the European level and by Member States to strike down entrenched positions which put Europe at a competitive disadvantage: 1. it means fostering an entrepreneurial mentality to enable the emergence of new dynamic sectors of the economy 2. it means developing a common regulatory approach to bring forth a competitive, Europe-wide, market for information services 3. it does not mean more public money, financial assistance, subsidies, dirigisme, or protectionism”. The Report reckoned that “throughout the world, information and communications technologies are generating a new industrial revolution already as significant and farreaching as those of the past. It is a revolution based on information, itself the expression of human knowledge. Technological progress now enables us to process, store, retrieve and communicate information in whatever form it may take - oral, written or visual - unconstrained by distance, time and volume. This revolution adds huge new capacities to human intelligence and constitutes a resource which changes way we work together and the way we live together”. It focused on strengthening market mechanisms and creating the necessary regulatory framework to foster entrepreneurship and fair competitiveness in the information and technology industries. However, that would “NOT mean more public money, financial assistance, subsidies, dirigisme, or protectionism”, but “concrete initiatives based on a partnership between the private and public sectors to carry Europe forward into the information society”.


It was particularly significant for digital cities projects in Portugal the areas of application considered in the report as the building blocks of the information society: teleworking (more jobs, new jobs, for a mobile society), distance learning (life long learning for a changing society), network for Universities and research centres (networking Europe's brain power), telematic services for SMEs (relaunching a main engine for growth and employment in Europe), road traffic management (electronic roads for better quality of life), air traffic control (an electronic airway for Europe), health care networks (less costly and more effective healthcare systems for Europe's citizens), electronic tendering (more effective administration at lower cost), public administration networks (better government, cheaper government) and city information highways (bringing the information society into the home). After the report, the European Council, during its meeting at Corfu in 1994, acknowledge the need for “permanent co-ordination instrument to ensure that the various parties involved - public and private - are working along the same lines. This co-ordination instrument, to be set up as soon as possible, should be based on the appointment in each Member State of a person responsible at ministerial level for coordinating all aspects of the subject (political, financial and regulatory) with a view inter alia to ensuring a co-ordinated approach in the Council”. Gibbs et al. (2000) pointed out that “these themes were elaborated upon in the action plan from the European Commission, “Europe’s Way to the Information Society”, which summarized information society initiatives already under way, or planned, by the commission. Developing a new regulatory framework received most attention, while problems of regional cohesion and balance were only treated in brief. […] The Commission launched a study of the impacts and benefits of the information society

for regional, economic and social cohesion. Besides this, only pilot projects and specific networks were envisaged in cooperation with cities and regions”. The action plan (European Commission, 1994) covered four areas: 1. “the regulatory and legal framework, for which new proposals will be made, in particular regarding telecommunications infrastructure and services, on the protection of intellectual property rights and of privacy, on media concentration, as well as the updating of the "rules of the game" for the free movement of TV broadcast in the Community; 2. networks, basic services, applications, and content, where there is a need to bring the parties concerned together in order to stimulate the development of applications in the areas proposed by the High Level Group and endorsed by the European Council; 3. social, societal and cultural aspects, including the linguistic and cultural dimensions of the information society stressed by the European Council; and 4. promotion of the information society in order to increase public awareness and support. The Commission invites the Council and the European Parliament, as well as the Social and Economic Committee and the Committee of Regions, to debate the issues and give political backing to the development of this action plan”. Several other documents were released by the European Commission between 1994 and 1997, e.g. “The information society: from Corfu to Dublin”, “The implications of the information society for European Union policies - Preparing the next steps” and “Europe at the forefront of the global information society: rolling action plan”, but the most influent one was the “Building the European Information Society for us all: final policy report of the high-level expert group” (European Commission, 1997). It gave a


long list of recommendations, including “the death of distance”, meaning pushing “towards universal community service” and “rethinking regional cohesion policy”. Gibbs et al. (2000) interpreted that “overall, it can be argued that European Commission and Council documents on the Information Society pay only limited attention to the impact of telematics upon the EU’s regions and, while they are optimistic about the impact, they do not adopt a critical approach to verify this, although the inauguration of the High Level Group of Experts indicated that an awareness that problems may exist”. Table 1 summarizes several strategies and action plans of selected European countries. They provide a clear view of the European conceptual trends through time and space. Netherlands 1994 “National Action Programme on Electronic Highways: From Metaphor to Action”. Main action points: 1. Liberalization of telecommunication infrastructures 2. Liberalization of the Media Act 3. Demarcation of the Public Domain 4. Juridical border conditions 5. Example projects in the public sector 6. Initiatives in the market sector “The Dutch Digital Delta – The Netherlands oN-Line”. The five pillars: 1. The (tele)communications infrastructure 2. Know-how and innovation 3. Access and Skills 4. Regulatory aspects 5. The use of ICT in the public sector Contract with the Future 1. New vision for the role of government within the Information Society under the title “Freedom through Connectedness”. 2. Implementation of approachable government, 3. Government in Flux: additional actions that were necessary and useful in preparing the government for the Information Society.









Modernizing Government Modern government could be characterized by the following: 1. A new vision of control; 2. Better embedding of policy implementation in the policy process; 3. Modernization of accountability, supervision, and scrutiny; 4. Citizen involvement in policy formation; 5. Better service provision; 6. Modern inter-administration relationships; 7. Impact on the back-office structural organization of government. eNorway Three basic pre-requisites: access – knowledge – confidence 1. The Government will contribute to greater accessibility so that everyone has access to the new technology. 2. The Government will increase the population's knowledge in and understanding of the use of ICT, so that individuals will be able to use ICT as a tool based on their own needs and desires. 3. The Government will implement measures, laws and regulations that increase people's confidence in the technology. The Internet must be secure and available to everyone – irrespective of his or her level of expertise. eNorway 2.0 New challenges in ICT policy: 1. Removal of obstacles to electronic communication 2. ICT vulnerability 3. Broadband 4. 24-hour access to administrative services 5. VAT Reform 6. ICT-statistics and benchmarking 7. eEurope 2002 eNorway 3.0 Main challenges in respect of IT policy: 1. Online Government 2. Electronic commerce and communications 3. IT, telecommunications and media convergence 4. Norwegian content 5. The ICT industry: A dynamo for growth 6. The disabled 7. Health and social welfare 8. A sustainable information society 9. ICT statistics and benchmarking 10. Individuals, culture and the environment





“National Information Society Strategy” Five key targets for the strategy: 1. Renewal of business and the public sector through information technology and information networks 2. Transform information industry into one of Finland’s most important future businesses 3. Improve competitiveness in information and communication technology skills 4. Universal access to information society services and basic skills in their utilization 5. Competitiveness and service capability “Education, Training and Research in the Information Society: a national strategy” The main strategic principles: 1. From instant training towards continuous learning 2. Information society skills for all 3. Professional skills in ICT 4. Teachers have a central role 5. Knowledge products and services must be developed 6. Research into the information society 7. Information networks of education and research 8. Supportive conditions, such as legal aspects and standardization “Quality of Life, Knowledge and Competitiveness: Premises and objectives for strategic development of the Finnish information society” Main objectives for strategic development: 1. Increase welfare and offer jobs and income 2. Provide equal opportunities for the acquisition and management of information and for the development of knowledge 3. Improve conditions for entrepreneurship and the quality of working life and promote competitiveness 4. Increase opportunities for human interaction and cooperation 5. Strengthen democracy and opportunities for social influence 6. Improve security and the individual's data protection and status as a consumer 7. Develop services and cultural provision and increase international interaction 8. Boost Finland's attractiveness as a location for innovative enterprises 9. Alleviate inequality between regions 10. Support the objectives of sustainable development.






United Kingdom


An Action Plan for the Information Society The Government’s plan will be completed with measures to stimulate innovation in government services (egovernment), to develop e-commerce and to define rules and rights with regard to competition, network access and infrastructure. Objectives for 2001 1. 15 laboratories and university courses in economics and information and communication technology; 2. 5 university-based centres of excellence devoted to ICT; 3. 40 public multimedia centres for training and access to ICT. They will remain open during evening hours; 4. 1 computer for every 25 students at the primary school level; 5. 1 computer for every 10 students at the secondary school level; 6. 900,000 hours of training for teachers, organised at the regional level; 7. Professional ICT training for 150,000 workers, with 1000 new trainers; 8. Free training courses for the unemployed in southern Italy; eGovernment Action Plan 1. Networking infrastructure 2. Extranet of local administrations 3. Information and Service portals 4. Computerization of local government 5. Integration of civic registers 6. Notification of changes in personal data 7. System for interchange between Property Registers and municipalities 8. Electronic I.D. card 9. Promotion of digital signatures 10. Computerized management of documents 11. eProcurement 12. Training actions Government's guidelines for the development of the Information Society 1. Transforming the public administration: e-government 2. Human capital (Digital literacy and eLearning) 3. Infrastructure (Broadband and digital signatures) 4. Industrial policy (electronic commerce, SMEs, Teleworking, Telemedicine and Tourism) “Information Society Initiative (ISI)” The ISI was an umbrella for a large number of ICT activities and programmes. Between 1996 and 2000 there










were 26 component activities / programmes, including: 1. Marketing, Awareness and Delivery Programme 2. Local Support Centres (LSCs) 3. Multimedia Demonstrator Programme 4. The Information Society Creativity Awards “Action Programme for the Information Society (PAGSI)” 6 priority axes: 1. Computers and Internet access in schools 2. Multimedia contents 3. Modernization of public services 4. Electronic commerce 5. Technological innovation 6. Market regulation Plan RE/SO 2007 1. Electronic commerce 2. Diffusion and appropriation of new technologies (ex.video games industry) 3. Telecommunications “INFO XXI: an information Society for all” Three main guidelines 1. providing ICT sector with fresh momentum by completing the regulation and competition promotion process 2. improving e-government 3. improving access to information society for both citizens ad companies Action Plan INFO XXI 2001-2003 More than 250 actions in 7 axis of development 1. Education 2. Employment 3. Innovation 4. Effectiveness 5. Social cohesion 6. Quality of life 7. Promotion of Spain abroad España.es 1. Public administration (administacion.es) 2. Education (educaion.es) 3. SMEs (pymes.es) 4. Internet access (navega.es) 5. Contents (contenidos.es) 6. Mobilization (Comunicacion.es) 7. New action plan for R&D Building the knowledge society Key Messages for Government 1. The Broadband Challenge 2. The Innovation Challenge 3. The Skills Challenge






Ireland’s Broadband Future These include the commitment to extending open access MAN (Metropolitan Area Network) infrastructure to all population centres of greater that 1,500 people, the Group Broadband Scheme to promote rollout to smaller towns and rural areas, and the appointment of e-Net as the Managed Services Entity (MSE) to manage the open access MAN infrastructure on behalf of government. eGovernment Report There is more to e-government than simply putting services online. ICT is essentially a tool for better government – better public services, better information management, better collaboration across agencies. Advice to step back from the commitment of putting all services online by 2005 as an end in itself, and to prioritize those services that will have greatest impact. Greece in the Information Society: Strategy and Actions 1. Open and effective public administration 2. New technologies in education and scientific research 3. Economic development and competitiveness 4. Employment in the Information Society 5. Quality of life: Health, transport, the environment Operational Programme “Information Society Action lines: 1. Education and culture measure 1.1. equipping and networking schools measure 1.2. new technologies in education measure 1.3. documentation, management, promotion of greek cultural heritage 2. Citizens and quality of life measure 2.1. government on line: business plans, studies and pilot projects measure 2.2. government on line measure 2.3. administration of the structural funds and transition to the euro measure 2.4. regional geographic information systems and innovative actions measure 2.5. training and modernization in the public administration measure 2.6. ICT applications in health and welfare measure 2.7. training and organizational reform in health and welfare measure 2.8. ”intelligent transport” 3. development and employment in the digital economy measure 3.1. a “digital” environment for the new economy measure 3.2. business in the digital economy measure 3.3. research and technological

development for the IS measure 3.4. skills upgrading measure 3.5. employment promotion for the is 4. communications measure 4.1. supporting the liberalization process measure 4.2. development local access network infrastructure measure 4.3. advanced telecommunications services for the citizen measure 4.4. modernization of postal services measure 4.5. training in the communications sector
Table 1 - Information Society strategic and/or action plans in selected European Countries between 1990 and 2000. Sources: (Chatrie, I. and Wraight, P., 2000; European Institute of Public Administration, 2003; Kenniscentrum ELO, 2005; Kasvio, 1997; Niemi, 2003; Finnish National Fund for Research and Development, 1998; UK’s Department of Trade and Industry (DTI), 2003; France’s Comité interministériel pour la société de l'information (CISI), 1999; Greece’s http://en.infosoc.gr/; Ireland’s http://www.isc.ie/.

