Chicago Wants Feds to Fund Failed Broadband Effort

Published December 2, 2009

Chicago Mayor Richard M. Daley is asking for $100 million in federal grant money to create a broadband network in underserved communities, though an earlier 2007 plan to bring high-speed Internet to low-income areas failed.

Daley’s office says residents and business owners will benefit from broadband access and that it will stimulate education and economic development.

“In the twenty-first century economy, everyone needs to have access to computer technology to succeed in life,” Daley said upon submitting his application for part of $7 billion in federal broadband stimulus funds. “Computer literacy is a fundamental skill in the modern world.”

President Barack Obama’s adopted hometown already has received $1 billion from the new administration for economic recovery. Daley said he’s hoping for $700 million more in grant funding in addition to the broadband stimulus funds. The mayor says broadband penetration in 23 of its 77 neighborhoods is lower than in rural areas.

Daley said he will apply for the funding over the next several months.

Seen as Essential

Dan Wang, former lead program manager at Microsoft for most of the last decade and founder of Just Evolved, a San Francisco-based technology think tank, said broadband access is becoming an essential part of American life.

“Pretty much everything has a Web presence now, so broadband is pretty important, almost as important as electricity or water,” Wang said. “So you could translate that into the question of whether or not cities should think it is a good idea to provide municipal broadband.

“If you believe broadband is almost as important as electricity and water–and because the city provides electricity and water abilities to every resident–then you could make a case for the city providing broadband to every resident as well,” Wang added. “Whether that should best be provided for free or for a fee is up in the air.”

‘Vast Waste’ of Funds

Samuel Slom, president of Smart Business Hawaii, a small-business trade association in Honolulu, says Chicago’s application represents a “vast waste of funding” because municipal-driven broadband projects have a proven record of failure.

“That [record of failure] hasn’t stopped them in the past, so they will continue to go after the funding,” Slom said.

In 2006, Chicago began moving forward to create a free municipal wi-fi system that would blanket the city, but the project fizzled by the end of 2007 when provider Earthlink pulled out. The city was told it would take $50 million to set up the wi-fi infrastructure and $150 million to maintain it over six years.

Avoiding Government Involvement

Slom said Hawaii has considered proposals to get the government involved in broadband delivery, but he remains skeptical of their value.

“We have had a broadband task force in Hawaii over the last two years, and we’ve got some legislation pending, but again, I look around at what’s happened in other jurisdictions,” Slom said. “And I feel problems arise when the government is too involved in this.

“Just like anything that government has been involved in, the costs go up,” Slom added. “And the areas that are supposed to be served are not served, and technology is not keeping pace. Of course, we need more broadband and innovation, but it has got to come from the private sector.”

Muni Broadband = Higher Taxes

Wang, who has lived in Europe, said municipal broadband over there comes at a price: Higher taxes.

“Currently, some cities provide free broadband to their residents,” Wang said. “This of course, needs to be funded somehow–through higher taxes.

“So it seems to me that you could either have higher taxes to fund free broadband, or residents pay for broadband themselves, similar to water and electricity, on a how-much-consumption method,” Wang said. “People that pay taxes might not want to pay higher taxes. And the people that consume [municipal broadband] aren’t necessarily the residents of that city, yet they can still use it.

“There could be a situation where the people who consume don’t necessarily pay for it,” Wang added.

Krystle Russin ( [email protected]) writes from Texas.