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How Stockholm Is Creating A Second Silicon Valley In Scandinavia

Hint: It's the super-fast, government-funded Internet.

How Stockholm Is Creating A Second Silicon Valley In Scandinavia

Photo: S-F via Shutterstock

The headline in the Financial Times story last year was "Stockholm: The Unicorn Factory." Such has been the Swedish capital's ability to found billion dollar startups: Skype, Spotify, King (maker of "Candy Crush"), and Mojang (creator of Minecraft) all call Stockholm home.

Some say Stockholm is second only to Silicon Valley in producing successful tech startups, and creating tech jobs. The most common job role in the city is "programmer"—coders make up 18% of the workforce.

Why has the city managed to produce so many successful companies where others haven't? One answer is surely solid—and publicly owned—infrastructure. Undergirding tech development in Stockholm is an enviable fiber-network that reaches 90% of the population (790,000 people) and 100% of businesses. The super-fast network is owned by a public body—Stokab—which the city set up in 1994. It licenses access to 100-plus companies to deliver IT services using the fiber.

"The philosophy behind it is that access to fiber is a strategic utility. We see it like other infrastructure, like water or bicycle roads," says Karin Wanngård, Stockholm's mayor.

Stockholm's mayor, Karin Wanngård

Analysts say Stokab could be a model for other cities looking to technology infrastructure as a public good. Stokab is praised for enhancing competition in Stockholm and lowering everyone's network access costs. "Stokab was seen as a public infrastructure company by the City Council, much like a public organization responsible for roads," says Benoît Felten, in a report for Diffraction Analysis, a research firm. Financed by loans backed by the city, Stokab connected public institutions and universities first, then "private businesses started purchasing dark fiber circuits from Stokab, and the network expanded briskly," Felten says.

Stockholm was recently named number one "networked society" city in a ranking produced by Ericsson, the Swedish telecoms group (no hometown advantage was afforded, surely). The report uses three dimensions—social, environmental, and economic—to grade cities. In second place is London, followed by Singapore (which also has a publicly owned fiber network), Paris, Copenhagen, Helsinki, New York, Oslo, Tokyo, and Seoul.

According to a 2014 PWC survey, Stockholm also has good IT in its schools and public institutions. Wanngård believes in teaching programming in elementary schools: "We believe one should see code as a new language, as much as in the past we saw it important to learn foreign languages like English. When we use technology like apps, we should have knowledge of how it works," she says.

Ericsson CEO Hans Vestberg says ICT has a role in reaching all 17 Sustainable Development Goals agreed by the United Nations last year, including "Goal 11: Make cities inclusive, safe, resilient, and sustainable." Before taking over the company, he spent seven years with the United Nations.

Ericsson's report says no city is truly sustainable yet. Vestberg says there's a lot more they can do around connecting cars and doing traffic-flow management (reducing CO2 and other pollution); using electricity more sparingly (building local smart grids for instance); and integrating public safety (police, fire, ambulance services, and so on).

"Big cities are starting to think about infrastructure that is technology," Vestberg says. "Historically, it was hospitals, apartments, roads. Now they see technology has to be part of being a livable city. We need more private-public partnerships where governments take advantage of technology that is rolled out already and delivering better services."

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