^{Democracy & Technology Blog} Municipal madness

There may be remote, isolated parts of the country where it makes some sense for local officials to spend tax dollars on wireless broadband networks. But for most of America, it is a bad idea. Here is the number one problem that municipalities who want to get into the telecom business face: The technology is improving so rapidly that they are either digging a bottomless pit or they will be stuck with something that belongs in a museum before they retire the bonds that paid for it.

Philadelphia wants to be the “number one wireless city in the world.” Years ago, France wanted to be number one in computers. Remember the Minitel? The government of France distributed free terminals to ensure equal access to central databases. Of course, France couldn’t foresee the PC or the Internet, both of which rendered mainframes and the Minitel absolutely worthless.

Philadelphia does not plan to spend taxpayer dollars. But it will give free access to city property and agree to be the “anchor tenant.” Sounds like a cozy relationship. This means that the network will enjoy a competitive advantage which will discourage future investment by others.

When the Telecommunications Act of 1996 eliminated barriers to competition, a lot of cities were short-sighted. They saw telecom as an opportunity for new gross-receipts taxes and in-kind contributions. Municipal rights-of-way policies actually contributed to the telecom meltdown. Some cities apparently still don’t understand that their own taxes and regulations are hampering investment in broadband. Alexandria, VA and Portland, OR, for example, recently announced plans to raise taxes on wireless services provided by the private sector at the same time they are moving forward on plans to build wireless broadband networks a la Philadelphia!