Wi-fi: Should Cities be in the business of broadband…

Knowledge@Wharton has a nice article that presents conflicting opinions on the issue.

Are broadband services better handled by the public or private sector?

…The city of Philadelphia’s grand experiment to blanket its 135 square miles with wireless high-speed Internet access is being closely watched by municipalities across the U.S. that are pursuing similar initiatives. While Philadelphia’s project, which edged closer to reality with an announcement on April 7, is more than a year away from completion, it has sparked an intense debate over whether cities have any business in the broadband industry.

At issue are the following questions: Are broadband services better handled by the public or private sector? Can a wireless broadband network, commonly known as Wi-Fi (wireless fidelity), be used to help more low-income people gain online access, bridging what is commonly known as the digital divide? Will projects become caught up in politics? Should Internet access be viewed as city infrastructure, like telephone poles or city streets?

…While Philadelphia sees its network as a way to help close the digital divide, for smaller cities getting into the broadband business it is a matter of survival. One such city is Glenwood Springs, Colo., population 9,000, nestled in a mountain river valley between Aspen and Vail. The problem: Broadband providers Qwest and AT&T’s cable unit, which was later acquired by Comcast, didn’t think running fiber optic lines through mountains into a small city would be profitable.

So in 2001, the city decided to offer its own broadband services and laid fiber optic cable along with its electric lines (the electric company is also run by the city). Glenwood Springs now offers broadband services, voice over Internet protocol, disaster recovery and wireless service. It wholesales the backbone to small Internet Service Providers, which then sell access to the public. To Faulhaber, the argument for rural cities to build wireless and wired broadband networks is stronger because it’s an economic necessity. “If the city is ‘smallish,’ with no other options, it’s a good idea.”

….As these projects play out in coming years, a number of wild cards will be worth watching. For example, Faulhaber says political issues could take center stage during the network rollouts. If these wireless networks become revenue makers for cities, municipalities may not stand aside and allow private upstarts with next-generation technology into the market. “Every city is starved for revenue. If these networks generate revenue, then cities are going to milk the situation to protect their franchises,” says Faulhaber. “Any municipality can tax new infrastructure or prevent new technologies. Cities can easily erect barriers.”

New technology is also a potential issue. Although today’s wireless networks may be on the cutting edge, you can almost guarantee that they will be antique in a decade. Will cities continue to upgrade networks? In Philadelphia’s business plan — at least for now — there is a pool of funds devoted to maintaining and upgrading the network.

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Posted on June 2, 2005, in Uncategorized. Bookmark the permalink. 2 Comments.

  1. I have witnessed the fight between muni networks and private enterprises during my last visit to Philadelphia early this year. My take on the debate: it needs to be a partnership. The city needs to control the infrastructure and pricing, while the private sector gets a cut of the revenue for keeping the technology up to speed and ensuring reasonable service levels. Municipal networks cannot function on their own. Cities and towns simply don’t have the support infrastructure or the staying power to support such an undertaking. There is simply no responsibility or answer-ability. A mixed model, like the public utility system, can also be explored. Let the city control the last mile wireless loop, and let private enterprises compete for the connectivity from that point. The consumer can choose from quality of service, support, and content offered. I truly believe that wireless broadband will become a commodity in the next 2 to 3 years in the U.S, and the winner will not be the ones with the fattest pipes, but the most compelling content.

    • I agree with you that municipal networks cannot function on their own. The mixed model sounds reasonable. I think the political side of things could also get interesting over time. As Faulhaber points out, who is to say that the municipality may not erect barriers if wirless broadband turns out to be a revenue maker for the city?

      I don’t know the scene in the US, will take your word on broadband becoming a commodity in the next 2-3 years. Hopefully, it won’t take too long here!! This post comes courtesy a Reliance RConnect card. Not quite broadband, but heck, a big enuf deal for me. 🙂

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