Nothing new in this report from the incumbent-funded Progress and Freedom Foundation: This pro-incumbent institute is one of my favorites because of their full disclosure of their ties to industry with vested interests. The report recycles lots of figures and arguments from other sources, including the familiar "here's a bunch of failed municipal broadband projects," which actually aren't failures (see earlier post today on the Free Press's report) and which often involve vast investments for fiber-optic cabling which doesn't figure in here.
There's a lot of speculation and ideology in this report by Adam Thierer, and very little that I can hang onto to talk about that I haven't read elsewhere, usually in deeper form with more citation.
(The following has been updated after receiving additional information.)
Tom Lenard's separate report looking at the finances and strucutre of the Philly plan directly has a number of interesting ideas in it and it challenges optimistic assumptions in the Philly plan. However, the first page notes that the report was published simultaneously by the New Millennium Research Council.
The PFF's Patrick Ross has a very interesting response to this post on the PFF's blog that notes the diversity of funders of PFF and their varied opinions on municipal broadband. I'll be writing something separately about this whole issue and the PFF reports as it deserves deeper coverage.
The Thierer report points out what appeared to me to be an inconsistency in the business plan for Wireless Philadelphia: the first year capital cost is project at $10,000,000 but the next four years at just a grand total of $500,000. After reviewing the plan more thoroughly, the capital budget for years 2 to 5 is hidden because the money comes from cash flow: there's $4 million in there that Thierer doesn't discuss.
The initial cash required by the plan is $15 million with the $10.5 million for the capital budget and the rest for staff and operational costs of setting up an organization of this size.
In years 1 to 5, the capital budget noted in the plan is from funding sources: foundations and bank loans. But in years 2 to 5, there is a supplementary working capital budget that will reach $4 million by year 5 which comes out of cash flow. This working capital budget plus the $500,000 allotted from initial funds totals nearly 50 percent of the initial expense that's projected which is a reasonable budget for a project of this scale.
Over time, the existing equipment will need to be replaced or updated, but falling equipment costs mean that more bandwidth and better functionality with lower cost will be the case across the board. And the initial cost includes all of the work to build infrastructure to bring power and backhaul to the mesh nodes.