Building the information society in Portugal
In April 1997, the “Portuguese Information Society Green Book”, published by “Information Society Mission” taskforce (1997), created a year earlier, established a set of key policies for the development of Information Society in Portugal. It addressed a broad range of issues related with electronic democracy, digital divide, electronic government, knowledge networks (R&D, Universities and schools), digital business environments, employment, new economy (software, digital contents, entertainment, telecommunications), institutional and legislative frameworks, security and privacy, among others. The following year, 1998, the Portuguese Digital Cities Program was launched (Veiga, 2000). It proposed four action lines: (a) improve quality of life in cities, mainly through the provision of electronic local administration services and telemedicine; (b) contribute to development of peripheral areas; (c) improve local economy and employment, including access to new markets, teleworking and ecommerce; and (d) contribute to fight info-exclusion and help citizens with special needs. 7 cities or

regions were invited to participate in the program through a diverse mix of organizations, mainly led local governments, universities or regional agencies. Nonetheless, the basic content of each project was somehow predetermined by previous beliefs and only occasionally, notably in the case of Aveiro, local needs and expectations could be addressed.

Figure 11 - ICT Intensity and Growth (1992-97). Source: OECD, 2000

But to better understand the positioning of Portugal among other European countries it necessary to focus our attention to the diffusion of ICTs. Figure 11 presents the intensity of ICT expenditure in 1997 against the growth rate of this intensity from 1992 to 1997. Following recent analysis for knowledge-based industries (Conceição and Heitor, 2003), the results show that Portugal was the leading OECD country in the growth rate of ICT expenditure from 1992 to 1997, with a growth rate of more












telecommunications (about 9%). Expenditures in IT services and software are particularly low, below 1%, and only Turkey, Greece and Poland have shares of expenditure on IT software and services below the Portuguese value. The growth in this category has been equally dismal, below 2% a year. In terms of my analysis, I would like to argue that the figure shows large variations associated with countries characterized by small absolute values, exhibiting patterns typical of latecomer industrialization for Portugal. In addition, the results may represent indications of the process through which latecomer countries become engaged in the new techno economic paradigm (Freeman and Louçã, 2002). Most countries are clustered in the bottom of the figure, with growth rates below 4%. The levels, as indicated by the horizontal distribution of countries, confirm the perception that the US is a leading country. The expenditures on ICT as a percentage of GDP in the US are about 2% above the European average.
Border Midland and Western Region La Rioja South Aegean Ionian Islands Baleares Islands Western Greece Açores Highlands & Islands Epirus Alentejo Peloponese Continental Greece Algarve Centro Norte Southern Scotland Lisboa e Vale do Tejo Liguria 357.8 € 357.8 € 269.4 € 241.4 € 238.2 € 151.1 € 117.9 € 98.4 € 83.4 € 44.5 € 43.1 € 42.8 € 42.5 € 29.9 € 13.3 € 9.2 € 6.8 € 2.2 €

Table 2 - Expected ICT Expenditure per capita for selected European Regions, 2000-06; Source: Tsipouris, 2000 37

The evidence of still low absolute investments on ICT in Portugal is clearly illustrated in Table 2, which shows values per capita for sample European regions in the census whose programming documents indicate information society actions and that provide the necessary financial information (Tsipouris, 2002),. It is clear that the table refers, above all, to regions that have attracted European structural funds and, on this basis, it is important to mention the wide diversity of situations and framework conditions for attracting these funds, which clearly influence any analysis to be considered. But for the purposes of my analysis, it is interesting to attempt defining the extent to which the performance of digital networks and cities would depend exclusively on the limitations of funds, as well as from the capacity to attract them. Besides large growth rates in ICT investments, the extent to which the Portuguese society is engaged in the knowledge economy comparatively to other nations can be analysed making use of the recently established systematic assessment by the World Economic Forum in collaboration with INSEAD and the World Bank’s infoDev programme through the “networked readiness”, as represented in Figure 12 for 2002 (Dutta. and Jain, 2003). This indicator offers an aggregated idea of “the degree of preparation of a nation to participate in and benefit from ICT developments” and illustrates the still weak position of Portugal in the European context, only above Greece. The main point to note is that the results for Portugal and for most of the OECD countries appears to be dependent from other than the country’s overall wealth (as measured in terms of GDP per capita). Considering the partial log regression plot included in the figure, Portugal is in fact entering the cluster of countries where the effect of increasing GDP on network readiness is less pronounced and other factors, namely at institutional and

contextual level, have been shown to particularly influence country’s competitiveness (Conceição and Heitor, 2003).

Figure 12 - Network Readiness Index versus GDP (PPP) per capita, for 2002, with partial Log regression. Source: Dutta, S. and Jain,A. (2003)

The challenges associated with latecomer industrialization, as mentioned before, and the relative positioning of Portugal in the international scenario at the outset of the 21st century can be further analyzed from the sample results of Table 3: it shows Portugal ranking among the first 25-30 positions but the least performing country in Europe. The pattern of small absolute values regarding the mobilization of information society, but large variations, can be further analyzed making use of a number of typical indicators to characterize the penetration of ICTs in a country and, for example, Figure 13 shows values for internet penetration rates, with Portugal getting the highest position in southern Europe for 2002 (Portugal 42%, while Spain 42%, Italy 40%,

Greece 18%, with an EU average of 51%), although far away from typical north European penetration rates (Eurobarometer, 2003). The relative gap persists in 2004 (UMIC, 2004).
Ranking Networked Readiness Index Dutta and Jain, 2003 1 2 4 7 8 10 11 16 19 20 21 22 25 26 27 31 42 Information Society Index IDC, 2003 8 4 1 7 5 15 6 16 20 12 21 19 24 23 Not included 26 25 e-Government Benchmarking U.N., 2001 13 1 11 7 9 10 8 25 14 27 23 12 16 19 20 24 49 Financial Times / OCDE ranking 2001 10 3 2 9 18 12 5 16 = 16 = 13 4 7 Not included 20 15 25 Not included

Finland United States Sweden United Kingdom Denmark Germany Netherlands Austria France Japan Ireland Belgium Spain Italy Luxembourg Portugal Greece

Table 3 - Sample results from recent international rankings






2000 2002

Figure 13 - Internet Penetration Rates in Europe (2000-2002). Source: EOS Gallup Europe, 2002








standard telephone line ADSL mobile w ireless connection (dk/n.a.)

ISDN line Cable Modem (other...)

Figure 14 - Internet Access type (2000-2002). Source: EOS Gallup Europe, 2002.

A similar picture could be obtained making use of Internet access in the household in 2000-2002, with Portuguese rates of 31%, as compared with 29% for Spain and 9% for Greece, while 40% for the EU average and 74% for the USA, although Portugal exhibits growth rates between 2000 and 2002 considerably larger than the European average (namely 72% for Portugal, with 81% for Spain and 89% for France, as compared with 43% for EU average) (EOS Gallup Europe, 2002),. Turning to the type of telecom infrastructure, the country followed the typical average EU trends, with standard telephone lines as the most frequent connection to the Internet access at home (Portugal 74%, EU average 72%), followed by cable modem (Portugal 12%, EU average 7%). ISDN, ADSL and Wireless connections were still relatively low in 2000 – 2002 (see Figure 14). As we shall see later, the relative gap between narrow and broadband closed dramatically between 2002 and 2004, being practically even ( UMIC, 2004).

For this brief analysis of main figures characterizing the Portuguese context for the use and application of ICTs in an international perspective, it should also be mentioned that the country has one of the lowest European usage rates of Internet for on-line purchases of products or services (9%, but only 1% frequently) and the third lowest percentage of Internet users that have already contacted the public administration (EOS Gallup Europe, 2002). These figures are important to set the context of information networks and clearly call our attention for the need to consider contextual levels beyond pure infrastructural issues, when considering measures to foster information networks. But the figures presented above should be further explored in terms of the main point of this dissertation, improving our understating of the conditions necessary for digital networks to succeed. Learning from the conceptualization about information societies (Mansell and Steinmueller, 2000) it can be said that, fundamentally, the performance in knowledge-rich competitive environments in terms of innovative performance depend on the quality of human resources (their skills, competencies, education level, learning capability) and on the activities and incentives that are oriented towards the generation and diffusion of knowledge. But beyond human capital, which corresponds to the aggregation of an individual capacity for knowledge accumulation, developing a collective capacity for learning is as, if not more important, than individual learning. Instead of individual or even aggregated human capital, a further important concept for learning seems to be social capital, as analyzed by Conceição et al. (2000), among others. Before going any further exploring social capabilities and related issues associated with the development of knowledge networks, I will present in the next chapter some

empirical evidence from Portuguese Digital Cities Projects and discuss a conceptual framework for understanding digital cities. Existing literature on the subject of digital cities often focus in technological innovations as the main, if not the only driver of social transformation. As the new digital technologies become embedded in daily life, as an “invisible” infrastructure, mobilization and the capacity of absorption and diffusion of those technologies seems to be critical to the development of the information society. Within this context, what critical factors enable a digital city to mobilize individuals, communities and organizations for the construction of the information society in Europe? What sort of public policies must be considered to promote these factors? These broad questions build on a comprehensive set of data on digital cities presented in previous work (Heitor and Moutinho, 2004; Moutinho and Heitor, 2004) and on the need to continuously adapt European and national policies aiming to foster innovation and competitiveness in information industries. Along this dissertation I will explore the hypothesis that current broadly target public policies to bridge the digital divide may not necessarily stimulate the construction of the information society. Focusing on communities of practice, interest or proximity might give better results in medium and long term. I will argue that, although geography based knowledge networks may have the potential to attract people and mobilize the information society and make public administration and markets more effective, they require effective infrastructures, incentives and adequate institutional frameworks across time and space (Conceição, Heitor and Veloso, 2003). Moreover, communities of practice (CoPs), interest or proximity may play a critical role for mobilization. Therefore, knowledge networks

need to be designed holistically, coping with change and being continuously assessed in order to accommodate humanity (Heitor and Moutinho, 2004).


Chapter II – Selected Case Studies in Portugal
The selected case studies included in this dissertation where chosen among a set of projects that were part of an integrated initiative, called the Digital Cities Program, set up by the Portuguese Government through the Ministry of Science and Technology in 1998 and jointly funded by the Portuguese Science and Technology Foundation (25%) and the European Union (75%). Although there were several simultaneous initiatives related to the diffusion of ICTs at a national level, e.g. Internet access in schools (RCTS network), national community building portal (Mosaico / Terra-à-vista), and a very successful electronic government one stop shop (Infocid), the projects were chosen not because they were presented as “Digital Cities” but, most important, they were integrated projects, strongly related to the territory and specifically designed for the diffusion of ICTs at local level, covering several aspects of society, collective or individual, public or private. To help explain the choices made by each region regarding the communities and content included in each one of Portuguese digital cities and regions, it is critical to understand the different perspectives that contributed for the overall context and respective results (Figure 15). I have already discussed some definitions for the information society and the ideas underlying current urban renewal theories. In this chapter I will start by explaining the methodology of analysis, called C3ITIES. Next, two digital city paradigms, Amsterdam Digital City and Kyoto Digital City, will be discussed. Then I will present 4 case studies of Portuguese Digital Cities.


