Columbus Wants Stimulus Money for Broadband

Published October 1, 2009

The Columbus, Ohio city council has submitted a grant application to the National Telecommunications and Information Administration requesting $37.9 million in federal stimulus money to fund a citywide fiber-optic network.

According to city officials, the network would allow Columbus to drop contracts with phone companies currently providing wi-fi hardware and attract tech companies that require high-speed Internet.

‘False Sense’ of ‘Free’

Vince Vasquez, senior policy analyst with the National University System Institute for Policy Research in La Jolla, California, doubts the proposal will work as promised.

“This doesn’t differ much from what we’ve seen in other government-run telecom networks,” Vasquez said. “The federal subsidy and plans to provide wholesale access to Internet service providers gives the Columbus proposal a false sense of being ‘free’ or able to pay for itself.

“Government-run telecom networks have proven for decades to be white elephants, being more costly to keep running than they’re worth,” Vasquez added.

Vasquez coauthored a 2007 study for the Pacific Research Institute reviewing 52 major municipal telecom networks. It showed the public systems cost taxpayers more than $840 million over 20 years and failed to pay their way 77 percent of the time.

“Government-run Internet access is a solution to a problem that doesn’t exist,” Vasquez said. “Public fiber-optic networks are anti-competitive, distort market forces, and are notorious money pits for taxpayers. The private sector is more capable of assuming risk and meeting the fluctuating needs of consumers.”

‘Recipe for Utter Fiscal Disaster’

Columbus plans to utilize the new technology for municipal applications such as police video surveillance and remote water and electric meter reading. But Steven Titch, a policy analyst at the Los Angeles-based Reason Foundation, notes such uses take up considerable bandwidth, which reduces capacity for moneymaking enterprises

“If they’ve underestimated the amount of bandwidth they’ll need, then they’ve overestimated the financial benefits of doing this,” Titch said. “It’s a recipe for utter fiscal disaster. In every study I’ve done, no municipality has ever accurately predicted their costs.”

Should the city receive the grant and build the network, there remains the issue of maintaining it, Vasquez notes.

“We saw a fiber glut in the 1990s, where cities and businesses bought up fiber, thinking it was a wonder technology, only to find themselves neck-high in debt,” Vasquez said.

Brien Farley ([email protected]) writes from Genesee, Wisconsin.

For more information …

Sonia Arrison, Dr. Ronald Rizzuto, and Vince Vasquez, “Wi-Fi Waste: The Disaster of Municipal Communications Networks,” Pacific Research Institute, February 2007: