Municipal Wi-Fi: The Bubble is Bursting
Ever since Philadelphia first announced plans to implement taxpayer-subsidized wi-fi Internet access (remember: there is no such thing as “free” access), I have been critical of the concept for a simple reason: wireless Internet access is not a public good (because it is excludable) and therefore is not a legitimate function of government.
For the most part I’ve been a lone voice, even among supposed “libertarians” who seem eager to sacrifice principles in the name of “neat-o!”
One exception has been the good folks at Out of Control, who blog about a variety of urban planning issues, including the folly of municipal wi-fi, from a strictly libertarian perspective.
Now they point to a study that concludes — surprise! — that the advocates of taxpayer-subsidized wi-fi have consistently overstated the benefits and understated the costs of their proposals:
The report estimates that the average cost of building and maintaining a municipal wireless network is $150,000 per square mile over five years. According to the report, roughly 50% of current initiatives will fail to breakeven even if the benefit of the initiative is assumed to be $25 per user per month.
As Out of Control observes:
It is no coincidence that in the wake of these reports, we have seen municipalities opt to shift risk, cost and operational responsibility to the private sector. It started with Philadelphia, which ditched its orginal plan to own a city-owned wholesale broadband backbone and instead turned over the whole kit-and-caboodle to EarthLink.
Demand creates its own supply. If there is an unmet need for an umbrella wireless Internet zone in a municipality, then revenue-hungry telecommunications companies will trip over themselves to offer it. Just add a little competitive bidding to keep them honest, and the entire enterprise can be established without a single taxpayer dollar committed to it.
Which is exactly how it should be.
Similar Posts:
- Municipal Wi-Fi: Philly Flip-Flops, Goes Private Instead
- NYC to Launch Municipal Wi-Fi?
- Is “Free” Municipal Wi-Fi Really Free? (Part Two)
- Philadelphia Presses Ahead with “Free” Wi-Fi
- Municipal Wi-Fi: Verizon Scraps Hotspots; Technology “No Longer Attractive”
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Kip, I couldn't help but think of you when I saw this article in the LA Times. It's a bit fuzzy about all of the relevant details, but it sounds like there are some variations on the theme here, some of them less bad than others. They talk about the town on Lompoc CA (pop. 43,000) which is setting up their own high-speed network because the cable and phone carriers who ought to be offering the service find Lompoc is too small a fish to fry while they still have other bigger markets to serve first. They make the analogy to Lompoc in the last century buying their own electrical utility because they weren't being adequately served by the commercial one. (They are still being served profitably by that electrical utility, and plan to use profits from it to make the initial investment in the network infrastructure.) This seems to me a different situation than Philly or San Fran. Lompoc seems closer to a homeowner's association or neighborhood coop setting up a network. What do you think?
[Kip replies: It's still the politicians of Lompoc who are doing the grumbling, even though they claim to be basing their actions on "surveys" and "studies."]