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August 21, 2007

Essay on Muni-Fi Falls Through Hole in Time

Hey, Blomquist! 2005 called and it wants its essay back: The, apparently a red-blooded site about and for 'mericans (read: a specific subset of big-business-oriented conservatives) suggests that asking cities to pay for services in a kind of [air quotes] public-private partnership [air quotes] is tantamount to socialism.

The essay writer, however, while au courant on some details surrounding EarthLink, appears to confuse the idea of a city paying a private corporation for services with a city building its own network in order to compete with wireline.

The public-private partnership notion exploded some time ago. Municipal networks are typically--not exclusively--a business relationship of the same time that cities pursue with cable and telephone companies. EarthLink and MetroFi's desire for city dollars isn't to be paid to build the network, which is what Blomquist implies even though he states the opposite. (Rather clever rhetorical device, actually.)

He states that EarthLink wants a service commitment to make "at least a minimum return," but then notes that service providers will use this as the thin edge of the wedge. "As municipal Wi-Fi companies become entrenched, we can expect them to not only demand that cities be anchor tenants, but that they help make up for the shortfalls that will inevitably result when new technologies supplant Wi-Fi."

He also casts the Wi-Fi providers in the form of a monopoly because of this logic:

"Companies that enter into public-private partnerships enjoy favorable treatment. Special access to city or county rights of way, shelter from liability, and the backing of a public partner with the power to tax makes Wi-Fi firms that enter into municipal deals formidable foes. Potential competitors may find these advantages too much to overcome, thus driving them out of the marketplace. With potential competitive rivals driven out, we are soon left with an ossifying public utility disguised as a private enterprise."

I don't know of any contract that shelters the provider from liability, nor any city of scale (above small towns) that has found the possibility of using taxes to pay for the network palatable. (St. Cloud, Flor., is the exception, and a change in Florida property tax law may doom that network.)

Blomquist is more accurately describing cable and telephone providers, who receive rights of way in long-term contracts, and have enshrined rights in the mere fact of having installed copper and fiber in the ground that insulate them (hey, good metaphor) from any form of competition. They own the wire and glass, and there's no necessity for them to resell it at any reasonable price or, in many cases, at any price whatsoever.

So I don't see how AT&T, for instance, has any "competitive rivals" except for equally monopolistic cable firms. Telecom and cable companies fight it out for market share, but they barely differentiate their services except that cable can currently offer more speed than DSL with less effort and cost. (That's why telecoms are pushing fiber to the node, curb, and home.)

What Blomquist really misses is that Wi-Fi has been shown to be a poor competitor against wireline services. Wi-Fi might be a dial-up replacement, but it really competes against cellular data networks, which are closed off, walled up, and expensive. There's no real competition among cellular providers, each of which offers similar rate plans ($60 per month for voice subscribers with other conditions; $80 per month otherwise), and generally similar network limitations.

Blomquist says that cities encouraging the building of Wi-Fi networks and paying for services as anchor tenants--that is, changing the payee on a line item for telecom services--is the equivalent of granting a monopoly. It's always remarkable to me that large entrenched businesses are never counted as monopolies, even when they exhibit all the tendencies of such, and that freeing them from the shackles they bear (made of paper clips at this point, perhaps) will cause dramatic increases in services and a drop in prices.

Yeah, right. Let's close this wormhole to 2005, and talk about the realities of 2007 again.


Glenn Fleishman gets it right. Cord Blumquist is either an idiot or was paid by AT&T (really SBC) to make sure they maintain their monopoly.

Cord says "they may well ask for regulations stacking the deck in their favor, slowing the spread of the latest and greatest tech." Excuse me, is the "they" he is referring to AT&T or some WiFi company.

I'm sorry Blumquist, who is fighting "Open Access"? Let me give you a clue, it aint't EarthLink.

I'm sorry I wasn't able to talk more about franchise reform and the entrenched monopolies of cable and phone carriers in my piece--I only had 800 words and explaining all the regulatory problems with the current system takes a bit more space!

I agree that cable and phone, who once enjoyed monopolies, now thanks to convergence only enjoy duopolies, but this, of course, is still unacceptable.

I realize that Wi-Fi is extremely uncompetitive when compared to wireline services, which is what the BusinessWeek article I referenced also pointed out.

The best solution for consumers would involve local authorities reforming the access rules to city rights of way. A good reform would involve burying conduit, rather than cable, so that multiple networks could utilize city rights of way and competition could really take off.

I'm not a lackey of any company, and challenging my ideas on such a basis is nothing more than an ad hominem attack. Let's hash out the details in a future post?

[Editor's note: Your comment here seems directly opposed in many ways to what you wrote, as I can agree with much of what you wrote here, but not in your article, which seemed highly uninformed about the specifics of how Wi-Fi networks are currently being built.

I didn't accuse you of being a company's lackey, rather a "big-business-oriented conservative," because your arguments carried water for incumbent monopolies. In this comment, though, that bucket's empty. -gf]