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Today's Headlines •  Some Cities Face Roadblocks, Drop Out •  EarthLink Pulls Out Of Municipal Wireless Market •  Municipal Broadband Projects Spark Legislation •  Considering Future Municipal Broadband Models - Advertisement - - Advertisement -		Issue Of The Week: Monday, March 10, 2008 Municipal Broadband: Greater Than Expected Challenges by Winter Casey      Seeking to attract greater numbers of tech-savvy Americans as well as a way to boost economic growth and competitiveness, many cities in recent years began to contemplate ways to encourage local broadband access by setting up their own high-speed Internet networks.      But these initiatives, either fully or partially provided by the government, have posed greater challenges then many municipalities bargained for when they signed on. Experts advise that, going forward, city officials should carefully consider the risks presented by municipalities building and operating their own networks.      "Hot spots are easy -- but networking them is challenging," said consultant Scott Cleland, president of Precursor LLC. "The core dilemma is that cities want cheap reliable broadband, and it isn't cheap to provide."      James Speta, professor of law at Northwestern University, and Robert Atkinson, president of the Information Technology and Innovation Foundation, said cities have faced problems because DSL and cable modem services are increasingly pervasive.      "Even if you are going to use wireless it is a technical challenge to build a network that blankets an entire city or neighborhood," Speta noted.      Several experts said that while they do not support initiatives to plan a public network where existing broadband providers can be found, it is acceptable for municipalities to take matters into their own hands in cases where no service is being offered. Some Cities Face Roadblocks, Drop Out      This past fall, three years after then-Mayor John Street announced that Philadelphia would be the first major U.S. city to have its own broadband network, published reports disclosed that the project is nearly a year behind schedule and beset by cost overruns.      Meanwhile, municipal officials in Boston no longer expect to meet the city's goal of completing a citywide network by next year. And a San Francisco plan to build a citywide network appears dead.      Ron Rizzuto, a professor at the University of Denver's Daniels College of Business, said cities have faced problems in setting up and running these networks because they "don't run the networks to make money" He noted that "often times there is a political agenda" and pricing becomes a political rather than a business decision.      "The model of trying to provide free broadband everywhere -- we just have not seen that model work," added Graham Richard, a former mayor of Fort Wayne, Indiana. EarthLink Pulls Out Of Municipal Wireless Market      Meanwhile, EarthLink, a company that bills itself as a pioneer of municipal wireless projects that it undertook in partnership with city governments, announced last fall that it would begin a process to consider strategic alternatives for its business.      "[W]e have decided that making significant further investments in this business could be inconsistent with our objective of maximizing shareholder value ... [and] considering our strategic alternatives with respect to this business," said Rolla Huff, EarthLink's president, in a statement.      Sasha Meinrath, a research director at the New America Foundation, said "Public-private partnerships that have failed in the U.S. have often done so because the municipalities aren't empowered with any real power."      He added that "we can definitely create collaborations that better meet the needs of communities -- the actual business models are certain to be myriad -- whether fiber, wireless, or hybrid."      Meinrath said that in the long run, hopefully EarthLink's decision will "lead to municipal decision-makers being far more diligent in assessing the claims being made by folks trying to sell them a service or technology."      Adam Thierer, a senior fellow at the Progress & Freedom Foundation, observed in writing last fall that "one lesson from this [EarthLink] experiment is that demand counts" and that "network-building is a tough, time-consuming and expensive task." Municipal Broadband Projects Spark Legislation      Discussion of municipal broadband initiatives has resulted in a number of proposals from concerned lawmakers in recent years.      States have passed bills to prevent municipalities from deploying broadband networks or unfairly competing with the private sector. In 2005, that sparked legislation by Sen. John McCain of Arizona -- this year's presumptive Republican presidential nominee -- to prevent states from outlawing municipal broadband. (One of McCain's potential Democratic opponents, New York Sen. Hillary Rodham Clinton, has proposed financial support for state and local broadband initiatives, while the other Democratic contender -- Illinois Sen. Barack Obama -- says he "will encourage innovation at the local level through federal support of public/private partnerships that deliver real broadband to communities that currently lack it.")      Currently, pending legislation by Rep. Rick Boucher, D-Va., aims to "to preserve the ability of local governments to provide broadband capability and services." Another measure floated by House Energy and Commerce Telecommunications and the Internet Subcommittee Chairman Edward Markey, D-Mass., would clarify that municipalities can offer broadband and other telecom services.      Telecommunications Industry Association Vice President of Government Affairs Danielle Coffey said her group supports legislation that prevents "states from dictating how smaller jurisdictions can or should run their communications networks."      Meinrath contended that "federal regulation is needed to ensure that all competitors are allowed to compete [including municipalities]" and that "enough information is available to consumers for them to make informed decisions."      But Speta contended that federal legislation is not needed. "States should decide what their municipalities can or can not do," he said. "Municipalities should be permitted to do it if they want to -- but they should rarely want to."      Rizzuto said he would support legislation that would eliminate potential cross subsidies for broadband projects, while limiting the amount of loans that a municipal utility could receive and requiring the utility to pay a fair market interest rate on those loans. Considering Future Municipal Broadband Models      No one seems to have the definitive answer as to how municipalities should structure future projects for success.       "We should certainly look to networks that are working and innovative business models that have been successful in other locales," said Meinrath, while adding, "A growing number of communities across the country and around the globe have been building successful networks."      While he acknowledged that success is often in the eye of the beholder, he pointed to projects in southern California as well as in large municipalities -- such as Minneapolis -- and smaller cities like St. Cloud, Fla. and Lafayette, La. Rizzuto added that a project in Cedar Falls, Iowa could be considered successful.       "Newspaper headlines trumpeting the death of municipal wireless networks ignore the increasing investments by cities in Wi-Fi systems," declared a report published in January by the Washington-based Institute for Local Self-Reliance. "Public ownership offers a network built to benefit the community."      Atkinson suggested that, if cities want higher broadband speeds, they could set up a competitive fund -- allowing local providers to bid to undertake the kind of build-out that a municipality wants without duplicating networks.      The real question for municipal broadband projects, Atkinson suggested, is why a community wants a wireless network in the first place. Is it to compete with broadband local provider -- or to provide an appealing tourist spot, he asked.      "Municipalities could do an awful lot more to streamline the process [of deploying] broadband going forward," said Atkinson.      Former Mayor Richard advised his colleagues still in office to develop high-speed Internet in order to stay competitive and attract jobs.      "If you can get it from the private sector then do that first -- create a strategy based on what providers are already there, convene anyone that knows anything about broadband in the city, find out what's there already," he said.      And if no one from the private sector is ready to set up a network "then you have the libraries, hospitals and school organizations form a nonprofit and request bids," he added.      "You need to try to find a way to engage the private sector to pay for it as much as you can," suggested Richard -- who said that his motto is "beg, borrow, buy, build."

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