Figure 15 - Overall Context for the Development of Portuguese Digital Cities and Regions

C3ities Methodology
Digital cities and regions projects, in terms of the co-evolution of ICTs and regional development, could be approached from different perspectives: technology enabled communities or social networks (Ishida, 1998; Huysman,Wenger and Wulf, 2003); urban renewal through the use of new technologies (Downey and McGuigan, 1999), systems of innovation (Mothe and Paquet, 1998; Kominos, 2002), geography of the Internet (Zook, 2001), or even the economics of knowledge (Foray, 2004).

Digital cities and regions can also be considered as complex, large-scale Engineering Systems, emphasizing the socio-cultural context, system life-cycle and change management as well as dealing with architecture (Crawley, E., et al., 2004),


uncertainty (Neufville, 2004), flexibility (Moses, 2004), safety (Levenson et al., (2004), and sustainability (Cutcher-Gershenfeld et al., 2004). The proposed methodology, called C3ITIES, extends the socio-technical approach to information systems (Laudon and Laudon, 2002), where the dynamic mutual adjustment of both technology and users determines its final performance, function, and cost. It considers a holistic approach for designing and implementing regional or urban information systems as a whole. The context, namely when related to the territory, provides to both content (existing, needed or planned) and communities their significance as nodes of knowledge networks or tangible expressions of multidimensional relationships. These relationships – information flows – must be mapped to the technological roadmap to determine the amount and the direction of change needed in the organization, community or society. Technology pathdependency and usage permanence must be well understood before designing, implementing or exploiting information systems at a regional level. As a result, knowledge creation, accumulation and diffusion play a critical role in this process. Emergent, or initially unintended, properties, often present in complex systems, must be also optimistically incorporated in the process of building digital cities or regions, e.g. new business models or usage behaviors. The framework identified in Figure 16 considers the relative importance of the several processes for making available or implementing technological infrastructures, together with the increasingly important role of creating incentives for mobilizing communities and dynamically adapting institutions towards innovative societies (Conceição et al., 2003). Under this conceptual approach, I refer to three main levels of analysis, including infrastructures, contents and context, although there is a growing body of opinion that balanced information society depends on five mains

aspects, namely: infrastructure, access, application and services, digital content development, and ICT skills development (Tsipouris, 2002). It is argued access and infrastructure could be joined in a single layer, as well as application and services and digital content developments into a second layer. In addition, the scope of the socalled ICT skills development is broadened to include other contextual issues and local characteristics of communities of practice.

Figure 16 - Framework for the analysis of digital cities, C3ITIES, including the consideration of the overall context, contents and communities of practice, with a diversified network of infrastructures and the processes of their implementation. Source: Heitor and Moutinho, 2004


The Digital Cities Program
The evidence presented in this section is built on the analysis of sample projects for digital cities and regions in Portugal, which have been structured around the electronic provisioning of local government administrative services complemented by some pilot projects in areas such as e-business and telemedicine.

Figure 5. Identification of main projects for the specific development of digital cities and regions, established over the period 1998-2001, making use of European structural funds.

The first experiences in Portugal with digital cities started in 1998 through a program funded by the Portuguese Government and the European Union and involving 5 small and mid-sized cities (Aveiro, Bragança, Guarda, Marinha Grande, Castelo Branco) and 2 rural regions (Trás-os-montes and Alentejo), as identified in Figure 5. The main objectives of the program were to (a) improve the quality of life in cities; (b)

contribute to development of peripheral areas; (c) improve local economy and employment; and (d) fight info-exclusion and help citizens with special needs (MCT, 1997). The project sites were chosen for reasons which are out of the scope of this dissertation and I will concentrate my analysis on issues associated with their effective implementation. Alentejo and Trás-os-montes are remote agricultural regions, among the least developed in Portugal and Europe, sparsely inhabited by an aging population. Both projects were designed to create new opportunities for the local population, mitigate social and economic disparities and promote regional networking. Aveiro is developing a true innovative and entrepreneurial image, in particular connection with the local university and the local branch of Portugal Telecom, which includes important research and development activities. On the other hand, Marinha Grande is particularly engaged in traditional, labour-intensive industries and the digital city project has been particularly promoted through the industrial network associated with the local moulds industry. Both these two projects invested mainly on local competitiveness and competence building. Bragança, Guarda and Castelo Branco are peripheral cities with relative regional significance. Their approach was to support the adoption of information and communication technologies by individuals, firms, associations and local government and other public organizations. In terms of regional penetration, Table 3 shows that the projects listed above covered about 11,30 % of the total Portuguese population (10,44% of the population under 15 years of age) and about 42% of the total surface of Portugal. All projects involved a broad range of relevant actors and change agents within each one of the territories

being nonetheless always led by local municipalities.

Local higher education

institutions were particularly involved only in a limited number of projects (Aveiro, Bragança, Trás-os-Montes).
Municipality Aveiro Bragança Castelo Branco Guarda Marinha Grande Alentejo Trás-os-Montes Total Pop. 69.560 32.440 54.260 38.560 33.370 510.690 431.540 1.170.420 (%) 0,67% 0,31% 0,52% 0,37% 0,32% 4,93% 4,17% 11,30% Pop. < 15 12.160 4.760 7.440 6.230 5.050 71.930 65.450 173.020 (%) 0,73% 0,29% 0,45% 0,38% 0,30% 4,34% 3,95% 10,44% Area (Km2) 208 1.138 1.440 709 186 27.227 11.122 42.030 (%) 0,23% 1,23% 1,56% 0,77% 0,20% 29,55% 12,07% 45,61%

Table 3. Characterization of digital city projects, in terms of population and area considered in each city/region Source: INE, 2001

It should be noted that, at least for the initial projects analysed here, the institutional framework established by the central government was quite flexible and fostering local voluntary initiatives. It was based on the simple provision of guidelines focused on providing content and services related to local public administration and to specific activities with social implications (e.g., healthcare), economic impact (e.g, businessdriven corporate networks for regional competitiveness), and aimed to promote cultural contents (Aveiro Digital City Coordination Team, 2001a, 2001b; Association for the Development of Bragança Digital City, 2001). Initiatives to mobilize and promote the adoption of the Information Society were part of various applications, although not always considered at the required level, at least beyond that given to the implementation of infrastructures (Aveiro Digital City Coordination Team, 2001b).

Table 4 show sample data in terms of public funds made available to the seven projects mentioned above, illustrating diversified situations, with levels of funds per capita raging from low to moderate when compared with those considered within the overall usage of European structural funds (Tsipouris, 2002). Within the broad range of digital city projects considered at international level (Tanabe, Besselaar and Ishida, 2002), Aveiro Digital represents an interesting case study in that it has comprised diversified initiatives promoted and coordinated by an autonomous organization formed among the local government, the local University and the incumbent Telecommunication operator, PT Telecom. It represented the result of a long preparation effort and provided the opportunity to evaluate concepts and dynamically testing ideas, involving a limited but well informed group of people (Aveiro Digital City Coordination Team, 2001b). Bragança Digital focused on creating basic ICT infrastructures and wireless networking environment for local government buildings, health institutions, educational institutions, and local employment agency to provide information and services to local citizens. Other initiatives included the provision of local products (www.rural.net), health, educational and e-business activities (Association for the Development of Bragança Digital City, 2001). Guarda Digital was promoted by and organization formed by the municipality, local educational institutes, associations” and the incumbent telecommunication operator. It included pilot projects in healthcare e-business, tele-working and educational initiatives (http://www.ipg.pt/adsi/). Castelo Branco Digital aimed to connect all public institutions (municipality, social security and health institutions) and local associations (sports, culture and business) to

provide an integrated information network to citizens and tourists. For example, it has included the provision in rich media of old Portuguese theatre contents (http://www.cm-castelobranco.pt/cb_digital/).
Project Aveiro Marinha Grande Bragança Castelo Branco Guarda Trás-os-Montes Alentejo Pop. (a) 69.560 33.370 32.440 54.260 38.560 431.540 510.690 Total investment 5,590,000 € (b) 1,200,000 € (c) 1,044,000 € (d) 1,082,000 € (e) 350,000 € (f) 1,735,000 € (g) 1,500,000 € (h) Investment p.c. 80,39 € 35,96 € 32,18 € 19,94 € 9,08 € 4,02 € 2,94 €

Table 4. Public Funds Expenditure Per Capita in the first phase of the Digital Cities Program, 1998-2000. Sources: (a) INE, 2001; (b) PACD, Final Evaluation Report, 2001; (c) ; (d) Associação para o Desenvolvimento de Bragança, Final Evaluation Report, February 2001; (e) personal communication http://www.dpp.pt/pdf/info52.pdf; (f) http://www.freipedro.pt/tb/110698/guarda3.htm; (g) personal communication; (h) http://home.telepac.pt/telepac/net/13/regionalismo_2.html.

Marinha Grande Digital, as managed by the local municipality and the Technological Centre associated with the moulds and plastic injection industries, focused on creating an Extranet to provide business-related (mould, plastics and glass) content and services and on facilitating communication among companies and clients. Other initiatives included a centre of advanced telecommunications to promote the use of the Internet (http://www.marinhagrandedigital.com/). Trás-os-Montes Digital included regionally-based web contents (i.e.,

www.espigueiro.pt), managed by the local University, that aggregates content and

services of 31 municipalities. The portal is managed by the local university and includes business and employment opportunities, geo-referenced information, healthcare facilities and technologies to coordinate medical services in rural areas (Morgado, 2003a, 2003b). Alentejo Digital brought together 47 municipalities and 3 regional agencies to create a regional information network to provide services and territory-related content to citizens and local firms through regional web-based contents. The main objective was to enable local government teams to learn, use and promote new technologies, namely computer network management and digital content production and publishing. An Intranet was set up linking all municipalities and regional agencies to enable the necessary collaborative work environment. About 50 people were recruited, mostly from local unemployment lists, to work on the project that lasted until July 2001 (http://www.alentejodigital.pt/). In the next section I will describe in greater detail the cases of Alentejo Digital, Aveiro Digital, Trás-os-montes and Bragança Cidade Digital. However, before continuing to the presentation of the case studies, a number of important limitations need to be considered. First, empirical data provided by the managing teams were sometimes fragmented and mot of the time unequal among projects. None of the regions could make available complete information about context, communities, content, information fluxes, technology roadmaps, information systems and exploitation models. Following the methodology, I have gathered different types of information, from raw data (website data logs) to evaluations reports to fill the information gaps whenever possible. I have also interviewed all managers, except


those from Castelo Branco, to check the available information and to get feedback about my conclusions. Second, digital cities projects were very dynamic and sometimes it was difficult to freeze in time and space the scope of the projects. Aveiro Digital and Trás-os-montes were especially hard to limit in terms of content since it was constantly updated. I had to rely on interviews to agree on what data was significant within period of the study. Third, from 1998 to 2000, the expectations about digital cities were very high. However, data gathering and interviews took place much after the Internet bubble burst in April 2000. Disbelief in the so called new economy and a profound technology hangover made it difficult to capture the real feelings of the people involved in the projects. Most of the system administrators, programmers and content producers had also already left the projects and weren’t available to explain the reason of some of the technical decisions.

