Government-owned networks neither compelling nor wise, says new research

Recent research work from New York Law School’s Advanced Communications Law and Policy Institute deconstructs five current arguments for government-owned broadband networks.

In Evaluating the Rationales for Government-Owned Broadband Networks authors and Institute directors Charles M. Davidson and Michael J. Santorelli conclude that while:

Government-owned broadband networks are neither compelling nor wise investments of scarce public resources…Nonetheless, municipalities are well positioned to play limited but important roles in the broadband space.

The authors proceed to outline both supply and demand-side roles for local government.

On the supply-side municipalities should … seek to serve as hubs for channeling funding and forging public-private partnerships with experts in the private and nonprofit sectors…There are also opportunities for municipalities to work with stakeholders in the private sector and policymakers at the state and federal levels to streamline processes for siting and managing rights-of-way — key infrastructure inputs for all broadband networks.

On the demand-side, local policymakers and government institutions could help to raise awareness of and demand for broadband services. Such demand aggregation activities are essential first steps to creating attractive economic incentives for private firms to build out networks to unserved areas. In addition, local government could work within existing social infrastructures to ensure that residents have ready access to digital literacy training services and other such programs aimed at assuring equal opportunity…

The paper concludes with what has been reported repeatedly:

Municipalities are not the last, best hope for bolstering high-speed Internet connectivity because the vast majority of Americans are benefitting from robust private sector competition among firms …

My only minor quibble here is that they did not drive home their earlier point that “the vast majority” looks something like this:

According to the National Broadband Map, which compiles data from a number of sources, 96.5 percent of housing units in the U.S. had access to at least one wireline broadband provider in June 2012, while less than one percent of the population lacked access to a wireless broadband provider. Equally as important, the intermodal nature of the broadband market — the ability to deliver service in several different ways (e.g., via cable modem, fiber, wirelessly) — has resulted in most consumers having a menu of service options available to them. Nationally, over 1,600 different companies currently provide broadband Internet access service, up from just 130 in 2000.

Nonetheless, their final conclusion is the area of greatest concern to me in all this:

But, broad intervention in the market via a GON threatens to undermine the very market forces that have generated significant consumer welfare gains over the last decade. [emphasis in the original] In sum, local government can and should play key roles in the broadband space, but building, owning, and managing a GON is not one of them.

Well said. Tomorrow, I will run through their evaluations of five rationales used by local governments for getting into broadband delivery. They are:

    • Availability of broadband
    • Providing residents with the benefits of competition
    • Overbuilding broadband facilities for internal government use
    • Economic development/smart grid arguments
    • Local self-reliance
This entry was posted in Duplicate Facilities, government competition, Municipal finance, Overbuilding, Rural broadband and tagged , . Bookmark the permalink.

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