NEW YORK, Oct. 20, 2015 /PRNewswire/ -- This paper is an adjunct to a concurrent report on the telecommunication regulatory scene in the United States. It will be of interest to public policy departments of the telecommunication network operator community.
In the early part of this century, municipalities discovered Wi-Fi. Cheap, easy to install and configure, and superficially easy to understand, Wi-Fi was going to be the broadband infrastructure of the modern community: ubiquitous and free to all. Everybody, it seemed, was jumping on the WiFi bandwagon. Then something happened: reality began to intrude into this rosy picture of free broadband for all. It turned out that Wi-Fi is cheap if it is done poorly; but when it becomes a network that needs to be planned, installed and supported, it can be very expensive. Almost immediately, municipalities began to look for ways to pay for the carrying costs of the new Wi-Fi networks. Everything from advertising for local businesses to pay-per-use were investigated, implemented, and then abandoned. The problem back then was that municipal Wi-Fi had competition in the form of cellular wireless. What many forgot in the rush to install metro-Wi-Fi was that it isn't as mobile as cellular, and generally provided performance that was inferior to cellular. The problem was only exacerbated as 3G evolved into 4G, with higher data rates and even more pervasive access.
Now, there is a push afoot for municipalities to build their own broadband fiber networks. The notion is that, by doing so, they can provide substantially higher data speeds to their communities, while charging much lower access rates. The community also wins by providing 21st Century infrastructure that attracts new business, providing new job opportunities for the residents, and an expanded tax base. It also makes politicians and social engineering advocates feel better by addressing the digital divide between the haves and the have-nots and "democratizing data." Of course, no one thinks of fiber deployment as being especially easy or cheap; so, the cost dynamic is different for municipal fiber than it would be for municipal Wi-Fi, but the equation is similar: government can deliver, so the proponents say, a service that is intrinsically better than a private enterprise because it does not have to worry about such things as profit or shareholders. It can shave cost to the bone and, for a relatively nominal outlay, maintain the plant on an ongoing basis. There is an old adage, though, that is especially relevant to this situation: if it sounds too good to be true, it is! Municipal broadband makes no more sense than municipal Wi-Fi, and for many of the same reasons. Stratecast has examined the current advocacy for municipal broadband, and believes that it would be a serious mistake for communities to get into the business of being communication service providers.
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