Alentejo Digital
Alentejo, literally “beyond the Tagus River”, is an agricultural region famous for its cork plantations. The population density is very low, less than 1/5 of the national average.Its territory, corresponding roughly to one third of the national area, lies in the south of Portugal. It is limited to the north by the Tagus River, to the South by the Monchique mountain ridge and the Algarve and to the east by the Spanish regions of Extremadura and Andalusia. To the west lies the Atlantic Ocean. Alentejo Digital was a partnership set up between the public administration (Ministry of Planning through the Coordination Commission of Alentejo Region, Regional Delegation of the Institute of Employment and Professional Training, Agency for the

Development of the Alentejo Region and Ministry of Science and Technology, through the Information Society Mission) and the private sector (Portugal Telecom). Website about the April 25th, ’74 revolution Northern Alentejo Development Program Cante Alentejano (traditional folk songs) Education (idea contest) Compadre (Regional Portal) Évora District Government Environmental Regional Statistics News from Alentejo Alentejo Development Program Classifieds Business opportunities Restaurants Local government websites Contents Business support Games and puzzles www.alentejodigital.pt/25deAbril/ www.alentejodigital.pt/avna/ www.alentejodigital.pt/cante/ www.alentejodigital.pt/educacao/ www.alentejodigital.pt/ www.alentejodigital.pt/gcde/ www.alentejodigital.pt/natureza/ www.alentejodigital.pt/ine/ ww.alentejodigital.pt/alentejodigital/internet/ www.alentejodigital.pt/protal/ www.alentejodigital.pt/classificados/cgi/classifieds.cgi www.alentejodigital.pt/oportunidades/ www.alentejodigital.pt/gastronomia/ www.alentejodigital.pt/concelhias/ www.alentejodigital.pt/conteudos/ www.alentejodigital.pt/ace/ www.alentejodigital.pt/jogos

Table 4 - List of selected websites produced between 1999 and 2000. Source: www.alentejodigital.pt

The project consisted basically of a regional networking infrastructure and a content management system hosting an aggregation portal of 47 municipalities. The portal (www.alentejodigital.pt) provided relevant contents and services for inhabitants and visitors of the Alentejo region. The back-office, supported by an Intranet, was managed in each one of the municipalities by a mediator who had the responsibility to gather, edit, publish and update content. Most of the content was provided by the local administration, but some interesting websites were also published by local communities. Examples of these websites were


social networking (Sopas e Descanso) (Figure 17), environmental associations (Figure 18), folk songs from Alentejo (Cante Alentejano, Figure 19), and games (Figure 20).

Figure 17 - Sopas e Descanso

Figure 18 - Environmental Association

Figure 19 - Cante Alentejano

Figure 20 – Games

The key targets of the project were (RCCA, 2001): 1. individuals and local communities, namely those related with local or regional development, as well as local businesses, regional culture and traditions and handicraft that promote the economical and/or social growth of Alentejo Region”;


2. Basic and secondary schools, universities and polytechnic institutes, or other educational or professional training institution; 3. Regional and local administration

Figure 21 - Typical infrastructure (source: adapted from http://www.alentejodigital.pt)

Figure 22 - Example of an information flux between users and mediators with access to the Intranet (source: RCCA, 2001).

The mission of the Alentejo Digital project was to create the necessary conditions for attracting and retaining people within the region. The use of communication and information technologies would be one among a variety of instruments to overcome the chronic tendencies of economic decline, desertification and population ageing. The objectives included the completion of a regional information portal, the implementation of a regional data center and a digital network over ISDN lines to ensure the provisioning of electronic local administration services. The coordination of the information fluxes by the different points of presence all over the region was made through an “information, distribution and contribution network”,

called “Infopontos” (RCCA, 2001). The infopontos were managed by mediators linked to the regional Intranet. They would collect, edit and publish content from both citizens and municipalities (Figure 22). Hits Total hits Daily average Homepage Total Page views Daily average Documents Visitor sessions Average session International visits Unknown orign Origin from Porugal Unique visitors One visit More than one visit 2.794.394 18.754 77.613 1.527.462 10.256 673.303 50.673 00:14:19 9,72% 53,49% 36,78% 14.886 10.238 4.648

Page views


Unique visitors

Table 5 - Website statistics from October 1999 to February 2000 (source: RCCA, 2001)

The usage statistics (Table 5) shows interesting values: more than a million and a half page views in less than 6 months, more than 50,000 visitor sessions, averaging about 15 minutes each and bout 15,000 unique visitors. Despite the growing number of visitors, the system analysis (Figure 23) of the project would show that several factors contributed for the final shut down. The period for the planning and implementation of the project, 2 years, was evidently short. There was no time to discuss and detail institutional arrangements to secure the sustainability of the project led by the 47 municipalities. Portugal Telecom was a strategic partner at the inception of the project but swiftly became a provider. As an example, Portugal telecom designed the topology of the ISDN network (Figure 21) and respective points of access to minimize costs for the project, but they changed the prices for the connections even before the network was completely laid down. As a result, the connection costs almost doubled and added for the high burn-out rate.

Figure 23 - System analysis of the Alentejo Digital

The investments were technology oriented, basically the ISDN network and a content management system. Even though the mediators were somehow capable of managing content, the lack of advanced skills in systems management and the inconsistent content production, together with the end of the funding period, caused the portal to shut down.

Aveiro Digital
Aveiro is a seaport, located at the Vouga estuary, with a population of approximately 69,560. The city’s innovative and active character, although recent, draws from the singular institutional framework established in close collaboration between the local university and the local business environment, mainly driven by the national telecommunication operator. Following the launch of the first Digital Cities public funding program in Portugal (1998-2000), the municipality, the university and the incumbent operator set up a

public-private partnership to develop the idea of Aveiro Digital City focusing on (a) quality of life in the city; (b) democratic participation; (c) extensive access to public and private digital information and services; (d) local public administration modernization; (e) inclusive development and sustainable growth; and (f) job creation and lifelong learning (Aveiro Digital City Coordination Team, 2001a,b; Municipality of Aveiro, 1998). The complete funding life cycle was expected to be 8 years, with the first phase of the project starting in February 1998 and lasting until December 2000, totalling an investment of 5,590,000 Euros. The second phase, originally planned to start in January 2001, has only begun on June 2003 and is planned to last until December 2006.

a) Aveiro Digital City Centre (source: http://digipraca.aveiro-digital.net/)

b) Interactive learning website for kids (http://www.cidadedamalta.pt/)

Figure 24 - Sample infrastructures and contents provided through Aveiro Digital.

After a troubling start – budget allocation negotiations and bureaucracy caused lengthy delays, mostly for over than one year, in both the formal approval procedures and the technical implementation schedule – the first phase included 38 projects covering several different aspects of the use of information and communication technologies, as illustrated in Figures 6 and 7. Emphasis was given to infrastructures and digital contents, including local e-government, e-health, e-business and entertainment, as listed in Table 6.

Enterntainment, Culture and Arts; 8,05%

Community Buiding; 18,60%

Community Buiding; 5,41% Enterntainment, Culture and Arts; 29,73% e-Government; 13,51%

e-Business; 24,54%

Social Cohesion; 3,87% e-Health; 4,78% Knowledge Integrated Communities; 3,60%

e-Government; 20,38%

Education; 18,92%


e-Business; 16,22%
Education; 16,18%

Knowledge Integrated Communities; 2,70% e-Health; 2,70% Social Cohesion; 10,81%

a) Budget allocation per intervention area

b) Number of approved proposals per intervention areas

Figure 25 - Sample indicators associated with the incentives attracted by Aveiro Digital. Adapted from Aveiro Digital City Coordination Team, 2001a,b

E-business and education related activities accounted for 35.1% of the total number of approved projects and 40.7% of the budget allocated. E-government used up to 20.4% of the available funds. University-based and e-health projects included only two projects and utilized less than 9% of the total budget. On the other hand, entertainment, culture and arts accounted for about 30% of the total number of approved projects, but only received about 8% of the total budget available. In general, ICT infrastructure – computers, applications, Internet access and basic ICT training – was the most important component of all projects, while investments in activities oriented towards the mobilization of the population for the information society were practically inexistent. Consequently, the evaluation of many activities claims for reduced levels of public participation, with some of the initiatives falling short from their original objectives (Aveiro Digital City Coordination Team, 2001a,b). Egovernment and other projects involving basic and secondary schools had more permanent effects, while e-commerce and e-health performed poorly. Budget cuts

and uneven financing flows during the implementation phase posed extra difficulties and increased risk unnecessarily. Nonetheless, during 1999-2000, Aveiro Digital City made available 446 personal computers to diverse public and private organizations, published 8 CD ROMs and 32 websites, supplied 73 interactive services, and trained 529 people, as listed in Table 6. The number of Intranets and Extranets users exceeded 3.000 people in different public and private organizations and the Aveiro Digital City Website (www.aveiro-digital.pt) accounted for a monthly average of 4,700 visitors. The main question raised by local people involved in the project has been consistently associated with the structure of public financing and the conditions for long term sustainability, mainly due to the fact that when the limited public funds dried up some of the projects came to a close, while others kept their presence in the Internet although rarely updated. Moreover, the funding concentrated mostly on the inputs of a long change process, namely infrastructures, information systems and ephemeral content, giving little consideration to the mobilizing the population at large. Aveiro Digital makes a very interesting case for the requirement of streamlining of processes for the submission, approval and funding of projects (Figure 26). First, the excessive bureaucracy postponed the start of the projects more than a year in most cases. Then, the total public funding agreed with the Portuguese Government was stretched thin to fund all the projects approved by the coordination team. In average, the approved incentive was 50% of the amount requested. The reimbursements were also often overdue. These three factors contributed for cash flow problems in most of the projects and together with poor management in the first months they created several technical and operational difficulties.

Intervention Areas Digital Community

Activity Facilitate to all citizens Internet access and active learning support in basic ICT: 14 centers in local parishes, and 4 in disadvantaged neighborhoods. Aveiro Municipality geographical and administrative information systems Water, sewage municipal services one-stop shop Water quality sensing and monitoring system Internet and Intranet services for the Aveiro Judicial Court; Construction of communities compromised with education, through training and easiness of the communication between families, teachers and students Pedagogical Games and Interactive learning applications for children to play, learn and communicate Online biology competence centre in the areas of vegetal and animal diversity, molecular biology, local biodiversity and Aveiro estuary ecosystem Intranet and Internet services for the D. Pedro V District Hospital and the 20 health centres functionally dependent of this Hospital, complemented with ICT training of health professionals Computers, Internet access, ICT training, focused online information and services and design and validation of telework models, for people with special needs Computers, Internet access and ICT training for 20 SMEs, including basic digital services provisioning Sea harbour telecommunication infrastructure, commercialisation and management information systems. Integrated online services serving various communities eCommerce service centre (Internet and public access Kiosks) for local shops On-line shopping mall Cattle farming sector internet and intranet services for online management, involving 36 farms, with a national expansion ELearning and interactive professional training Interactive Pay-Per-View Pilot Project Online edition and publication of news and Internet radio broadcast Equipments, training for the production of digital art Interactive and pedagogical learning of classical music for all ages 7 Public access information kiosks (City guides) History, culture, art and nature from Aveiro

Related Websites digipraca.aveiro-digital.net digibairros.aveiro-digital.net www.aveiro-digital.pt www.cm-aveiro.pt www.smaveiro.pt n.a. n.a veraria.aveiro-digital.net cspveracruz.aveiro-digital.net membros.aveiro-digital.net/esvir www.prof2000.pt/tic-tac Tictac.aveiro-digital.net www.cpj.ua.pt www.cidadedamalta.pt www.biorede.pt saudenet.aveiro-digital.net

Local Government and Public Services

Schools and School Community

University and academic community Health Services

Social Solidarity

Economic Sector

Resea.aveiro-digital.net portal.ua.pt/projectos/meu bancoalimentar.aveiro-digital.net portal.ua.pt/projectos/ist www.aida.pt/sicate www.portodeaveiro.pt

n.a. http://www.aveiromegastore.com www.anable.pt www.ipjc.pt n.a. www.netpaginas.pt oadgv.aveiro-digital.net www.orquital.ua.pt n.a. aveirana.doc.ua.pt camarinha.aveiro-digital.net www.net-moliceiro.inovanet.pt ciadanca.aveiro-digital.net www.terravista.pt/copacabana/2800 raphits.netual.pt/

Culture and leisure

Table 6 - Main digital contents included in the first phase of the Aveiro Digital City Project. Source: http://www.aveiro-digital.pt


Neither time nor money was left to mobilize people, communities and organizations and the usage was very low. With the help of the university, the main portal was kept barely alive until 2004 when a new influx of public funds, 22,000,000 Euros, secured the expansion of the project to additional 11 municipalities. Yet, knowledge networks, namely related to basic education, continued to operate and provided the necessary technology infrastructure for social capital building and information exchange.

Figure 26 - System analysis of Aveiro Digital

The time frame of the project and the extent to which public funds were continuously available at the early stage appear to be critical conditions, namely to guarantee the evolution of a process of gradual competence building. This is a major issue learnt form the Aveiro project and here I refer to competence as skills and capacities, both individual and collective. It is important to stress that new skills are part of the competence foundation, but I’m not necessarily arguing that technological change is skill-biased. It often maybe, but there are also cases in which it is not. When

competences are considered, the focus is on generic skills, including higher levels of education (who can ever be against more education?) but also on capacities that are more generic, such as creativity, risk-taking, and initiative (Conceição et al., 2003)


Technical Teachers Students IS promoters Project Managers Public servants Total Internal External Institutions involved


Other indicators

28 108 47 51 38 257 529 3020 To be estimated on the basis of 4,700 unique visitors/month of the main website 76

Persons involved in the execution 422 of the 38 projects Temporary Jobs Created 43 Definitive Jobs Created 3 Table 6. Number of trained people, users and other indicators in the first phase of the Aveiro Digital City Project. Adapted from [14]

Trás-os-montes Digital
Trás-os-montes, literally “behind the mountains”, is a remote region in the northeastern corner of Portugal, one of the poorest in Europe, riddled with desertification, aging population and socio-economic exclusion. Its population is largely rural and sparsely disseminated. Both agriculture and industry are still underdeveloped. Accessibility is difficult and public transportation is infrequent. There is a noticeable lack of institutions involved in R&D, technical training, education or technology support, as well as regional business networks or associations.


Therefore, there are very few opportunities for employment in technology or information industries (Marques, 2004). Within this context, the University of University of Trás-os-Montes e Alto Douro (UTAD) started in December 1999 a pilot project called Cooperative Extension Service in Trás-os-Montes e Alto Douro, later renamed “Trás-os-Montes Digital/SCETAD”. The idea behind the project was to adapt and contextualize a particularly successful model of agricultural extension services in the USA to simultaneously provide access to and promote public awareness about the benefits of information and communication technologies (Morgado et al., 2003,1). The USA Cooperative Extension Service (CES), created in 1914 by the Smith-Lever Act, was “a collaborative effort between the U.S. Department of Agriculture (USDA) and the land-grant colleges. The primary functions of the service were to disseminate information and make educational opportunities available to people not enrolled in the colleges. The general structure of the system enlisted the land-grant colleges to coordinate outreach and the dissemination of the research conducted at experiment stations through such media as workshops, demonstrations, and field-days” (Cash, 2000). The pilot phase involved 10 municipalities, 20 local parishes, the Regional Agriculture Directorate, 3 hospitals and more than 80 basic schools. The program focused on setting-up the technological infrastructure for the data center (hardware, software and networking), launching 20 public Internet access points, building competences in application development, webdesign and service support, publishing a portal (http://www.espigueiro.pt) and preparing the next phase that would start in December 2000 (Cruz, 2002).

The network of public access points distributed in, preferably remote, 20 local parish offices, called GAC (Gabinetes de Apoio ao Cidadão – Citizen Support Offices). GACs were equipped with a 64kbps ISDN dial-up connection, a multimedia computer, an ink jet colour printer, a scanner and an electronic payment terminal. Every GAC was managed by a Mediator, who provided technical assistance for users whenever necessary. The GACs were articulated through the Extension Agents with the Municipalities Extension Offices (GEA – Gabinete de Gestão Autárquica). Extension Agents role was to “monitor, support and develop the mediators activities and act as liaison between them and the Coordination Team at the University of Trás-os-Montes e Alto Douro. All these elements, together, form[ed] the Operational Team”. Institutional, bureaucratic, logistic and administrative issues were constantly influencing the location and the operation of GACs (Morgado et al., 2003b).

Figure 27 – Model of the operational team. Source: Cruz, 2002

Unlike the Mediators, who had to stay continuously at the GACs, the Extension Agents were in close contact with local people and acted as campaigners for the diffusion of ICTs in everyday life. On the other hand, they received constant feedback from users and often proposed new services or additional functional

requirements for the Coordination Team. They became the pivot on which revolved users, GACs, Coordination Team and local authorities. Therefore, recruiting and training Extension Agents was considered a critical success factor.

Figure 28 - Examples of activities developed

Figure 29 - Example of activities for kids

Bragança Digital
Bragança Digital City project, led by the local government and the local Technical Institute, promoted several initiatives that included basic ICT infrastructure, local e-government one-stop shop, Internet access in public schools, telemedicine and a very successful e-commerce website for local products (i.e., “RuralNet”). Several public service buildings were connected (local government, health institutions, schools and local employment agency) through a Wireless MAN, as schematically represented in Figure 30 (Amaro and Lopes, 2001). The municipality implemented a management information system and a geographical information system that supported the provisioning of digital services by the Internet. Other projects included an agricultural information network for the local irrigation perimeter and activities to attempt mobilizing young people for the use of the Internet.


a) RuralNet (source: http://www.ruralnet.pt/)

b) Wireless MAN (source: http://rdc.bcd.pt//)

Figure 30 - Sample digital contents provided trough Bragrança Digital

RuralNet was aimed to improve the competitiveness of rural SMEs by providing local firms with (a) innovative marketing ideas supported by efficient e-commerce technologies; (b) knowledge sharing environments and (c) new opportunities and new markets for their products and services. It mobilized several local manufacturers of high quality traditional goods – wine, olive oil, sausages, cheese and handcraft among others (totaling 46 firms) – to sell their products and services through the Internet (www.ruralnet.pt). The digital contents were developed at the local Polytechnic Institute in 1998 and were integrated in the Bragança Digital City project in 2000. The period of incubation of the project can de derived from the statistical information of Figure 9, which shows a lengthy, but significant process of market penetration. Although it involved about 40 providers of local products, 5 firms of smoked sausages, cutlery and cheese, had more than 50% of the total 1999 sales. Local clients accounted for only 25,6% of total number of orders, while orders from Lisbon (25.7%) and Porto (9.0%) together summed up almost the same number of orders as those from the rest of Portugal (34.4%). International sales totaled 5.3%.


Usually, local traditional manufacturers are very focused on production and lack the necessary competences and resources to address the needs of a global market. RuralNet makes available to local firms a new sales channel, but also a new marketing tool to expand local markets. It also provides training for all the partners and followsup closely the information and communication technologies adoption process.

Number of Orders and Sales - Rural Net (1999)
140 120 Number of orders 100 80 60 40 20 0 J F M A M J J A S O N D Month N. of orders Sales 7.000 € 6.000 € 5.000 € 4.000 € 3.000 € 2.000 € 1.000 € 0€ Sales (Euros)

Figure 31 - Monthly evolution of orders and sales during the first year of operation of “RuralNet”


Chapter III – Discussion and conclusions
I will now turn to the analysis of the empirical evidence provided above and start by discussing necessary framework conditions for the success of digital cities. Then, I will come again with the suggestion that knowledge networks are drivers of larger communities of users and mobilizers of the information society. Under this context, I will continue my analysis by identifying critical factors in order to discuss a conceptual framework for digital cities. I will conclude by presenting main policy implications derived from my conceptual understanding of digital cities.

Mobilizing the information society with digital cities and regions
But before continuing with the analysis, it should be mentioned that the emphasis will be on the conditions favoring the mobilization of the information society in less favored regions (LFRs) in Europe, which have been shown to lag behind the adoption of measures as rapidly or intensively as were the core regions of Europe. In fact the type of structural funds used to support the projects discussed before derive from increasing awareness of that growing disparity in the European scenario, based on three arguments, namely. (a) LFRs tend to get little new hardware and applications because of the weakness of their markets (lack of scale and agglomeration economies); (b) most LFRs have no track record of intensive interaction leading to innovation or new ways of learning and, therefore, most LFRs put their efforts into catching up, as opposed to proactive capacity building for the information society; and (c) although the deregulation process and much of the hardware infrastructure may be


national jurisdiction, applications and content are vital in regional terms (Tsipouris, 2002). Looking first at infrastructures in general, in the neoclassical view, they are related with the existing amount of labor, capital, and natural resources. The new growth theories bring to stage other important factor inputs, in particular human capital, and R&D expertise embodied in firms, universities, and laboratories (Conceição, Heitor and Veloso, 2003; Conceição, Heitor and Lundvall, 2003). Thus, infrastructure will encompass, in addition to labor and capital, what it is called technology infrastructure, or technostructure. Tassey (Azariadis and Drazen, 1990) has proposed a definition that suits the present discussion: technostructure consists of science, engineering, and technical knowledge embodied in human and organizational forms. In the context of my analysis, I consider these three types of infrastructures in two main terms, namely physical infrastructures and web-based contents (or non-physical infrastructures), on which most of the sample projects considered in this dissertaion have concentrated their investments. Table 7 provide the results of a brief analysis of main activities considered in the various digital city projects discussed above and list typical infrastructures that have been considered. Turning to incentives, current understanding of knowledge-driven activities based on endogenous growth theories are based on the existence of dynamic externalities and imperfect markets, and require a careful understanding of the structure of competition. On the one hand, because of the nature of knowledge, investment of private agents often fails to acknowledge spillover effects, or may not be able to anticipate the full extent to which there is further learning potential in a new technology. On the other hand, incentives to invest in new knowledge depend on the existence of some degree

of monopolistic rents. These rents may not exist in latecomer countries exposed to international competition, if they are solely adopting foreign technology.


Physical Infrastructures Networking and Connectivty (a) Information Systems (b) Local public administration management information systems; Justice court Intranet; GIS Municipality management information systems; GIS

Content (non-physical infrastructures) Information Services (c) City guide; Entertainment, Arts & culture initiatives; Local government website Interactive Services (d) e-business, Agriculture; Job opportunities; Environment; Teleworking

Context (e)


Local health institutions communication network; Internet access in public schools; People with special needs

Community building based on city metaphores


Municipality communication network; Internet access in public schools

City guide; Local government website

e-business; Telemedicine; Agriculture e-business; Telemedicine; Teleworking Mobilization of firms and public institutions for the use of ICT


Internet access in public schools

Local government website

Marinha Grande

Advanced telecommunication demonstration centre; Internet access in public schools Municipality communication network; Internet access in public schools Internet access in public schools

Local industries Knowledge network (Glass, moulding and plastics)

Castelo Branco

City guide; Local government website; Art & culture Content management platform Content management platform Regional Portal Telemedicine; Agricultural Network; Job opportunities Job opportunities

Trás-osmontes Digital Alentejo Digital

Intranet for 47 municipalities

Regional Portal

Table 7 - Main initiatives developed within the Digital Cities Program in Portugal (1998-2000) (a) Networking and connectivity includes communication networks and Internet access; (b) Information Systems includes technological components that store and process data like data bases, electronic mail, ERPs, management information systems, content management, application serves and business intelligence software; (c) On-line presence or downloadable forms; (d) Electronic form submission or interaction through the web; (e) Mobilization and context building initiatives

As a result, Conceição, Heitor and Veloso (2003) call our attention that private investment levels (which result from the incentive structure provided by the market to economic agents) in activities with learning or spillover potential tend to be lower than the social optimum, and may even generate what is known in the literature as “low-level equilibrium traps”. In principle, these shortcomings of the market

mechanism call for some sort of government intervention. Governments are concerned with making sure that societal costs and benefits are endogenized in the decisions of private firms. In a learning environment this may mean subsidizing specific activities, investing in education, or protecting infant industries (Chandler, and Hikino, 1996; Lundvall and Johnson, 1994. But government intervention must balance the potential distortions on competition that may come from intervention with the needs to “correct market failures”: artificial restraints on competition can also divert profits to activities other than building technological capabilities. Against the background of the conditions described above, it is clear that digital cities cannot be promoted independently of an innovation policy fostering capacity and connectivity and that in turn innovation determines and is determined by the market. However, it is also clear that it will require an effective mix of public support mechanisms that take a relatively long-term perspective, taking into consideration specific regional and thematic aspects, thus promoting a diversified environment. But still focusing on the issues of incentives and looking at their relation with the operational effectiveness of digital infrastructures, applications and services, Figure 32 shows that the most important web contents associated with the digital city projects discussed before and summarized in were available to the public domain only for the time public support was also available. Besides the notable exception of the Aveiro Digital and Trás-os-montes Digital, this result may be obvious for the local promoters of those projects, but should be acknowledge as a major issue for public policies fostering the information society. I argue that early stage developments, as those considered throughout this dissertation, do require continuous support, together with adequate monitoring and evaluation procedures, in order to acquire the necessary

strength for their sustainable development. The evidence is that market mechanisms do not necessarily work at the level of the issues associated with digital cities, namely in less favorable zones, where incentives structures should de effectively designed and adapt over time.

Figure 32 - Timeline of public funding to the projects of Table 7 - Main initiatives developed within the Digital Cities Program in Portugal (1998-2000), versus the availability of updated webcontents

(a) 10 Municipalities; 20 “Juntas de Freguesia”; Regional Agricultural Agency; Hospitals of Vila Real, Chaves e Macedo de Cavaleiros; 80 basic and secondary schools; Trás-os-Montes and Alto Douro University (UTAD). The second phase started in January 2001 and it will end on October 2003 (source: SCETAD, Trás-os-Montes Digital Presentaion, Vidago, November 20-21, .2002); (b) Only 8 out 47 municipalities were connected during the first half of 1999 (source: http://www.alentejodigtal.pt); (c) A very limited pilot project of Telemedicine started in April 1999 (source: http://www.ipg.pt/adsi/); (d) Most of the projects started in February 1999. RuralNet Started on January 2000 (source: Associação para o Desenvolvimento de Bragança, Final Evaluation Report, February 2001); (g) Projects submission and evaluation started in July 1998. The Projects were approved on October 1998, but only started implementation in May 1999 (source: PACD, Final Evaluation Report, 2001). Although incentives and infrastructure greatly inform our understanding of economic development, they do not tell the whole story about the differences across the various

projects discussed before. This is because both incentives and infrastructure do not operate in a vacuum, being shaped by and shaping the particular context where they operate. In the scope of this analysis, the city or region must have embedded a set of social capabilities that define the context under which digital cities evolve. Consideration of contextual issues in building-up network societies have not always been considered in many different situation throughout the world, as acknowledged by Castells (2001), among others, and Table 7 shows that specific measures to promote adequate contexts in the projects considered in this dissertaion have also been scarce. If one considers the broad social and economic context under which digital cities may be facilitated, the conditions for integrated learning processes are a critical success factor. This has led Conceição, Heitor and Lundvall (2003) to build on Lundvall and Johnson’s (1994) learning economy and to discuss the learning society in terms of innovation and competence building with social cohesion. They view innovation as the key process that characterizes a knowledge economy understood from a dynamic perspective, while competence is the foundation from which innovation emerges, and which allows many innovations to be enjoyed. In other words, it contributes both to the “generation” of innovations (on the supply side of the knowledge economy) and to the “utilization” of innovations (on the consumptions side of the knowledge economy). Conceptually, the foundations for the relationship between learning and economic growth have been addressed in the recent literature (Conceição and Heitor, 2002), with learning being reflected in improved skills in people and in the generation, diffusion, and usage of new ideas (Lamoreaux, Raff, and Temin, 1999).


As it was emphasized earlier, learning can occur in many shapes and forms, some of which are informal, some formal. The institutional framework that comprise the national and regional systems of innovation formalize the technological infrastructure critical to generate the learning processes for individuals, firms, and nations, that ultimately lead to long-term development. Thus, looking at a particular set of organizations, their capabilities and related institutions, provides important lessons for development. This is the reason for the need to combine adequate infrastructures and incentives with institutions, to foster the necessary context for digital cities to succeed.

Fostering knowledge networks
The evidence of the projects discussed above show the need to extend the analysis from a technocratic paradigm of technical change and look at broader system design fostering societal developments. In particular the experience of projects such as those developed in the cities of Marinha Grande and Aveiro clearly shows the important mutual relationships that specific project-based communities have on the facilitation of network societies, but also the fact that the implementation of digital cities may significantly improve the efficiency of those communities. In the following paragraphs, I extend this evidence and argue that the success of digital cities rely on the specific development of communities of practice (CoPs), interest or proximity, namely those integrating knowledge networks. I refer to knowledge-centric, project-based communities, oriented to specific social and economic goals, that will benefit, and gain from, digital networks if particularly challenges by knowledge-based activities. In the case of Marinha Grande the evidence is that economically-oriented networks based on mould-forming companies has particularly launch business networks, which still require long-term processes and

continuous funding, as well an adequate institutional setting. In this case, it should be noted the role of the related industrial association and technology centre in promoting the necessary links and networking facilities, which again support previous discussion about the need to consider basic framework conditions. In a different scale, but also using relatively reduced level of incentives, namely at an international scale, the evidence provided by the RuralNet Project developed in the city of Bragança also shows the critical importance of project-based mechanism to support and sustain digital cities. But of specific interest in our context, are some of the activities developed in Aveiro, in that knowledge-based activities could promote and sustain digital networks well beyond the period under which public incentives were made available. The reason why knowledge-based activities are particularly prone to foster and sustain digital networks is because they will increasingly rely on “distributed knowledge bases”, as a systematically coherent set of knowledge, maintained across an economically and/or socially integrated set of agents and institutions, as discussed by Smith (2000) and Conceição et al (2003), among others. The relevance of considering distributed knowledge bases across economically and/or socially integrated set of agents and institutions leads us to the concept of social capital. In the broadest sense, social capital is associated with the “social capabilities” (Lamoreaux, Raff and Temin, 1999), that allow a country or region to move forward in the process of development. In a more sophisticated treatment, Coleman (1988) states that social capital is “a variety of different entities, with two elements in common: they all consist of some aspect of social infrastructure, and they facilitate certain actions of actors—whether personal or corporate actors—within the structure.” The relationship of social capital


for the economic performance of nations was recognized by Olson (1982) and North (1990), in broad descriptions of the process of development. Referring again to the evidence provided by some of the projects discussed above, namely those at Aveiro, the role of higher education institutions appear to be particularly important in fostering network activities, namely in the form of knowledge-based communities. Following the analysis of Castells and Hall (1994), “it takes a very special kind of university, and a very specific set of linkages to industrial and commercial development, for a university to be able to play a role it often claims to play in the information-based economy”. Definitely, those technical universities that are pure teaching factories, or work under a bureaucratic structure, are unlikely to act as generators of advanced technological milieu. Again, this recalls our attention to the role of institutions in planning digital cities and promoting their impact. Still in this context, Bill Mitchell (2003) argues that the most obvious advantage of digital networking is that it provides an efficient way of “aggregating specialized expertise” through “common access to project databases, compatible software tools, and advanced telecommunication capabilities”. But, he emphasizes that “it does little about the problems of creating trust and confidence, and of building intellectual and social capital for the long term”, requiring the development and maintenance over weeks and months of “project-based learning communities” looking at a common and complex target. Long term collaborations can provide a more permanent framework of online resource-sharing, and examples of such an initiative shows the need to bring scale and diversity, beyond time. Based on this example, Mitchell concludes that we should look beyond the popular idea of learning communities and seek to produce communities that “motivate and sustain creative discourse yielding original


intellectual products such as architectural and engineering designs”, the so-called “creative communities”. A final remark associated with the form and role knowledge networks may play in the process fostering network societies, should be discussed in terms of the evidence provided by the Program “Ciência Viva” in Portugal, namely in association with some of the projects discussed above (http://www.ucv.mct.pt/home/). It refers to specific networks formed among basic and secondary schools with university groups and research centers through project-based activities oriented to promote a culture of learning.
Driving factor Scientific Sample Experiences Biorede - Biology knowledge network about local biodiversity, molecular biology and estuary ecosystems launched at Aveiro (www.biorede.pt ) “Engineering in Portugal”, providing historical data and information for Basic and Secondary Schools, as well as university students (http://www.engenharia.com.pt/ ) Health information and communication network of the Bragança Digital City extension services (www.espigueiro.pt/servico_cooperativo/ servico_coop_puh.html ) Water quality monitoring and public diffusion system (www.simoqua.pt ) Marinha Grande local-industry (molding, plastics and glass) network (www.marinhagrandedigital.com/ ) Remarks Website developed and managed by Research Centre

Education / Training

Learning materials and information exchange between experts, teachers and students; Website managed by Research Centre Portable computers and Internet access to foster the communication and information exchange between doctors and patients Raise public awareness about water quality, flooding and other public risks Extranet managed by Technological Centre

Public Health

Managing Public Risks Corporate strategy and competitiveness

Table 8 - Typical experiences fostering knowledge networks as identified in the various digital city projects analyzed and other sample initiatives

Beyond the critically important role of this type of activities, as explained by Ziman (2000), among others, taking Pine and Gilmore’s contentions (1999) about what they termed “the experience economy” and the role experiences play in building stronger and more personal relationships in the corporate world, it is argued that schools, and

universities in particular, must deliver authentic experiences to build and encourage sustainable and entrepreneurial growth. Pine and Gilmore explore the idea of experiences as a fourth economic offering, as distinct from services as services are from goods, but one that has until now gone largely unrecognized. While services may be considered as a set of intangible activities carried out on behalf of a person, experiences are memorable events that engage that person in an individual way, so that they determine and guide transformations. Experiencing entrepreneurial processes at the school (and the university, in particular) thus sets the stage for the societal transformations required to progress successfully towards innovative societies. From the analysis above, it is clear that knowledge-integrated communities may develop over different institutional, thematic and social frameworks and Table 8 summarizes the evidence provided by the various projects analyzed.

Conceptual framework
The previous paragraphs provide empirical evidence on specific digital city projects developed in Portugal in the recent past, as well as on particular framework conditions for their success, but now I turn to the discussion of a conceptual framework required to improve our understanding of digital cities and networks. It is clear that focusing on digital cities, I must consider the conditions that foster innovation and the related processes of knowledge sharing in local contexts. Traditional neoclassical approaches in industrial economics have emphasized the analysis of the microeconomic behavior of firms and built theories specialized in the American and Anglo-Saxon systems and related market dynamics. Following the

analysis of Conceição et al (2003), it provides an excellent context to understand incentive structures and outcomes, but ignores most of the remaining issues associated with learning discussed above. Evolutionary economics focuses on routines and capabilities rather than incentives to improve our understanding of learning processes and the role of institutions in economic development. Nevertheless, they have not addressed the specific historical context of any region, namely those characterized by late industrialization Cooke and Morgan, 1998). Building on the evolutionary approaches and in system theory, the concept of “national system of innovation” (Nelson, 1993; Lundvall, 1992; Edquist, 1997), has led to numerous studies of individual countries, but there is still a long way to go in order to assess the specificity of metropolitan systems or late industrialized regions. The importance of the learning dynamics of firms and regions has been increasingly considered as key to the processes of knowledge accumulation, innovation and growth Nelson and Winter, 1982). In this respect, “firm competencies” affect the ability of firms to innovate and shape their technology trajectories. Building on this idea, Conceição, Heitor and Lundvall (2003) discuss the need to consider the systemic nature of innovation together with processes of competence building. At the same time, the spatial patterns of innovation and the related geographical dimension of economic and social development have witnessed a renewed and increasing interest in the literature (Cooke and Morgan, 1998; Storper, 1998), but attention is to be focused on the ability to build social capital, including interactive learning, local externalities, and networks among institutions (Swann, Prevezer and Stout 1998). This focus on relational assets is part of the “institutional turn” in regional development studies, as a result of the relative failure of classical approaches

which sought to privilege either “state-led” or “market-driven” processes, regardless of time, space, and milieu.

