Municipal broadband networks sound like a great idea, and they were a hot trend a few years ago. For one thing, promoters claimed they weren’t going to cost taxpayers a dime. Many attempts were made to blanket towns and cities with ubiquitous, free, public-spirited broadband service, but most of these projects resulted in cost-overruns, construction delays and ultimately poor service. Many were abandoned. That is, supporters walked away from a bad investment rather than build upon it. In Tennessee, the legislature is considering a “technical” amendment that would allow municipalities to use “public money” and “public debt” to deploy broadband on an “open access” basis “within or without” that municipality’s, and (with permission) any other municipality’s, boundaries. This is not Read More ›
Reacting to Apple’s decision to not allow Google Voice for the iPhone, Wall Street Journal guest columnist Andy Kessler complains, It wouldn’t be so bad if we were just overpaying for our mobile plans. Americans are used to that–see mail, milk and medicine. But it’s inexcusable that new, feature-rich and productive applications like Google Voice are being held back, just to prop up AT&T while we wait for it to transition away from its legacy of voice communications. How many productive apps beyond Google Voice are waiting in the wings? So Kessler proposes a “national data plan.” Before we get to that, Kessler complains that margins in AT&T’s cellphone unit are an “embarrassingly” high 25%. He doesn’t point out that Read More ›
A paper by James Valvo published by Americans For Prosperity notes, Easily the biggest problem with municipal projects is that they commit taxpayer money to projects that nearly always run over budget for construction, are not financially sustainable once they are built and rely on future subsidies to provide so-called “free service.” As is always the case when governments enter the free market, distortions in price, customer service and availability hinder competition and ruin what could otherwise be a profitable venture. See: Municipal Broadband’s Record of Failure: A Profile in Market Intrusion.
Lompoc, California financed the construction of a Wi-Fi network that has attracted so few users it won’t be able to start repaying the loan — and a lot of other cities are facing the same predicament, according to the Associated Press. A $3 million plan to blanket Lompoc, Calif., with a wireless Internet system promised a quantum leap for economic development: The remote community hit hard by cutbacks at nearby Vandenberg Air Force Base would join the 21st century with cheap and plentiful high-speed access. Instead, nearly a year after its launch, Lompoc Net is limping along. The central California city of 42,000, surrounded by rolling hills, wineries and flower fields more than 17 miles from the nearest major highway, Read More ›
Writing in Technology Review, Mark Williams provides some fascinating detail on the San Francisco Wi-Fi network that Google and EarthLink have teamed up to build (emphasis is mine). Google would foot the bill for free Wi-Fi service, which would run–or crawl–at 300 kilobits per second, about five times the speed of a dial-up modem connection. EarthLink would build the network hardware and offer, for $20 a month, a megabit-per-second service with customer support. The proposed network would require at least seven Wi-Fi access points per square kilometer, mounted on city property such as light poles and traffic lights. At this density, the network would meet the city’s coverage goal but would not be guaranteed to reach above the second floor Read More ›
City officials in Ashland, Oreg. have delayed their plans to raise electricity rates by $7.50 per month to cover the unexpected cost of their municipal fiber network. Meanwhile, the local newspaper calculates the problem could be solved if 90% of the customers of Charter Communications switch over to the municipal network and “accept steep price increases to top market rates.” They might as well outlaw private enterprise while they’re at it.
What happens when a municipal broadband network fails to cover its costs? The costs get shifted. Residents of Ashland, Oregon will see a monthly surcharge of $7.50 on their electricity bills. Ashland’s cable rate payers will also get hit with a surcharge. (See the article from the Ashland Daily Tidings.) The fact that Ashland’s fiber network is not profitable, that Ashland cross-subsidizes it and that Ashland’s taxpayers/captive rate payers will foot the bill for a bailout proves what many of us have been saying about municipal networks: (1) Cities lack the expertise to successfully build and operate broadband networks, (2) Cities will discriminate in favor of their own network ventures and (3) Cities are unprepared to continually modernize the networks Read More ›
Despite high hopes, Orlando’s Wi-Fi network doesn’t attract enough users to justify the expense, according to Mark Schlueb writing in the Orlando Sentinel. … the service worked well — as many as 200 people using laptop or hand-held computers could log on at once to check e-mail or surf the Web … … only about 27 people a day, on average, accessed the free service. City officials said they couldn’t continue to justify the $1,800-a-month expense. See: “City Yanks Plug On Free Wireless Zone for Internet,” by Mark Schlueb, Orlando Sentinel, Jun. 21, 2005.