Battle over municipal Wi-Fi networks

SEATTLE – As more municipalities consider providing their own wireless broadband services, state and federal lawmakers are mulling over legislation that would limit or ban such initiatives.

About 10 to 20 states, including Florida, Texas and Indiana, have introduced, passed, and, in some cases, rejected such legislation, said Steven Titch, a senior fellow for information technology and telecom policy at the non-partisan, nonprofit Heartland Institute.

And at least one federal bill – introduced by Rep. Pete Sessions (R-Texas) more than two months ago – would essentially prohibit state and local governments from offering telecommunications, Internet and cable services in any area where a private entity is offering a “substantially similar service.” Another federal bill would place hurdles on a municipality seeking to compete with the private sector.

The telecommunications industry has been lobbying hard for such restrictions, but Titch, who also doesn’t think it’s a good idea for cities to develop their own Wi-Fi networks, said it’s a question of wisely using taxpayer funds.

“Stand-alone commercial Internet service is not and should not be the goal of municipal networks,” Titch said, citing a recent Jupiter Research study. “Government effectiveness and efficiency are the top priorities and justifications for build-out.”

Michael Balhoff, a telecommunications expert and managing partner with Balhoff and Rowe, said his company will issue a 250-page report in two weeks that will say state municipalities should not compete in this industry.

Even though the telecommunications industry sponsored the report, Balhoff claimed the report is independent and factually based. He said there are many policy and financial risks involved.

“My belief is municipalities and governments should not get in unless there’s a true market failure,” he said.

But proponents of municipal Wi-Fi networks said benefits include economic development, closing the Digital Divide and improving government services. State Sen. Ron Amstutz (R-Ohio) said a source indicated at least 76 cities plan to provide some form of wireless infrastructure. To date, Philadelphia is probably the largest metropolitan city building a wireless network that would charge residents and businesses $20 per month for high-speed Internet access.

State Rep. Curtis Thomas, (D-Pa.) said there was an underlying notion that a competitive marketplace would drive such initiatives. “That has not happened,” he said. “So therefore the ball is now in the courts of municipalities to handle what I call the last mile of connectivity.”

Thomas was among a number of supporters and opponents who spoke during a session held yesterday during the National Conference of State Legislatures in Seattle.

David Olson, director of Portland, Ore.’s cable communications and franchise management office, said the cable and telephone companies there have essentially failed to provide affordable broadband service in his city and to other municipalities leading them to implement such initiatives.

The city is seeking to build a wireless cloud, but through a public/private partnership, he said. The city is expected to issue a request for proposal in a week to determine how much it will cost to build a mesh communications network. The initiative involves the city’s school district and transit system.

But Jonas Neihardt, vice president for Qualcomm’s federal government affairs, said the industry is providing broadband service that is much better and wider than what municipalities can provide. He admitted that some cities will miss out on such service, but not major cities like Philadelphia and even rural areas.

Like other opponents, he said municipalities will not be able to keep up with the changing technology and continued costs of operating and maintaining such networks. Titch added municipalities might also face liability issues, such as spamming, piracy, illegal or inappropriate content and theft of consumer or operator data.

But Titch said he expects municipalities will increasingly partner with the private sector to develop such networks rather than go it alone. The public/private model has a far more chance of success, he said.