It was the best of policies, it was the worst of policies.
In a 2004 paper the Institute for Policy Innovation (IPI) made clear that cities should “Just Say No To Municipal Broadband Networks.” Also in 2004, IPI testified before the Texas House Regulated Industries Committee arguing that the committee members should eliminate (or at least reduce) regulatory impediments to real competition in telecommunications.
Yet many local governments thought they knew better. Now, a Tucson, Arizona, staff study of the potential for municipal WiFi found, according to city telecom chief Anne Strin, that cities from Philadelphia to San Francisco that established municipal WiFi systems are having significant problems in their projects’ fiscal stability, and more than that, usage is below originally anticipated levels.
Now those cities are wishing they had listened to us.
Revenues have been hard to come by with transient customers and limited advertising opportunities. So these cities find themselves stuck. Cities that were considering these projects are retreating. It turns out that there has been no revolution supporting government-provided Internet access.
At the same time, several states were making significant efforts to deregulate the telecommunications marketplace. The positive impact on investment by communications providers and competition from telecommunications deregulation are incontrovertible, not least of which has been greater availability of service, improved service, expanded choice of vendors and lower prices.
In example after example—Texas, Kansas, Virginia or any of the other dozen or so states—states that have taken significant steps towards communications deregulation have experienced the same results: increased investment, more consumer choices and lower rates.
The US Department of Commerce’s Bureau of Economic Statistics reports that since the recent wave of deregulation, including the four years of such things as franchise reform (where competing companies can get one statewide franchise and not have to trudge through scores of burghs and hamlets getting individual franchises approved), there has been a 40 percent rise in investment—almost all in the form of real investment in communications equipment.
The lesson is clear: When the marketplace drives the investment the results are far better than when government tries to force a market.
The free market: It is a far, far better thing to do than some cities have ever done.