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Colorado, Washington, Utah, Maryland Top States for Internet-Related Businesses, Report Says

The report looks at how states and municipalities can make themselves more welcoming to internet and technology firms.

by Ryan Marshall, The Frederick News-Post / August 28, 2017

(TNS) -- Maryland is one of the top states in the country for internet and technology companies, according to a recent report by a trade association of tech businesses.

The report by the Internet Association ranks Maryland fourth nationally in its “Ease of Doing Internet Business” report, which looks at how states and municipalities can make themselves more welcoming to internet and technology firms.

The group is a trade association whose members include industry giants Amazon, Facebook and Google, as well as such newer companies such as Netflix, Uber and PayPal.

Internet businesses include data processing, hosting, and related services, wired and wireless telecommunications carriers, telecommunications, internet publishing, broadcasting, and web search portals, and computer systems design and related services, Internet Association spokesman Scott Haber said in an email.

The internet doubled its contribution to America’s economy between 2007 and 2014, increasing from 3 percent to 6 percent of the gross domestic product, the report said.

“While we have begun to develop accurate measures of the internet sector’s economic footprint, there is far less research on what policies and conditions can help develop or expand that footprint in a particular city, state, or region,” it said.

Top 10

The following are the top 10 states, in order, for doing Internet business, according to the Internet Association.

  1. Colorado
  2. Washington
  3. Utah
  4. Maryland
  5. Massachusetts
  6. Delaware
  7. New Jersey
  8. Connecticut
  9. District of Columbia
  10. California

Factors in the success of internet businesses include an area’s environment for internet businesses; internet accessibility; the amount of public and private money available for research and development, internet investment and general investment; and the regulatory environment for an area, including taxes, regulations and licensing.

Colorado ranked first in the study’s rankings, while Maryland came in fourth, behind Washington and Utah. Massachusetts was fifth.

Access to high-quality internet is the largest driver of different index scores, Haber said.

There’s a significant discrepancy in internet access between top-performing states and others, he said.

Maryland scored a 94 out of 100 on internet access in the report.

Each of the top five states enjoys high rates of internet access and strong investment environments that can help technology companies get funding, the report said.

“However, they are beaten out for the top spot because of less friendly general business governance, which is marked by higher regulatory burdens, and or by weaker internet business environments,” it said.

Maryland has a highly educated workforce with many colleges and universities focused on developing skills in cybersecurity and information technology, said Daraius Irani, chief economist at Towson University’s Regional Economic Studies Institute. The federal government also employs many alumni from Maryland colleges.

The state needs to ensure a pipeline of students who can meet the demands of tech companies by providing them with internships and apprenticeships, Irani said.

Companies need a business environment with stability where they’re able to make long-term plans, he said.

Keeping business taxes steady or cutting them should help Maryland attract more tech companies, but counties and cities shouldn’t engage in a “race to the bottom” to attract more companies with low taxes, Irani said.

Taxes are a consideration, but companies also examine other factors when they’re deciding where to set up their offices.

“They’re looking for workforce,” as well as land, infrastructure and other things they need, Irani said.

He said Frederick County has done a good job of making itself a draw for companies.

Construction is expected to be finished by early 2018 on a new incubator space for the Frederick Innovative Technology Center Inc. at 118 N. Market St. in Frederick.

It will include a variety of workspaces for entrepreneurs that can expand as their businesses grow.

The county is also home to Tech Frederick, a collective of people and businesses in the IT industry that highlights, develops and advocates for the county’s tech community.

Nick Damoulakis, one of the founders of the custom software-development company Orases, sits on Tech Frederick’s board of directors.

Both Frederick city and county have been very active in Tech Frederick, and have been “true advocates for tech companies,” Damoulakis said.

The state’s EARN grant program, which helps businesses invest in training to create a skilled workforce, has also helped companies, he said.

Tech Frederick recently received $300,000 in grants for employee education and training to help people move into the technology field.

Getting employees the right education, whether it’s helping programmers learn more programming languages or teaching project managers different skills, leads to more satisfied clients, Damoulakis said.

He said the state is doing the right thing by giving the money to businesses and making them accountable for the results of the training.

“I believe the state is putting the money in the right place. They’re putting it in education,” Damoulakis said.

©2017 The Frederick News-Post (Frederick, Md.) Distributed by Tribune Content Agency, LLC.

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