Minneapolis, Minn.—(May 20, 2008). In a matter of days, MetroFi and Earthlink have announced they are abandoning the municipal wireless market. Both will shut down their existing Wi-Fi networks in several cities if they cannot find buyers.
The private sector has largely decided municipal Wi-Fi networks are not profitable. But the public sector has come to the opposite conclusion and is continuing to build networks. Why?
ChristopherMitchell, Director of the Telecommunications as Commons Initiative for the Institute for Local Self-Reliance (ILSR) is a strong voice in the broadband industry, researching publicly owned broadband networks.
Mitchellsuggests that public entities use a different cost benefit calculation than private when deciding on investment. “Cities build roads and water systems because they benefit the city, not because they are profitable. Cities approach broadband networks with the same perspective, viewing them as a piece of essential infrastructure. When a city invests in a wireless network, it may be seeking to offer high bandwidth mobile connections to first responders or other city employees working in the field as well as offering a mobile service to consumers.”
Hundreds of communities have decided to build publicly owned broadband networks. Some have invested in fiber-optic networks for speed and others in wireless for mobility. Some are doing both, using the fiber as a backbone for the wireless.
ILSRhas yet to find a community that regrets its choice to build a broadband network. A recent report on municipal fiber deployments noted that muni systems between one and four years old average a 54% take rate, which is higher than that of many private providers and often exceeds the muni business plan.
Mitchell is unsurprised by the success of these systems. “When a community invests in its own network, it sets the rules. Private cable and DSL networks may block certain applications or protocols without any transparency. In contrast, public ownership offers transparency and the ultimate threat of electoral defeat for those responsible for an under performing network.”
Though Earthlink and MetroFi can shut down the network and quietly leave town, city governments and utilities are sure to remain for the long haul.
