Muni Wi-Fi Systems & Crowding-Out Concerns

by on June 23, 2005

I’m sure that the pro-municipalization movement will be buzzing today about the front-page Wall Street Journal story entitled, “Phone Giants Are Lobbying Hard to Block Towns’ Wireless Plans.” But I hope those pro-muni forces also flip back to the B section of today’s Journal and read Walt Mossberg’s Personal Technology column on the latest developments in private wireless broadband. And they should also check out a very similar report by New York Times technology columnist David Pogue on page C1 of today’s paper.

In these two articles, Mossberg and Pogue review the new wireless broadband technologies coming to market today and point out that speeds are getting much better and coverage is growing rapidly. For example, Verizon’s $1 billion investment in its EV-DO wireless broadband network is finally bearing fruit. Speeds are 400-700 kilobits per second and coverage is available in 32 major metropolitan areas. And out-of-market coverage is provided too, albeit at slower speeds. Rivals like are rushing to build out similar networks and get newer, faster, more capable devices to market too.

So, getting back to the debate over government municipalization of wi-fi networks, the question I have for pro-muni forces is this: Do you think that this sort of private investment and innovation will continue to take place and spread to other (more suburban and then rural) markets if local governments continue to socialize broadband infrastructure? Do you not envision there being any crowding out effects associated with government efforts to build their own broadband networks? Do you not see how, if enough municipalities decided to go into the wireless business themselves, these efforts could greatly discourage private wireless broadband providers from building out their networks and filling out their cover service coverage maps? Also, do you really think that the government-operated networks will rival these private networks in terms of speed and reliability?

These nagging questions help explain why some public officials are more than a little skeptical about the wisdom of government socialization of an innovative business like wireless broadband. Not only is it unlikely that most cities will be able to keep up with the rapid pace of technological change, but their municipalization plans could crowd out the sort of private investment that we’re already seeing in major metro markets.

Of course, as a small town boy by birth, I am sympathetic to concerns about some rural pockets being last in line to receive these wonderful innovations. And, for that reason, I’m not completely opposed to the idea of government playing a small role in ensuring high-speed networks come to town. But I would greatly prefer that (a) private operators be approached first and given the opportunity to build-out those markets; and (b) potentially even lured with tax credits or other inducements to come and provide service.

Finally, I want to note my personal opposition to efforts to federalize this issue. Although I am terribly concerned about the crowding-out effect associated with local municipalization issues, I feel that this is one issue best handled by state and local officials. The feds have enough to do in terms of cleaning up the regulatory mess at the national level; they don’t need to get involved in a fight over the wisdom of municipal broadband networks. Leave it to the states and localities to figure out. That also happens to be the solution that is most consistent with our founding federalism principles. (I wrote about that issue in this book in case anyone cares to explore federalism and high-technology issues in greater detail).

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