Figure 33 - Schematic representation of a possible framework for the development of digital cities

In conceptual terms, I would like to explore features in the seminal work of Nelson and Winter (1982), for which organizations know how to do things through simple rules and procedures (routines) which represent the knowledge memory of the organization. Even firms in the same industry differ in the sense that they accumulate and develop idiosyncratic routines, which form the basis of the firms’ distinctive capabilities. Fundamental to the idea of skills and routines is that they are constituted essentially by tacit knowledge and are thus not easily replicated. Replication of routines is thus possible only as a costly, time-consuming process of copying an existing pattern of productive activity.


The dynamics in the theory is brought about by the processes of searching for new routines and creating variety and mutations amongst firms, which are then subject to selection processes. The combined interaction of search and selection processes form the basis of the evolutionary approach and relate Nelson and Winter’s approach to the theories of organizational learning and population ecology respectively. The routines are thus seen as the knowledge genes of the organization, being transformed by organizational learning and innovation. Although Nelson and Winter’s work provided a conceptual foundation for a knowledge-based view of the firm, an essential development was a deeper understanding of what constitutes knowledge, which it is attempted to extend for a territory base. Figure 33 attempts to provide a schematic representation of a possible framework of analysis considering main functions to satisfy the knowledge-based view presented here. Digital cities should be built from edge to core. The civil society is considered – not only in terms of an organized and institutionalized civil counterpart of government, but also including individuals and informal associations – as the origin and the fate. To mobilize people to participate in the construction of a city, it is necessary, In this context, a knowledge-based view of the territory assumes that individual, firms and organizations operate in dynamic environments, where markets and technology are changing fast and in unpredictable ways, as discussed by Eisenhardt and Santos for the open discussion of emerging theories of strategy (Santos and Eisenhardt, 2002). It also assumes a highly competitive setting, with those agents operating within ecologies of learning, interacting and adapting to the environment. In this framework, organizational capabilities or competencies are understood as clusters of knowledge sets and routines that are translated into distinctive activities. Dynamic capabilities are

those that enable individuals and firms to build, integrate and reconfigure internal and external competencies. The knowledge that is embedded in capabilities is a complex and dynamic combination of tacit and explicit knowledge. Individuals operate within organizational contexts in order to be able to share and use their specialized knowledge. As a result, digital cities should consider communities of users and build a context favourable to their increasing participation over time. Extending this concept for the collective dimension typical of the territory, the absorptive capacity should be largely a function of the level of the regions’ prior knowledge (which emphasizes the cumulative nature of knowledge) and is also history or path dependent (which emphasizes the importance of earlier decisions). The level of absorptive capacity is heavily dependent on the level of absorptive capacity of each actor (individuals and organizations) in the territory, but is different form the sum of the parts. It not only depends on the interface with the environment but also involves the internal transfer and communication of knowledge. This concept calls attention to the internal channels of communication, to the diffusion of knowledge in the region, and to the pattern of investments.

Public policies and the social and cultural shaping of ICTs
The discussion is framed within three main levels of analysis, namely infrastructures, contents and context, which are comparable with those schemes that consider five mains aspects, namely: infrastructure, access, applications and services, digital content development, and ICT skills development (Tsupouris, 2002). In fact, the evidence provided by Lena Tsipouri throughout Europe leaves us to jointly consider the first two levels under infrastructure, as well as to join application and services and digital content developments into a single level of analysis. In addition, the scope of

the so-called ICT skills development is broadened to include other contextual issues and local characteristics of communities of practice. In previous papers, the analysis was focused on the type of incentives and institutions required to allow the mobilization of ICTs (Moutinho and Heitor, 2004; Heitor and Moutinho, 2004; Moutinho and Heitor, 2005). In this dissertation the analysis focus on the role of public policies and on the cultural and social shaping of these technologies. This is because although incentives and infrastructure greatly inform our understanding of economic development, they do not tell the whole story about the differences across the various projects discussed above. Both incentives and infrastructure do not operate in a vacuum, being shaped by and shaping the particular context where they operate. In the scope of my analysis, the city or region must have embedded a set of social capabilities that define the context under which digital cities evolve. Consideration of contextual issues in building-up network societies have not always been considered in many different situation throughout the world, as acknowledge by Castells (2000), among others, and evidence shows that specific measures to promote adequate contexts and mobilize people in the projects considered in this dissertation have also been scarce. Following the seminal work of Mansell and Steinmuller (2000), the evidence supports the critical need for adequately managing those uncertainties and shows the necessity of effective infrastructures, incentives and adequate institutional frameworks to be promoted over time and across space. But the implementation of complex technology-enabled infrastructures typical of digital cities calls for a broader approach where social and cultural aspects are integrated in early design phases to mitigate uncertainties, such as sustainability,

flexibility and scalability. Moreover, digital cities may develop other unexpected properties, or emergent properties, “developed by users of a system” and “often unbeknown to the system designer” (Moses, 2003). Being so, the stakeholders involved in the co-evolution of urban areas and ICTs would be better off if, as proposed by Cooley (2000), “the current mechanistic paradigm of technological and societal development [would be substituted by] human-centered systems [that would] provide a powerful alternative philosophy for system design and a broader educational and societal development”. He adds that “[this philosophy] regards the social and cultural shaping of technology as central to the design and development of future technological systems and society as a whole”, in terms of “knowledge-based adaptive human-centred environments” (Cooley, 2000). Expanding this conceptual framework to the entire city or even whole regions in order to consider the way millions of people interact with information and communication technologies in their daily life, it is clear that the initial approach to design digital cities described in chapter II above need to be reconsidered. Table 9 describes main implications and requirements of emerging trends, so that the vast majority of potential late adopters are inclusively considered in future digital city projects. As Dertouzos (2001) argues, we can avoid “drowning in information overload and computer complexity only by throwing out last century’s model for computing and adopting – indeed, demanding – a new computing philosophy, a new master plan, that lets people interact naturally, easily, and purposefully with each other and the surrounding physical world”. And he adds, “to put it in action requires three big steps: changing the mind-set of users and designers; ensuring that our machines are easier to use and make us more productive; and insisting that new technology reach many more people”.

Layer of Analysis

From Conspicuous objects

To Invisible infrastructure

Implications and requirements Embedding ICT infrastructures in urban daily life, fostering humancentered systems Competitive mobile services and improved regulatory framework for increased individual participation Specific knowledge of institutional and local contexts in order to help developing interactive contents New competences in content and services development, enhancing user activities and networks Mobilizing “change agents” to foster communities of practice, CoP´s, and user involvement Building individual and social competences through knowledgebased adaptive human centred environments

Infrastructure/access Fixed access Roaming

One-way distribution of information Content/ services Web functionalities

On-line collaboration and participation Networked Activities

Technology supply

Mobilization of users

Human and social Context



Table 9 - Emerging trends in the mobilization of the information society, towards a new generation of “Digital Cities”.

Norman (1998) noticed that, in fact, technological systems tend to increase internal complexities exponentially to meet the continuous evolution of users needs, but its interfaces are likely to be constantly simplified to perform specific activities to a broader base of users. The opportunities and possibilities of the co-evolution of urban development and ICTs are so vast that this strategy, “edge to core”, would be more appropriated to implement the next generation of digital cities. It starts by finding out the critical interfaces between city dwellers and its supporting ICT infrastructure and only then developing objective technology-enabled services to meet existing or potential demand. On the other hand, the number of potentially connected nodes within urban environments has significantly increased in the last couple of years (see Figure 34), and includes GSM/GPRS wired PDAs, Wi-Fi enabled laptops, 3G mobile phones,

ADSL connected game consoles and entertainment PCs, Bluetooth tablet PCs, Videophones, Interactive TVs, real-time environment sensors (e.g. air and water quality), large databases (corporations, libraries, museums, public administration), GPS oriented cars, and GPS traceable trucks and buses. On the other hand, new layers of territory-related data and information are been created in a daily basis, like municipal geographic information, Internet city guides, interactive maps and routes, and 3D worlds. To cope with this increased complexity, a new technology must add another layer of distributed computing and data management to the current Web based information distribution paradigm. In fact, as computers and networks become ubiquitous and interlinked, they will turn out to be another invisible urban infrastructure, like electric grids and sewage systems that will sustain daily life.

Figure 34 - Grid resources linked together in a “Digital City” infrastructure

Grid computing, as described by Berman et al. (2003), can be the “computing and data management and infrastructure that will provide the electronic underpinning for a

global society in business, government, research, science and entertainment. Grids, integrate networking, communication, computation and information to provide a virtual platform for computational and data management in the same way the Internet integrates resources to form a virtual platform for information. [They] are intrinsically distributed, heterogeneous and dynamic”. Grid computing was shaped by the same early driver that has pushed the scientific communities of practice to build the Internet and the World Wide Web: the construction of a virtual collaborative environment for scientific research. The main objective still is, as it was before, to share networked resources for creation, accumulation and diffusion of knowledge.

Figure 35 - Layered architecture of a semantic grid enabled Digital City; modified from Berman et. al., 2003)

The current grid model has a 4-layered architecture that includes (Figure 35): 1. hardware resources, such as computers, networks, data storage, sensors and other devices that weave the underlying fabric;


interoperable protocols, services and applications that virtualize and secure the access to the grid;


common grid middleware, tools and services, such as resource allocation and monitoring;


Grid applications.

The vertical layers represent new devices, and institutional arrangements to create common policies, grid economy and a open global-area networking (Foster, 2003). It is argued that on top of the current model, an activity-based, human-centered layer of services should be added to help the mobilization process (as a complementary vertical layer). This territory-related additional layer could be enabled by specific knowledge-driven ontology (Fensel, Harmelen and Horrocks, 2003), natural language (Lenci, Calzolari and Zampolli, 2002) and/or the semantic web capabilities for “handling and support for knowledge processing” (Roure, Jennings and Shadbolt 2003). If one considers the broad social and economic context under which digital cities may be facilitated, the conditions for integrated learning processes must be considered. This has led Conceição, Heitor and Lundvall (2003) to build on Lundvall and Johnson’s learning economy (1994) and to discuss the learning society in terms of innovation and competence building with social cohesion. They view innovation as the key process that characterizes a knowledge economy understood from a dynamic perspective, while competence is the foundation from which innovation emerges, and which allows many innovations to be enjoyed. In other words, it contributes both to the “generation” of innovations (on the supply side of the knowledge economy) and to the “utilization” of innovations (on the consumptions side of the knowledge economy).

