Government-run Wi-Fi in San Francisco Wastes Taxpayer Dollars; Harms Consumers in the Long Run

SAN FRANCISCO – The City of San Francisco this week has asked for public input on its efforts to create a free wireless broadband network or “muni Wi-Fi.” The Pacific Research Institute (PRI), a free-market think tank based in San Francisco, believes that the city government should not be in the business of running a high-risk venture, especially when it can barely afford to pay for its civic responsibilities, such as providing basic services like police, fire, and public transportation.

“Wi-Fi is a high-risk enterprise that’s best left to the venture capitalists and financiers willing to bear the risks,” said Sonia Arrison, director of Technology Studies at PRI. “If the city gets involved, it will likely run an inefficient, costly system. Moreover, a taxpayer-funded network will crowd out private sector competition, and in the long run, will mean higher prices for consumers.”

“There is no such thing as a ‘free lunch’, and there is certainly no such thing as ‘free Wi-Fi,’ said Ms. Arrison. PRI’s research shows that municipal broadband networks are costly, risky to build, and difficult to maintain. Local broadband is already ample and affordable, and San Francisco is one of the most unwired cities in the nation. “Spending millions now on a redundant service on the backs of local taxpayers would be a mistake,” Ms. Arrison said.

City Hall is in no financial position to build a muni broadband network. Costs for a local Wi-Fi network range from $10 to $18 million. San Francisco faced a projected $59 million budget shortfall this year, but dodged it by raising parking fines for locals and fees for public services.

“If City Hall can barely afford to provide residents the critical services that matter most, such as police, fire, and public transportation, it is absurd to think that it will be able to maintain a high-quality, cutting-edge broadband network,” said Ms. Arrison.

The strength of the local consumer market, she noted, helps drive prices down and encourages broadband providers to upgrade equipment and expand consumer choice. Market intervention by City Hall, said Ms. Arrison, would likely raise prices and harm consumers for the benefit of a few.

“Local residents pay some of the highest public fees and taxes in California. Asking local taxpayers to foot the bill for a non-critical program like wireless Internet connection, when City Hall can barely balance its own books, is unfair. San Franciscans should answer Mayor Gavin Newsom’s call for public input with a resounding ‘no’ to muni Wi-Fi.”

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