Think Tank Trashes Municipal-Run Wireless

By Eric Griffith

February 03, 2005

A report out today says city or county controlled Wi-Fi broadband networks (like the one planned for Philadelphia) are 'ill-advised' at best—but Wi-Fi pundits question the authors' motives.

A report out today from the Washington D.C.-based New Millenium Research Council (NMRC), called "Not in the Public Interest—The Myth of Municipal W-Fi Networks," calls into question the necessity, the anti-competitiveness, and the overall viability of towns, cities, or counties installing wireless broadband and treating it like a public utility.

However, Wi-Fi-supporting pundits point out potential issues with not only the arguments made in the report but also the objectivity of the authors, who the pundits brand as "sock puppets of industry."

The NRMC was created in 1999 to "develop workable, real-world solutions to the issues and challenges confronting policy makers, primarily in the fields of telecommunications and technology." The group is an "independent project" of Issue Dynamics, Inc. (IDI), a group that has the support of such incumbent telcos as Bell South, Comcast, SBC, Sprint, Verizon and Verizon Wireless to name just a few (according to reports at eWeek.)

In a phone briefing held today with journalists, the authors of various sections of the report gave a summary of their analysis, all of which uniformly question the need for any kind of government-run and funded wireless broadband system. Arguments against include:

  • Anti-competitiveness: Municipal wireless networks will be funded by taxpayers. "When a private sector company fails, it must respond. But government [programs] can be propped up with additional tax dollars," according to Technology Counsel Braden Cox, counsel for the Competitive Enterprise Institute.

  • Past failures: "Nearly every municipal network of the last decade has failed badly," says David P. McClure, president and CEO of U.S. Internet Industry Association. When asked directly what municipal networks had failed, speakers mentioned Marietta, Georgia, a utility district in Washington state, and others—though not all are necessarily wireless.

  • Not addressing the "Digital Divide:" McClure's section of the report states that the phrase is a catchall, and can't be limited just to a lack of free broadband. He also says "econometric data shows no specific link between broadband availability and economic development." And, he says, it won't increase tourism either, since it won't offer more than the Wi-Fi already available in public access hotspots run by private companies.
  • It's already covered: Steven Titch, a senior fellow with the Heartland Institute, said that major cities proposing municipal broadband (like Philadelphia and San Francisco) are already well served by existing hotspots. Citing numbers from JiWire.com, Titch says San Francisco, for example, has 399 hotspot locations, 42 of which are free. He says that most municipal networks would only cover areas like downtowns and airports anyway—areas that are usually well-covered with Wi-Fi connections already.

  • Government Censorship: "If broadband ownership is by municipalities or county governments, you have the potential for government censorship that most of the journalists on this call would bristle against vehemently," said Barry Aarons, analyst with the Institute for Policy Innovation.
  • Many states, including Indiana and Nebraska, are already contemplating bans on municipal broadband networks, much like the one that was signed into law in Pennsylvania not long ago. Big companies like Intel are considering lobbying against such measures—municipalities are, after all, potential customers for future WiMax long-range wireless products that would be powered by Intel chips.

    Glenn Fleishman, editor of the popular blog Wi-Fi Networking News, took the group to task before the report was even out in a post on February 1, after BusinessWeek's blog took the group's findings at face value. While he says he doesn't wholeheartedly oppose the NMRC's point of view, he was put off by the lack of "transparency" of the groups the authors represent. Most are seen as being possibly funded by telecom organizations, such as Verizon, which stand to lose out to municipalities doing their own wireless. (Verizon, however, gave a right of refusal to Philadelphia after first trying to block that city's network plans even after the Pennsylvania anti-muni-network law passed.)

    Esme Vos has been writing exclusively about municipal wireless networks on her blog MuniWireless for two years. She's previously written about the Heartland Institute when it stated in October 2004 that that "virtually everyone who wants broadband services can get DSL from their telephone company or cable modem service from their cable company"—a sentiment they echoed in today's call. Vos said at the time, "Where is this paradise? Maybe in Seoul, Korea."

    Today on her site, referring to an early article Heartland placed on its own site as a preview to today's NMRC report, she said "For some reason, it does not cite the successful municipal Wi-Fi (and wired) deployments we all know about: Chaska (MN), Scottsburg (IN), Auburn (IN), among others. No, in the world of Heartland, they do not exist."

    She counters that, contrary to what the NRMC report says, the false hopes don't lay with the municipal broadband deployments, but in the "false hopes propagated for so long by the cable and DSL incumbents, the one that promises to bring fast, cheap broadband to YOUR neighborhood. Only now people are very impatient and the equipment is becoming very cheap."

    Fleishman says in his rebuttal against the same Heartland article, "Municipal broadband is almost the last resort of cities and towns that can no longer wait on the promises or lack of promises from incumbents." In a perfect world, he says, municipalities wouldn't have to build networks: the private companies would already have done so "without sock puppets making their arguments for them."



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