Conceptually, the foundations for the relationship between learning and economic growth have been addressed in the recent literature (Bruton, 1998), with learning being reflected in improved skills in people and in the generation, diffusion, and usage of new ideas (Conceição and Heitor 2002). Learning can occur in many shapes and forms, some of which are informal, some formal. As described before, the institutional framework that comprise the national and regional systems of innovation formalize the technological infrastructure critical to generate the learning processes for individuals, firms, and nations, that ultimately lead to long-term development. Thus, looking at a particular set of organizations, their capabilities and related institutions, provides important lessons for development. The analysis above is broad in scope and considers network societies as wide social and economic processes, which it is argued occur across time and space and require the dynamic adaptation of infrastructures, incentives and institutions, in a way that calls our attention for the need to foster learning societies. However, the evidence of the projects discussed in this presented in this dissertation shows that it is necessary extend the analysis to other aspects of the information society. This is because the experience of projects such as those developed in the cities of Marinha Grande and Aveiro clearly shows the important mutual relationships that specific project-based communities have on the facilitation of network societies, but also the fact that the implementation of digital cities may significantly improve the efficiency of those communities. Within this perspective, my analysis calls for policies that consider long term approaches of dynamic environments, which require to be continuously monitored and evaluated. Specific incentives for infrastructures should continue, but articulated

with the need to foster knowledge-based adaptive human centered environments as drivers of larger communities of users. This requires a continuous pubic effort, but also a better understanding of the effectiveness of the mix of public support mechanisms and private incentives for the development of digital cities.

This study was set out to determine which critical factors enable a digital city to mobilize individuals, communities and organizations for the construction of the information society in Europe and the nature of public policies that should be considered to promote these factors. It has given an account of 4 Portuguese Digital Cities projects developed between 1998 and 2000. To frame the analysis of these projects, I have presented a broad overview of other digital city projects – Amsterdam and Kyoto – as well as a brief introduction to selected European and member states strategic guidelines and/or action plans for the information society. The first Portuguese digital cities and regions became the most important experiment of regional appropriation of ICTs and implementation of national policies for the development of the information society. They left a lasting legacy as an example of integrated projects that could link European and central government policies to the final users (individuals, communities and organizations, both public and private) and promote territorial competitiveness and competence building. The experience of Aveiro and Trás-os-montes set an example for the other projects that followed under a new funding program. Today the Digital Cities Program in Portugal includes 25 cities and regions and covers about 85% of all municipalities and 95% of the population. The current mix of infrastructures and content is broader – community networks, regional data centers, regional portals, business portals and

related knowledge networks, broadband Internet access – including the necessary incentives for context creation and mobilization of people, communities and organizations. European and Portuguese action plans for the information society defined the content and the mix of applications of services included in the 4 cases studied and European and national funds were also the only source of investment. Therefore, the submission, approval and evaluation of these projects would be necessarily coupled to top down strategies for the development of the information society. The most obvious finding to emerge from this study is that consistent public policies, innovative regulatory systems and large investments are needed to create over time the conditions to catch up with more developed societies and mitigate the uncertainty associated with the adjustment process. The second major finding was that specific incentives for infrastructures should continue, but articulated with the need to foster knowledge networks – communities of practice, interest or proximity – to mobilize individuals, communities and organizations for the information society. This requires a continuous long-term pubic effort, but also a better understanding of the effectiveness of the mix public support mechanisms and private incentives necessary for the development of digital cities. Market mechanisms do not necessarily work at the level of the issues associated with digital cities, namely in less favourable zones. As an example, one of the most important critical success factors in Trás-os-montes Digital was the focus on specific communities related to agriculture, education and health. Supporting communities – GACs, GAEs and application developers – were also critical for building competences and mobilization for the information society. They could also sustain the project volunteering in situations of uneven cash flow. RuralNet can be considered another good example of mobilization for the information

society through business and knowledge exchange within a very particular community of regional products. In early stage developments, digital cities have demonstrated that they also call for specific initiatives, together with monitoring and evaluation procedures, for the mobilization of individuals, communities and organizations. This is one of the most critical factors to be considered in the design, implementation and exploitation of digital cities. They cannot be promoted independently of an innovation policy fostering competence building and connectivity to knowledge networks. Aveiro and Trás-os-montes, supported by the local universities, could build a large base of competences for the development of applications and contents. Other cities or regions, the case of Alentejo and Bragança, could not secure the necessary endogenous competences and had to shut down their portals as soon as public funds were discontinued. Bridging the digital divide to promote social cohesion – both national and European – was the main rationale to support these seven projects. Knowledge networks have the potential to make both public administration and markets more effective, which helps promoting learning trajectories for the inclusive development of society and bridging the digital divide, but they require effective infrastructures, incentives and adequate institutional frameworks. Returning to the hypothesis posed at the beginning of this study, it is now possible to state that the main policy implication to draw from this study is that incentives for Portuguese digital cities should be mainly concentrated in providing context, connectivity and content for local knowledge networks. Knowledge networks can be considered as knowledge-centric, project-based virtual communities. Virtual communities are defined by Rheingold (1993) as “communities [that] use words on screens to exchange pleasantries and argue, engage in intellectual

discourse, conduct commerce, exchange knowledge, share emotional support, make plans, brainstorm, gossip, feud, fall in love, find friends and lose them, play games, flirt, create a little high art and a lot if idle talk. People in virtual communities do just about everything people do in real life, but we leave our bodies behind”. When embedded in daily life routines, knowledge networks can be simultaneously mobilizers for the information society and drivers for change. Household size 2 3 4 42 61 71 29 63 78 73 89 90 35 68 79 19 32 44 30 54 66 35 58 66 35 51 58 27 52 67 48 81 91 78 78 92 39 71 78 18 41 52 48 75 79 79 93 96 55 73 82 Type of locality Metro Urban Rural 56 54 50 49 51 54 71 68 70 50 50 50 40 37 23 55 51 46 49 36 42 50 50 43 47 48 47 72 66 70 77 81 72 51 50 52 30 41 31 63 55 44 82 81 79 61 62 63

% of households Total TOTAL EU Belgium Denmark Deutschland Greece Spain France Ireland Italia Luxembourg Netherlands Austria Portugal Finland Sweden United Kingdom 53 51 70 50 33 49 43 47 47 69 77 51 34 52 80 62

1 32 19 47 24 25 24 23 23 23 41 67 30 10 30 62 29

+5 69 79 89 75 38 65 63 58 63 87 98 81 38 84 97 81

Table 10 – Penetration of personal computers in Europe - 2004. Source: IPSOS, 2004

Public policies for the development of the information society in Portugal have often, sometimes only, focused on providing universal Internet Access and delivering public administration services. This strategy has fallen short to place Portugal among the most developed countries in Europe. Portugal has consistently occupied the last positions in the European rankings (IPSOS, 2004) for the penetration of personal computers in households (Table 10) and proportion of households with personal computers that have internet access (Table 11).


% of households TOTAL EU 15 Belgium Denmark Deutschland Greece Spain France Ireland Italia Luxembourg Nederland Austria Portugal Finland Sweden United Kingdom

Total 39 40 58 39 18 28 28 37 36 56 65 39 16 39 73 50

1 24 13 33 19 13 15 15 21 16 29 65 22 4 16 52 20

Household size 2 3 4 32 46 54 20 51 66 62 76 83 27 53 64 10 20 24 17 29 40 22 37 43 29 43 45 21 42 51 39 64 78 52 85 81 29 58 58 7 19 29 38 59 67 71 87 89 44 59 68

+5 50 63 76 59 20 39 39 41 44 71 55 58 17 65 91 64

Type of locality Metro Urban Rural 43 41 36 36 40 46 59 59 56 39 39 39 25 19 12 35 31 25 34 20 24 42 35 36 36 38 35 59 51 58 64 64 68 42 39 37 14 21 14 50 39 34 77 71 69 47 50 52

Table 11 - Internet access at home in Europe - 2004. Source: IPSOS, 2004

% of households Total TOTAL EU 15 Belgium Danmark Deutschland Ellada Espana France Ireland Italia Luxembourg Nederland Österreich Portugal Finland Sverige United Kingdom 12 32 30 6 0 12 10 0 3 7 36 10 7 14 25 13

Household size 1 2 3 9 10 14 11 13 42 16 31 41 3 4 9 0 0 0 6 7 13 6 7 14 0 1 0 2 2 5 4 4 6 37 26 52 7 8 16 2 3 9 6 14 23 19 23 30 5 10 15

4 15 50 44 11 0 14 15 1 4 10 45 17 9 19 31 18

+5 16 55 49 7 1 20 12 0 5 10 37 8 7 24 33 18

Type of locality Metro Urban 17 14 31 30 30 36 6 7 0 0 16 16 16 6 0 1 0 4 6 7 33 36 20 11 6 10 29 14 34 26 15 15

Rural 8 35 25 6 0 9 2 0 4 7 40 5 5 7 14 7

Table 12 - Broadband Internet access at home, Europe - 2004. Source: IPSOS, 2004

Broadband access,

the most recent layer in public policy strategies (Table 12),

although critical for the development of more advanced applications and usage behaviors, has shown a smaller impact than expected on the attraction of new users in Portugal and may be mostly substituting narrow band users lately (UMIC, 2004).


Knowledge networks may also mitigate uncertainties related to (a) the level of dematerialization and disintermediation of social and economic activities; (b) user preferences, usage behaviors or acceptance/resistance patterns of digital goods; and (c) and the unpredictability of demand, and therefore the risk associated with the supply of digital goods (Mansell and Steinmueller, 2000). Several studies about Internet usage and behaviors (Katz and Rice, 2002; Wellman and Haythornthwaite, 2002; Compaine, 2001) suggest that public policies focused on deploying digital infrastructures and providing universal access to the Internet may, on the one hand, ignore the usual asymmetric patterns of diffusion and adoption of new technologies across time and space, and, on the other hand, increase costs for innovators and early adopters slowing down market performance. Actually, the digital divide seems to fade in time and the Internet usage and behaviors tend to replicate contextual issues like gender, age, income, education, etc. Unless governments diversify public programs and incentives for the development of the information society and also target the four-layered structure of the culture of the Internet – the techno-meritocratic culture, the hacker culture, the virtual communitarian culture and the entrepreneurial culture (Castells, 2001) – the full benefits of the information society in LRFs will not be attained. As Castells (2001) argues, “these cultural layers are hierarchically disposed: the techno-meritocratic culture becomes specified as a hacker culture becomes specified as a hacker culture by building rules and customs into networks of cooperation aimed at technological projects. The virtual communitarian culture adds a social dimension to technological sharing, by making the Internet a medium of selective social interaction and social belonging. The entrepreneurial culture works on top of the hacker culture, and on the

communitarian culture to, to diffuse Internet practices in all domains of society by way of money-making. Without the tecno-meritocratic culture, hackers would simply be a specific countercultural community of geeks and nerds. Without the hacker culture, communitarian networks in the Internet would be no different from many other alternative communes. Similarly, without the hacker culture, and communitarian values, the entrepreneurial culture cannot be characterized as specific to the Internet”. The analysis led me to suggest that while the role of public policies needs to be reexamined, the cultural and social shaping of information technologies requires the specific development of human-centered systems to support community building activities. I refer to “edge to core” strategies for the next generation of digital cities. The reflections were based on the need to consider uncertainty in the mobilization of ICTs, which requires individuals, firms and organizations to operate in dynamic environments, where markets and technology are changing fast and in unpredictable ways. This calls for the need to combine flexible infrastructures and adequate incentives with institutions, to foster the necessary context for digital cities to succeed. The new paradigm of semantic grids can help ICT complexity to be alleviated and become an invisible infrastructure embedded in urban daily life. This research has thrown up many questions in need of further investigation. First, the scope of the information society is yet to be determined. It is necessary to outline a more precise definition for the information society to frame strategies, action plans and evaluation programs. Second, the probable transformation of computer grids in urban utilities will need further research on business models and new public policies to promote competition, standardization and universal availability from the beginning. Third, studies about the social consequences of the Internet are still rare in Europe and

non existent in Portugal. To build the information society is necessary to understand how people behave and what sort of recombinations between territory, technology and people will be embedded in daily life.


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