The city government’s effort to provide free wireless service for the residents of Milpitas, California has had a history of trouble. After an initial attempt failed after operating only one year, the city inaugurated a public-private partnership in 2009.
Milpitas launched another free wi-fi service in 2009 with a new service provider, replacing Earthlink with Silicon Valley Unwired (SVU), a nonprofit group including Google and I-Net Solutions. Milpitas signed an agreement for one year that also grants the city an optional three additional two-year terms.
“In 2006 Earthlink signed an agreement with the city to install a wi-fi network,” explained Bill Marion, Milpitas information services director. “After approximately one year of operation, Earthlink shut down its municipal wi-fi business unit.”
Earthlink offered the network to the city in exchange for early termination of their agreement, which was operated on a much smaller network reserved exclusively for public safety. “From this experience, we knew that the city did not have the resources to operate the Earthlink network,” said Marion.
Broadband Cast as Necessity
“We think in today’s society, a basic broadband connection is a necessity,” said SVU cofounder Karl Garcia. “It is one of the services we think a city should provide to the citizens, just like sewer, water, and electricity.”
Garcia’s view, however, is not shared by Jim Lakely, co-director of The Heartland Institute’s Center on the Digital Economy. “Broadband is not a utility, any more than cable television is,” he countered. “And we don’t ask taxpayers to make sure ESPN is in every home—at least not yet.”
Seton Motley, editor-in-chief of StopNetRegulation.org, agrees with Lakely. “It is never a good idea to actively seek to increase the role of government in any business activity,” Motley said. “If you think the business models have been poor so far, wait until you see what the bureaucrats come up with,” he said.
Garcia argues the public/private venture is breaking new ground. “We think it is a large net win for the city,” he said. “Almost all of the smartphones out there today have built-in wi-fi, and using the citywide network can keep the monthly costs for these phones in check”
But Lakely says reducing the monthly wireless smartphone bills of city residents is not a proper function of government. “Besides, the vast majority of people with phones that can access wi-fi have unlimited monthly plans, so even the goal of reducing a smartphone customer’s monthly bill is specious,” he added.
‘Comes With a Cost’
“Everything comes with a cost,” said Craig Settles, president of Successful.com, a wireless industry consulting firm. “Who bears this cost depends on how the deal is struck. Some models do not burden taxpayers. But if the model is tied to a tax base, yes, it is going to affect taxpayers.”
In addition, he noted, “There is a risk to taxpayers in all projects since there is no guarantee that a project will be successful. If the model is poorly planned, it will not do well. Projects need to [incorporate] what the needs of the community are and what they need to do to be successful,” he continued.
Garcia says the city is working to keep costs down.
“We received initial funding and in-kind services from our private contributors and support from the city of Milpitas to restore and reconfigure the abandoned network from Earthlink,” said Garcia. “We have been working diligently to bring the operational costs down, plus we are working on sharing the cost savings currently enjoyed by some city services.
“The network will reduce the costs of providing essential city services and thus will be a benefit to the taxpayers. In addition to having the network as a platform, the city can provide additional services at a fraction of the cost to deploy these services if the network did not exist,” he added.
Lakely responded, “If Milpitas really wants to keep broadband costs down, it needs to stay out of the broadband market, not distort it with taxpayer dollars. Every ‘public/private’ partnership—especially in broadband—only serves to reduce private sector competition by tilting the playing field in favor of the one lucky ‘partner’.”
Tabassum Rahmani ([email protected]) writes from Dublin, California.