In today’s Wall Street Journal, Ben Charny has an article discussing why “Free Wi-Fi [is] Still an Elusive Goal.” He notes:
The same forces slowing development of single-city wireless Internet networks are now overwhelming their supersize versions that cover thousands of square miles and scores of municipalities. A telling example of the malaise can be found in Silicon Valley, where plans to provide free, high-speed wireless Internet access to 42 cities in an area of more than 1,500 square miles have come to a standstill, says Russell Hancock, the man in charge of the effort.
It was once thought that municipal wireless networks of all sizes could be supported through the sale of advertisements that appear during the free Internet sessions and the small fee paid by those who want a faster, ad-free Internet service. However, many cities with wireless networks say that there’s been little demand for their premium services and that technology issues have limited the networks’ reach. Moreover, while businesses were willing to invest in advertising on these single-city networks, they complain about very little return on their investment.
So, once again, we see that demand counts when it comes to broadband diffusion. That’s been a point that many of us made in the past when critiquing grand plans for muni wi-fi nirvana that all seemed to be premised on the “if-you-build-it-they-will-come” theory of economics. We’re now realizing the cost of that hubris. It’s one thing for private companies to be forced to eat the expense of over-estimating demand, it’s quite another when taxpayers might be on the line for the mistake.
We’ve talked about muni wi-fi problems here before. (Here, here, here, and here). Here’s another one to add to the list. The Chicago Tribune reports today that:
Chicago is curtailing its digital dreams, deciding to back away from municipal Wi-Fi service after failing to reach agreement with either of two companies that sought to build a wireless Internet network in the city. The move comes as municipal broadband wireless projects around the country face difficulties, and EarthLink Inc., a major player in the field, is re-evaluating its future in municipal Wi-Fi.
And here’s the key line from the piece:
[T]echnology is advancing and the cost of online access for consumers is declining so dramatically that Chicago has other avenues to promote more use of the Internet. As a result, the Wi-Fi deal lost luster when negotiations bogged down, according to sources close to the matter.
In other words, markets are working.
More bad press for the muni wi-fi movement. It seems like each week brings another story of how things haven’t quite turned out as planned. This week, it’s Business Week with a story about “Why Wi-Fi Networks Are Floundering.” In the piece, author Olga Kharif argues that:
The static crackling around municipal wireless networks is getting worse. San Francisco Wi-Fi, perhaps the highest-profile project among the hundreds announced over the past few years, is in limbo. Milwaukee is delaying its plan to offer citywide wireless Internet access. The network build-out in Philadelphia, the trailblazer among major cities embracing wireless as a vital new form of municipal infrastructure, is progressing slower than expected.
These potholes in the nation’s wireless rollout of civic ambition—criticized by many as an improper use of tax dollars—are hardly the exception. For the road is getting bumpier for cities and the companies they have partnered with in a bid to blanket their streets with high-speed Internet access at little or no cost to users.
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Do you mean to tell me that muni wi-fi networks will actually cost money? I’m shocked, shocked, I tell you. Where’s the free lunch we were promised?!
[see San Jose Mercury News story below]
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Municipal WiFi: A not-so-free lunch
by Sarah Jane Tribble
Mercury News
08/06/2007
It’s been more than a year since Silicon Valley’s Joint Venture Wireless Project first announced plans to build a regional wireless network, giving millions of local residents free access to the Internet. But that network won’t be so free after all, and the area’s millions of local residents may not really use it.
While initially the project was lauded as a way to give the masses affordable Internet, key organizers have gently shifted the focus of the network from serving residents, for free, to giving businesses and city governments wireless access, for a price. …
But the increasing focus on dollars and cents reflects a trend nationwide: As cities strive to provide wireless Internet service, they’re realizing it can’t truly be free.
[Read the rest here.]
Tech Policy Weekly from the Technology Liberation Front is a weekly podcast about technology policy from TLF’s learned band of contributors. This week we took the podcast on the road and recorded live at our Alcohol Liberation Front happy hour at the Science Club in Washington, DC. Voices on the show this week include Jim Harper of the Cato Institute, David Robinson of The American, Tim Lee of the Show Me Institute, PJ Doland of PJ Doland Web Design, James Gattuso of the Heritage Foundation, Jerry Brito of the Mercatus Center, and Adam Thierer of PFF. Topics include,
- Scholars bypass established journals and publishing their research online
- The growth of the breadth of patents
- The government’s plan to give everyone a free digital TV converter box
- The future of physical media in a digital age
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Do television sets have rights? Apparently so, according to the National Association of Broadcasters. Communications Daily, reporting today on the planned subsidy for analog televisions, quotes a broadcast industry spokesman as saying” [O]ur priority is that no TV set and no consumer gets disenfranchised.” Let’s read that again. “[O]ur priority is that no TV set and no consumer gets disenfranchised.”
It’s odd enough to say to talk about consumers being “disenfranchised” due to the digital transition. But TV sets? Can TV sets be “disenfranchised”? Somehow I missed the provision in the Constitution granting rights to televisions, or any electronic appliances for that matter. I’m not even sure how such rights would be defined. Would only analog televisions be protected? Perhaps any device with a cathode ray tube? What about computer monitors? Are they entitled to equal protection under the law?
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Anyone who wants to know how Washington works should look to an article buried in today’s Communications Daily (sorry, it’s by subscription) on a House Small Business Committee hearing. The committee had brought together representatives from various communications industry segments to talk about the “innovation agenda, ” focusing on the growth of broadband.
The good news: “All witnesses opposed an Internet tax and supported extending the moratorium” on federal taxation. Easy enough. But wait a second: many of the same witnesses also supported extending universal service subsidies to broadband, presumably applying universal service fund fees to broadband access bills (right now they only are imposed on telephone bills). Isn’t that a tax? No, said the Shirley Broomfield, representing rural telephone firms, who would benefit from extended subsidies. It depends on how it’s implemented, said Earl Comstock from the competitive carriers, whose customers already pay the “fee.” Only one witness — Richard Cimerman from the cable industry, whose customers would have to pay the tax/fee — said yes.
So much for the united front against taxation.
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Communications Daily reports today that public TV stations are thinking about taking a direct role in distributing DTV converter boxes for their viewers–either by negotiating alliances with retailers, or distributing the devices themselves–perhaps as gifts during pledge drives. Nothing wrong with that–in fact its refreshing to see anyone doing something on the DTV transition without asking more subsidies. And a converter box during pledge week would certainly be nice change of pace from the usual menu of Ken Burns DVDs.
But why are the stations so concerned about getting converter boxes to their viewers? The fear is that without easy access to converters during the DTV transition, viewers would flock to cable TV from over-the-air broadcasting. And although public TV is carried on cable, the stations –according to Comm Daily — are concerned that a shift away from over-the-air viewing would lead (among other things) to “more channel choices” for consumers, less viewship, and fewer contributions to public TV stations.
The key words here: “More channel choices.” There’s something that certainly must be stopped.
When Congress started funding public TV, the rationale was that, because television channels were scarce, viewers didn’t have adequate programming choices. Now, some 40 years later, the concern is there are too many television channels, and public TV is actively working to discourage viewers from obtaining those choices.
The public TV stations’ concern is understandable. They are no doubt right that more viewer choice will reduce their own viewership (and membership). And the stations are reacting the way most businesses would react–by trying to limit that choice. But why should federal taxpayers give them subsidies as they do it?
Very strange.
While debate rages over what to do with the frequencies soon to be vacated by broadcasters (see the last post), another debate is raging over what to do about those using them now. At issue: whether to subsidize converter boxes for millions of old TVs in basements and kitchens that will be made obsolete by the February 2009 analog cut-off.
In late 2005, Congress authorized up to $1.5 billion for such converter boxes. Last year, the Department of Commerce proposed rules for the program, concluding that households with cable TV should not be eligible for assistance (on the sensible ground that they will not lose access to TV). Now there’s word that the Department of Commerce is planning to reverse itself, and let cable households get in on the program. The rationale: many of these households have third and fourth television sets that are not hooked up to cable.
Commerce has been under pressure from–among other places–Congress to include these forgotten basement televisions in the program. In particular, a November letter from John Dingell and 19 other members positively waxed poetic about the issue: stating that millions of consumers would be “disenfranchised” and that the original Commerce plan “disadvantages the poor, the elderly, minority groups, and those with multiple analog television sets in their home.”
Maybe it’s just me, but I had never thought of “those with multiple television sets in their home,” as an oppressed minority. And “disenfranchise”? This isn’t voting rights, it’s television. In fact, its not even that–its the right to a third TV in your basement. In fact, its the right not to have to pay $50 (the expected price of a converter box) to get that third TV in your basement to work.
This is the sort of thing that gives Washington a bad name. I fulminate more on this in a just-released Heritage paper.
Stay tuned (well, at least until February 2009).
Ahead of tomorrow’s Senate Commerce Committee hearing on public safety communications, the Consumer Electronics Association released a report (PDF) it commissioned from Criterion Economics analyzing the Cyren Call plan. The report concludes that the Cyren Call plan would upturn Congress’s carefully crafted DTV transition scheme. It also calls into question whether the private sector would build a more expensive broadband network than it would otherwise have to in order to meet the more rigorous needs of public safety.
Like I said, the study was commissioned by a special interest and it should be read in that light. (And by all means, read it yourself and make up your own mind.) However, the study does outline some basic facts that support something I’ve been saying for a long time: public safety communications does not need more spectrum, what it needs is spectrum reform. Here’s a sampling from the report:
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