Sonia Arrison

Proof that Municipal Telecom Networks Are Financial Disasters

The Pacific Research Institute just published a paper I coauthored on Municipal networks. The study, titled “Wi-Fi Waste: The Disaster of Municipal Communications Networks” reviewed 52 city-run telecom networks that compete in the cable, broadband, and telephone markets. The amount of deception and anti-competitive activity that we found in our sample was appalling and a solid reason why proposed new Muni WiFi systems should be opposed.

February 28, 2007 | Comments |

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    One of the criteria for the 52 networks your study looked at was they "are competing or have previously competed against a private telecom service provider." What about muni systems not in competition with other networks? Were those studied? Should those be opposed too?
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    Your study may well have valid points, but any valid points that you may have made are totally hidden behind the clear bias of the anti-government diatribe.

    My fundamental problem with the article is that private industry is just a guilty in the mismanagement of cable systems. For example your paper refers to "wasteful bureaucracy" and "corrupt bureaucracies". Well, Adelphia, a private company, was run in a corrupt manner by the Rigas family. The company eventually filed for bankruptcy.

    Your article accuses government run cable systems of "not paying their way". Additionally the article states that cable systems that have operated for over four years or more "are expected to have a positive cash flow". Well, take look at Charter Communications, a private company. Charter Communications has lost money every year since 2001 and may well have lost money on an annual basis before 2001. The Associated Press reported on February 28, 2007 that Charter's 4Q loss widened. On February 9, 2007 the Associated Press reported that Charter was refinancing $6.85 Billion and expanding its debt to $8.05 Billion.

    Your paper discusses government "hardball practices" and "predatory pricing". Private companies resort to these practices all the time. Nearly all the cell phone companies offer "free" phones if you subscribe to their service. Clearly they are subsidizing the sale of their phones in the hope of capturing you as a long term customer.

    If I am to be convinced that your proposed policy recommendations on page 41 have merit, I need to see a well reasoned study.
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