The Pantagraph (Bloomington, Illinois), June 03, 2007
Public officials in
Bloomington and
Normal are exploring ways to provide high-speed wireless Internet access, or "Muni WiFi," for every resident. A closer look at the Muni WiFi phenomenon reveals numerous digital dangers ahead for
Twin City taxpayers.
Across the nation, local governments have soaked up positive publicity for their Internet endeavors, employing various business models and advanced technologies such as fiber optic cable and WiFi to connect residents to the online world.
Chief among them is
San Francisco, which made international headlines with its "innovative" public-private partnership model to provide "free" WiFi network for locals, now pending approval of the San Francisco Board of Supervisors.
Mayor Gavin Newsom declares that the network will be safely run by private companies, using no tax dollars to build it. Despite the hype, San Franciscans will incur high risks and costs to log on to their wimpy WiFi.
The partnership agreement that Newsom’s office signed with corporate collaborators Google and EarthLink Inc. creates a monopoly franchise to provide an obsolete technology at dismal speeds.
The free service speed is a measly 300 kilobytes per second - faster than dial-up, but a snail’s pace compared to standard DSL and cable modem packages.
The technical requirements in the agreement allow for Google/EarthLink to crowd out other WiFi providers on the local unlicensed radio spectrum, thwarting a competitive marketplace by degrading the quality of rival services.
As Silicon Valley entrepreneurs begin investing in faster, more mobile broadband technologies such as WiMax and EVDO, its unclear why
San Francisco (and other cities) has championed WiFi, which can only provide short-range signals that are notoriously spotty and easily broken by physical obstacles, such as bad weather, trees and walls.
Offering little in the way of innovation or high-performance, it’s not surprising that
San Francisco’s Muni WiFi efforts are ignored by many in the local political community, which now demand a comprehensive government-run telecommunications network, paid for by tax dollars.
History has shown that those too are set up for failure thanks to a lack of private-sector resources, proper planning, and business acumen. Indeed, government-run systems sour quickly.
This past February, the Pacific Research Institute released a major study that reviewed more than 50 government-run telecommunications networks that compete against private providers in the broadband, video, and telephone markets.
This analysis demonstrated that these public systems are overwhelmingly financial disasters. Many received their initial funding through suspicious means, including insider loans at special rates.
Muni networks are revenue-hungry, demanding constant reinvestment; the ones in PRI’s sample have raided more than $840 million from tax and ratepayers over 20 years. Analysis of the total track record of these municipal systems shows that 77 percent of the time they don’t pay their way.
Worse yet, when faced with strong competition from the private sector, most government-run networks have resorted to predatory pricing to achieve fiscal solvency. These tactics are sustained by raising government fees and taxes, and taking out high-interest loans on the public dime.
It’s clear that no matter what the technology or business model, municipal telecom networks are a risky gamble. They have proven to be nothing but a digital white elephant, costing the public much more than they’re worth and proving difficult to dispose of - even after failure, as bureaucrats rarely acknowledge defeat.
Rejecting big-government solutions and adopting market-friendly policies are more likely to solve the policy problems Muni WiFi networks are intended to address.
What’s truly needed is a re-focus on priorities - increasing high-tech investment for the benefit of the greater community. Serious consideration should be given for a stronger "voucher" model that protects competitive benefits and increases opportunity, positioning the Twin Cities as innovative leaders in advanced communications.
By eliminating red tape and temporarily exempting Internet service providers from costly government policies like franchise taxes and rights of way fees, Normal and Bloomington officials could provide targeted zero-regulation districts that can help channel private investment and entrepreneurship that helps people first, not government.
Working through public assistance agencies, local leaders can then reach out to at-risk residents, particularly low-income families with children, with donated computer equipment and "vouchers" for discounted monthly service.
By embracing market forces, city officials can create a vibrant communications marketplace that expands the reach and lowers the cost of Internet access for all, which is sure to leave San Francisco and other big cities smarting from their costly WiFi mistakes.
Vince Vasquez is the senior policy analyst with the San Diego Institute for Policy Research. He is the co-author of PRI’s study "WiFi Waste: The Disaster of Municipal Communications Networks."
