Report warns against muni broadband

Cities and municipalities who want to run their own WiFi wireless broadband networks are basing their plans on claims of benefits that have dubious merit and few facts to back them up and could be headed for "less than anticipated outcomes," according to a new report.

The New Millennium Research Council report warned that these networks present a number of serious problems that are being overlooked "as cities rush into committing millions in taxpayer dollars to pay for network development and expansion."

The research council is a project of Issue Dynamics, a Washington, D.C. firm whose clients include Baby Bells, Internet service providers and trade groups related to the communications industry. Contributors to the report include the U.S. Internet Industry Association, The Heartland Institute, the Competitive Enterprise Institute, the Beacon Hill Institute at Suffolk University, the Institute for Policy Innovation and Ron Rizzuto, a professor at the University of Denver.

Even if there are places where commercial broadband service is hard to come by, such as rural areas, there are incentives that states and cities can offer to get commercial companies to provide that service, said Barry Aarons, a research fellow for Institute for Policy Innovation's Center for Technology Freedom.

Municipalities say running their own networks is the only alternative for providing cost-effective broadband access for businesses and citizens where commercial providers won't, as in some rural areas, or in some inner city areas where commercial service is still hard to come by.

Cities such as Philadelphia and Chicago have made this argument to back their plans for building city-run wireless broadband networks. But libraries and schools, which get their funding from current programs, can be better sources of broadband access for low-income areas, said Steven Titch, senior fellow for IT and telecom policy at The Heartland Institute.

City ownership of WiFi networks "is not the solution for bridging the digital divide or encouraging competition in the broadband market," the report concludes.

Also this week, Oregon lawmakers have introduced a bill that would strictly limit the situations in which local governments in the state could offer their own broadband service. It requires governments to file three year cost projections and cost/benefit analyses, hold public hearings and receive elector approval of the financing before building their own network.

If the bill becomes law, Oregon would join at least 17 other states who have similar legislation in the books, or who are contemplating it.

Meanwhile, Sens. Ted Stevens (R-Alaska) and Daniel Inouye (D-Hawaii) introduced legislation in the Senate to ensure the Universal Service Fund (USF), which subsidizes rural internet and phone service providers, continues.

The bill exempts the USF from requirements of the Anti-Deficiency Act to have cash on hand to cover its funding obligations, versus relying on collections that will be generated in the future.

Robinson is a freelance journalist based in Portland, Ore. He can be reached at hullite@mindspring.com.