Wi-Fi as a Public Utility: What are the Costs?

by on September 30, 2004 · 4 comments

In a blog ealier this month, I mentioned how uneasy I was about municipal governments turning broadband or wi-fi into the next public utility, like local sewer or water service. There are many risks associated with such schemes, not the least of which is the potential for taxpayer bailouts when things go wrong.

Anyway, I just read a fine piece on this issue in MIT’s Technology Review entitled “Who Pays for Wireless Cities?” In particular, I would draw your attention to the excellent comments by Bill Frezza at the end of the story, with which I totally agree:

“The scenario is similar to that of the late 1980s, when municipalities considered offering cable TV services, recalls William Frezza, a general partner with Adams Capital Management in Cambridge, MA. Cable couldn’t survive as a low-cost public service, he says, and he finds public Wi-Fi equally misguided. He has read several dozen business plans from entrepreneurs looking to make money from public Wi-Fi. No model can succeed because the annual maintenance costs are likely to be exorbitant, he says. Moreover, he argues, performance will degrade as more users log on, which won’t necessarily stop municipalities from casting themselves as Wi-Fi service providers. “A town can make any argument it wants,” says Frezza. “It has as much money as it can pull out of its taxpayers.””

  • http://kipesquire.blogspot.com/2004/09/philadelphia-persists-in-wi-fi.html KipEsquire

    There is way too much overthinking going on with this issue. Wireless internet access is simply not a public good (it’s perfectly excludable). There is therefore no justification whatsoever for it to be publicly provided. Those concerned about wireless Internet access for the poor (besides having severely misplaced priorities) should consider vouchers or a comparable program.

  • http://kipesquire.blogspot.com/2004/09/philadelphia-persists-in-wi-fi.html KipEsquire

    There is way too much overthinking going on with this issue. Wireless internet access is simply not a public good (it’s perfectly excludable). There is therefore no justification whatsoever for it to be publicly provided. Those concerned about wireless Internet access for the poor (besides having severely misplaced priorities) should consider vouchers or a comparable program.

  • Bruce Neuman

    OK, maybe you are right. On the other hand, the entire Internet started as a public works project. The Internet Service providers charge an arm and a leg and then want to take advantage of the Net to provide low cost telephone service. What should be free is in the eye of the beholder.

  • Bruce Neuman

    OK, maybe you are right. On the other hand, the entire Internet started as a public works project. The Internet Service providers charge an arm and a leg and then want to take advantage of the Net to provide low cost telephone service. What should be free is in the eye of the beholder.

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