Reason Foundation releases report that seems, at first, to decry municipally built Wi-Fi: The report appeared yesterday, and I've taken some time to read it and its conclusions. I don't think it's quite what it seemed to be when first looked at.
The bulk of the report looks at whether government should get in the business of paying for and operating municipal networks, looking at the history of fiber optic, coax, and other networks. This ground has been hashed over before, and it's frankly a little too technical on the economic details for me to provide expert analysis of.
No large city since Philadelphia's announcement has chosen a plan that would put the brunt of expense, risk, and operation on itself. St. Cloud, Flor., and St. Louis Park, Minn., are smaller cities that have chosen to build networks, but are funding operations, not building departments to run them. Really, I'd like see the response from the loyal opposition, The Institute for Local Self-Reliance, which is distinctly opposed to this report's primary viewpoint.
So the universe of new (and especially wireless) projects in the U.S. that seem to fit the criteria established by writer Jerry Ellig seems to be rather small. I don't think government is as limiting or incompetent as libertarians believe by philosophy or many believe by real-world experience. But I also tend to agree that in a fast-moving field, there has to be a very particular need for any medium-to-large city to find the funds and build the network in such a fashion that the network meets its financial goals and remains relevant and up to date.
There is little critique in the report of municipally authorized proposals except as relates to the issue of de facto franchises, something I've sounded the horn on since Minneapolis first revealed their plan to find a company to build a network. As Ellig notes, there's a risk in squelching competition and providing unfair advantage when a city allows exclusive access to rights of way and utility poles.
While the Telecom Act of 1996 provides for non-discriminatory pole access, in practice, that's been a mixed bag. There are a lot of logistical and technical reasons why poles can't be used by every party that wants to use them in a reasonable timeframe. And there are many ways to drag one's feet in providing legitimate access. Even Toronto Hydro discovered that poles that they owned--that were sold to them by Toronto--weren't capable of handling Wi-Fi access points 24 hours a day.
While Ellig misstates the San Francisco deal--noting just Google's free 300 Kbps service, not EarthLink's intended 1 Mbps for-fee offering--he 's clearly right that exclusive, franchise-like agreements are not in the best public interest, as they protect only the city's anointed Wi-Fi provider and exclude the potential of competition by making good real-estate locations cost more (if obtained privately) or unavailable (if no private alternatives exist).
He writes, "Any local government that grants one Wi-Fi provider an exclusive right to use right-of-way and poles risks distorting competition in whatever markets are generating the revenue stream that will subsidize the Wi-Fi service."
What's interesting about this is that Clearwire has now entered the metro-scale market from the municipal side with their win this week of Grand Rapids, Mich. Clearwire keeps saying that they are happy to have a Wi-Fi network running citywide operated by another party, and see that network as a cooperative partner. The mobile WiMax that they will deploy there as the first real North American rollout of true mobile WiMax has different parameters and purposes than Wi-Fi, and could be substantially easier to provision with reliable throughput rates across the system. (The mobile part, for instance, although many metro-Wi-Fi vendors will tell you how they can make Wi-Fi work for moving vehicles, too.)
Clearwire thus now has a stake as a municipal partner in preventing competing initiatives--whether Sprint or others--from gaining the same rights to real estate, because the cost of finding appropriate antenna venues is a key aspect in setting up new networks and providing the density of coverage necessary to meet customers' needs. Ultimately, it's just a stumbling block for established cell operators, but it could prevent newer firms with no existing towers or real-estate arrangements from gaining a toehold.
Is Reason's report a condemnation of the general trend in building citywide wireless networks? I can't see how encouraging non-exclusive access to poles, buildings, and towers reduces competition. It does increase the risk for companies entering the field that other competitors might follow, but that's what competition is supposed to be about.