Doug Brake and Alexandra Bruer of the Information Technology and Innovation Foundation write the excerpts below from an article contending local governments are ill suited to provide advanced telecommunications service.
However, municipal or otherwise nonprofit broadband should be limited to those areas that are legitimately high cost and do not support investment of more than one provider. Municipal broadband advocates often attempt to define broadband at unreasonably high speeds in an attempt to define away competition existing in the market. They know that many providers have no desire to provide broadband speeds far in excess of what the market actually demands, and so by providing networks with more capacity than is needed, they hope to make the case for municipal networks. While flat bans on any municipal broadband do not make sense, they should be reserved for narrow cases wherein market options are extremely limited and private providers are unwilling to provide service, even with subsidies offered.
Sounds sensible in theory. But advanced telecom infrastructure is very unevenly deployed and highly granular, making it difficult to define these high cost areas and attain the economies of scale the authors discuss with contiguous infrastructure. One need only glance at those crazy quilt, checkerboard "broadband maps" to see it graphically -- the accuracy of which are subject of continuous debate.
High cost area subsidies proved effective for ensuring universal telephone service. However, high cost subsidies have historically not motivated investor owned providers to build advanced telecom infrastructure absent regulatory incentive to offer service to all premises requesting it (such as Title II of the U.S. Communications Act that governs voice telephone service) and better opportunities elsewhere that offer faster and higher return on investment such as mobile wireless.
Some neighborhoods deemed sufficiently profitable have fiber to the premises infrastructure while others adjacent do not. Or there may be fiber to the prem deployed for business customers but not for residential service. That's why publicly and consumer cooperative owned fiber passing every American doorstep is needed to ensure access and affordability.
There are variety of different models for what a municipality’s level of partnership with broadband providers can look like. If municipalities that believe they fit in that narrow category should generally avoid providing retail service, and instead provide an open-access fiber network wherein the retail service and the electronics are left to the private sector. In an open-access provider, municipalities offer the use of their broadband networks at wholesale for various providers to leverage in order to sell broadband services. In a retail provider model, a municipality both owns the broadband network and offers broadband services directly to customers. The government can take on the most static parts of the network—ideally providing just open conduit or dark fiber—and allow the private sector to continue to innovate with the electronics on either end.
This is clearly a superior role for the private sector instead of the current dominant model wherein investor owned providers own the infrastructure and must also regularly refresh the electronics that make it run. As the authors point it, the latter role is far more suited to the private versus public sector. The private sector can fulfill that function without having to own the infrastructure outright and battle continued public and regulatory pressure to build out fiber infrastructure to reach more homes and keep rates affordable.
