I haven’t written a post in a while, but reading an interesting article in Atlantic Cities today, Why Are There No Big Cities with Municipal Broadband Networks?, I was reminded of some past posts and wanted to take the opportunity to bring some thoughts together.
The largest city in the United States with its own municipal broadband network is Chattanooga, TN. (Another cool thing that put Chattanooga in the news was its 2012 typeface branding efforts). About 170,000 residents in that city have access to the city’s publicly owned cable networks for their internet needs.
There are 137 cities in the US with more population than Chattanooga, begging the question: why isn’t the internet treated more like electricity, gas, and water in more of America’s cities.
The first reason the Atlantic Cities article puts forward is the pressure that telecom giants AT&T, Comcast, Verizon, etc. are able to put on cities. Several states (like Colorado and Texas) have laws on the books that prohibit local governments from building their own networks, laws that are initiated and sustained by the telecom lobby. Chicago, for example, has been in the news for years as talk of establishing a network in that city is discussed (but always seems to fizzle out without gaining any traction). The latest is that Chicago is seeking a public-private partnership with Gigabit Squared which would circumvent some of the traditional providers.
Can big cities recreate the successes — and avoid the failures — of Americas smaller cities (340 of them) that have cut out the giant providers? The city of Riverside, CA laid the foundation for its comeback from municipal trouble and the threat of federal-government intervention with its own broadband network, created at the request of local businesses that tap into this infrastructure (another past blog post).
Another issue in major cities is the lack of trust in officials to sustain a new utility. Many residents are hesitant to place the fate of their internet service in the hands of their elected officials (who may struggle to accomplish even simple agendas), and the officials are hesitant to give up the leverage they have with AT&T, Comcast, and Verizon. The money it takes to put this infrastructure into place (think about if your city or town didn’t have telephone poles or water mains…) is also a huge issue for many cash strapped cities.
It’s an investment (home ownership vs. renting an apartment) that has potential to make itself back given the right circumstances and proper drive to tackle large projects, but it seems that it is very much a case-by-case decision for each city.
Would offer that the reason is the same reason that there are very few public own utilities…
Local governements as MOST government entities generally speaking do not want to ruffle the feathers of the biggest contributors(via taxes,user fees and even political donations)
Suspect this is the same reason, that a significant number governements have limited competition in the broadband area to one or two players…
Being somewhat cynical, one of the reasons that the 170,00 users in Chattanooga have access to publically owned broadband is that one of the “winning points” in Chattanooga getting Volkswagen to build a plant in the area was to offer the company easy, and relatively inexpensive, access to Very High Speed Internet. After Volkswagen agreed to build the plant Chattanooga needed some way to recoup some of the costs, and what better way than to provide access to broadband for all citizens.
I don’t believe that Chattanooga has limited any other of the companies to providing broadband service but my understanding there is not the massive profit margin available if they are going to compete with the cities broadband service.
I hadn’t known that about Volkswagen in Chattanooga, but it makes sense. Lots of innovation comes from non-typical circumstances. Their model obviously wouldn’t work in many bigger cities.
Maybe smaller providers breaking into the market will open things up.
I was told our city tried to run the infrastructure years ago, but the big private providers campaigned against it. They forced a referendum, and the campaign scared the people into voting it down. They said things like the city would be monitoring the traffic and know everything the people were doing online. This was all back before people really understood where the Internet was going and what it really is so I think the citizens probably didn’t understand the ramifications of their vote. Of course the providers did. So now we have no government provided Internet service and are at the mercy of the big providers.
Sorry, but I think the big bad providers are right on this one. Government should not compete with the private sector. Public services should be limited to those which are necessary to support health or safety and cannot be obtained through the private sector. Individuals, including those who join together to form corporations, should not have to face taxpayer subsidized competition to their efforts to earn a living. Government has no more business providing broadband than it has running grocery stores. Various government jurisdictions already compete against the private sector in a variety of areas that have nothing to do with their basic purpose of maintaining order and ensuring public health & safety.
I believe that publicly owned networks can ultimately close the digital divide and can work financially, but the path is difficult and many cities have stumbled. No one in the article or comments has mentioned the disasters in Philadelphia and San Francisco when the cities tried to create networks and then decided they were unfeasible. It takes a lot of hot spots and infrastructure to cover a large, densely populated area, so cities have to clearly determine the costs and the logistics before they start. Some observers say that the problems in Philly and San Francisco were caused by unrealistic expectations that networks would pay for themselves. Instead, they should be seen as enablers for other revenue-generating and cost-saving activity, such as reducing the need for driving or filling out paper forms.
I hear where your coming from Peter (although I do believe that that the internet supports public health and safety). I agree that public broadband could stifle a thriving private market. I think the middle ground may be hoping that mid-level providers become viable options for consumers who want better quality service. Granted, I don’t know much about the process of installing cable and becoming a broadband service provider. I assume it’s not possible for mom and pop broadband companies to come on the scene…
The Internet isn’t a “publicly held utility” for the same reason the telephone system isn’t a publicly held utility. And while some communities have municipal electric companies, it is more common for the power supply to be provided by a publicly regulated but privately owned power company — and even in areas with a municipal power company, private providers must be allowed to compete for the business.
CORRECTION REQUEST! The City of Riverside has never been connected to any bankruptcy action. On the contrary, as noted by the national rating agencies of Standard & Poor’s and Fitch Ratings, the City of Riverside has consistently handled its finances in a manner resulting in continued healthy reserve levels. This comes from making tough choices to adopt balanced budgets, then making necessary spending adjustments as fiscal conditions warrant. Riverside has historically been one of the most fiscally responsible cities in the State of California!
Thanks for the comment, Cindie. You’re right, I had my cities crossed.
I went back to the article I referenced from last summer and it reads the federal government was threatening intervention because of mismanagement among police not finances. Thanks.
@Tom – in Illinois it is illegal for private companies to deliver electricity to properties lying within municipal boundaries of cities that provide their own electricity. They are not allowed to compete.