MuniWireless

Pasadena has shelved its plans for a citywide Wi-Fi network after EarthLink pulled out of its contractual obligations to build one for the city. EarthLink has done the same to a number of other cities (and surprisingly I have not heard one of them suing EarthLink for breach of contract).

According to this article, the problem was the business model: The ventures failed because the business model for such public-private partnerships just doesn’t work, said Morley Winograd, executive director of the Institute for Communication Technology Management at USC’s Marshall School of Business. “The problem is that almost all municipalities that have tried to use this model have also asked the provider to offer a free service in addition to their paid (subscriptions) in an effort to bridge the digital divide,” said Winograd, whose group has conducted studies of municipal wireless ventures for the county and city of Los Angeles. But such free or low-cost services usually offer very low speeds and fail to attract customers, Winograd said. In addition, subsidizing such services means the provider has a harder time keeping its regular rates down and competing with other commercial Internet providers. Another option - which Pasadena rejected in 2005 - involves having the city build and operate the network. “Most cities have found they don’t have the talent or skills necessary to run such a system, which is basically a small-scale phone company,” Winograd said.

Although Pasadena and other cities do not have the personnel necessary to run a “small scale phone company”, they could also have paid someone to build a network (fiber plus wireless) and have opened it up to all service providers who can deliver fiber and wireless services. Pasadena does not have to run the network itself; the city can outsource that to a private company. This is what cities and regions in Europe are doing, for example, Amsterdam whose Citynet project is, I assure you, not run by the city. Amsterdam’s involvement is as a key investor and the network is open to all service providers.

What the article missed is this: US cities are loathe to invest in fiber and wireless infrastructure even if it means bringing true high-speed broadband access, wide coverage and meaningful competition.

The problem isn’t so much that cities such as Pasadena do not have the personnel to run a network. The problem is that cities do not see fiber plus wireless infrastructure as anything worth investing in, for the benefit of the entire community, businesses and individuals alike. They prefer to leave matters up to the incumbents and then they complain that prices are too high, speeds are too low, and the US is falling farther behind. Incumbents are money-making entities that are beholden only to their shareholders. That means they will milk their existing copper networks and when they do get around to deploying FTTH, they will never share them with competitors or deploy them in low-income areas.