Policy Documents

State & Local Broadband Initiative Failures

Ryan Krause –
July 9, 2008

Since the start of this century, municipalities across the country have proposed and implemented plans to provide their citizens with high-speed Internet access. As of 2007, 52 municipal broadband systems had cost taxpayers a combined $840 million. (http://www.heartland.org/Article.cfm?artId=21013) Cities like Philadelphia and Provo, Utah, expecting low costs and a reliable revenue stream, have found themselves experiencing ever-increasing costs and limited demand.

Now, some states are attempting similar initiatives, proposing broadband delivery to everyone in their jurisdictions who wants it. This is not progress. It is the next step in the wrong direction.

Proponents of municipal and state broadband initiatives claim high-speed Internet is a public good, vital to continued economic growth. The evidence shows, however, that economies can grow alongside Internet access, and, more importantly, the private sector provides the product far more efficiently, less expensively, and with better-quality service than government can.

Gradually, in pace with demand, private firms are expanding the scope of high-speed Internet access to more remote and impoverished regions. Prices have steadily decreased with time, while speed and quality of service have increased. Currently, several options exist from which the consumer can choose: DSL, cable broadband, and satellite among them. The price of DSL http://news.zdnet.com/2100-3513_22-5178050.html is approaching a point comparable to the discount price offered by most municipal Internet initiatives. The industry has thrived in a relatively free environment, and reducing existing regulations would further lower barriers to entry and allow for even greater price and quality competition.

Unfortunately, state and local governments have chosen to pursue the opposite path: immersing themselves in the broadband market, and leaving higher costs in their wake.

Previous attempts to bring high-speed Internet to the masses have failed one after the other. Yet this phenomenon fails to deter these projects' supporters, only emboldening them to try again.

The following articles describe and analyze several different municipal broadband projects, highlighting the unintended consequences that accompany these government undertakings. The combined examples provide further proof that government should not intervene where the private sector is proceeding successfully.


Research Institute Questions State Broadband Plan
http://www.mackinac.org/print.aspx?ID=3839
An early press release from the Mackinac Center for Public Policy contests the assertion that the government of Michigan has a role in building broadband infrastructure in the state.

Why States Should Stop Municipal Broadband
http://www.heartland.org/Article.cfm?artId=16180
Heartland Institute President Joseph L. Bast explains why states' preemptive action to stop local broadband initiatives is justified.

Why Ask Wi?
http://www.reason.com/news/show/36388.html
Reason's Tim Cavanaugh exposes San Francisco's proposed municipal Wi-Fi network as ill-conceived and destined to be "a duplicative waste of time."

Municipal Broadband Subsidies Are 'a Waste'
http://www.heartland.org/Article.cfm?artId=21013
Heartland Institute Senior Fellow Steven Titch outlines the cost to taxpayers of municipal broadband programs and discusses how the private sector provides the same service more efficiently.

Broadly Speaking, This Is Not the Government's Business
http://www.heartland.org/Article.cfm?artId=15851
Heartland Institute President Joseph L. Bast chronicles the losses that several municipal broadband programs have faced and outlines how the private sector would do a better job.

The Viability of Municipal Wi-Fi Networks
http://cei.org/pdf/4472.pdf
Braden Cox, technology counsel for the Competitive Enterprise Institute, challenges the assertion that Wi-Fi is a public good and suggests government competition in the Wi-Fi market yields inefficiencies and free speech concerns.

City a Good Wireless Example
http://www.journalgazette.net/apps/pbcs.dll/article?AID=/20080528/EDIT05/805280313
Heartland Institute Senior Fellow Steven Titch discusses the reasons a Fort Wayne, Indiana municipal broadband plan had to fail and ways the city could approach the matter better.

Hopes for Wireless Cities Fade as Internet Providers Pull Out
http://www.nytimes.com/2008/03/22/us/22wireless.html?_r=4&hp=&adxnnl=1&oref=slogin&pagewanted=1&adxnnlx=1214582822-3+eHTU3kFlSqKWdSkcTiKg (requires registration)
The facts break through the bias in this New York Times piece on the demise of Philadelphia's wireless Internet attempt. Despite the hopeful outlook on identical future municipal broadband projects, the author cannot avoid pointing out the failures of the past.

Gahanna Broadband Project is a Waste of Taxpayers' Money
http://www.buckeyeinstitute.org/article/838
The Buckeye Institute's Marc Kilmer warns against a proposed municipal broadband project for the town of Gahanna, Ohio. He points to previous failed broadband and cable access attempts to show this plan would fare no better.

Municipal Broadband Fails - Again
http://www.reason.org/commentaries/titch_20080128.shtml
Heartland Institute Senior Fellow Steven Titch details the shortcomings of iProvo, the broadband network in Provo, Utah. He identifies the "market misperceptions" that led Provo and other municipalities to embark on doomed broadband projects.


Nothing in this document is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For more information on telecom regulation, visit PolicyBot, The Heartland Institute's free online research database, where documents on this topic are grouped at http://www.heartland.org/PolicyBotTopic.cfm?artTopic=642.

If you have any questions about this issue or the Heartland Web site, you may contact Brian Costin, Heartland's assistant director for government relations, at 312/377-4000 or at bcostin@heartland.org.