If Longmont, Colorado’s city council had its way, failing in the telecommunications industry a decade ago wouldn’t get in the way of failing again—but this time on a grander scale. Thankfully, the voters of that city can put a stop to the folly in the November election.
The council on August 28 unanimously approved putting a question on November’s ballot asking voters to let the city get into the business of providing fiber-optic broadband services. Because a 2005 Colorado law bans cities from providing telecommunications and cable services on their own, the council has to ask the residents of Longmont for permission. If that law was in place in the late 1990s, maybe the voters could have saved the city from making a big mistake.
In 1997, Longmont embarked on a bold quest to build a “community-owned” fiber-optic broadband network—which would be the first such system in all of Colorado. Then-mayor Leona Stoecker promised the city’s fiber-to-the-home network would usher in a new era of “economic vitality” that would “afford all members of the community an equal opportunity to grow economically, intellectually, culturally, socially and with diversity.”
Sadly for Longmont, none of those dreams came true. By 2001, the city’s partner in the endeavor, Adesta Communications, had filed for bankruptcy and defaulted on its contract with the city. And Longmont taxpayers were left with a partially built fiber-optic system that has turned into a black hole of public funds and civic energy.
Attempts to salvage Longmont’s ill-advised public project have met with no success. Yet another public-private partnership in 2007—this time to provide municipal wi-fi services—was a flop. Kite Networks did not complete its promised task of providing service to the entire city, and even the areas Kite managed to cover were marked by less than a year of spotty service. The city finally gave up and sold the wireless network to a private company, Ohio-based DHB Networks in 2008.
Longmont’s failed attempts to compete in the expensive and ever-changing telecommunications sector have been repeated across the country. Residents of dozens of cities of all sizes across America—from San Francisco, to Philadelphia and Portland, Oregon to Naperville, Illinois—have learned the same expensive lessons Longmont has. Muni broadband is always big on promises, but short on delivery.
No matter how many times cities attempt to change the “business model” to make muni broadband work, the result is always failure. And residents end up losing twice—once when tax dollars and city manpower go to waste, and again when the city’s schemes discourage the kind of private investment and competition in broadband that would naturally occur.
Rather than throwing more good money after bad, the city would better serve the people of Longmont if it simply cut its losses, sold its largely unused fiber infrastructure to a private firm, and got out of the telecommunications business for good. Voters may suggest just that in November.
Research & Commentary: State & Local Broadband Initiative Failures
http://www.heartland.org/policybot/results/23502/State_Local_Broadband_Initiative_Failures.html
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. Cities like Philadelphia and Provo, Utah—expecting low costs and a reliable revenue stream—have found themselves experiencing ever-increasing costs and limited demand.
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.
Municipal Broadband’s Record of Failure: A Pro?le in Market Intrusion
http://www.americansforprosperity.org/files/Municipal_Broadband_Policy_Paper.pdf
Before billions of taxpayer dollars are spent on municipal broadband projects under the guise of economic stimulus, we should consider the results of recent projects that have already been undertaken. Almost without exception, the results have been overwhelmingly negative, according to Americans for Prosperity.
Not In The Public Interest: The Myth of Municipal Wi-Fi Networks
http://www.thenmrc.org/archive/wifireport2305.pdf
Ownership of broadband networks by municipalities, like many other government initiatives, is framed in terms of best intentions. Proponents of municipal broadband ventures assert that a high-speed network will be a means of energizing decrepit downtown areas, breaking poverty cycles, increasing tourism, and earning a reputation as a tech-friendly city. But such promises are rarely met.
Ohio Wireless Company Takes Over Colorado Town’s Wi-Fi System
http://www.heartland.org/policybot/results/23254/Ohio_Wireless_Company_Takes_Over_Colorado_Towns_WiFi_System.html
Longmont, Colorado finally cut bait on its attempt to make lemonade out of a public broadband lemon when it sold the city’s wireless network to Ohio-based DHB Networks in 2008. The “excellent cooperative partnership” the city struck with Kite Networks in 2007 soured within less than a year.
Minneapolis Wi-Fi Network Is Foundering
http://www.heartland.org/policybot/results/25021/Minneapolis_WiFi_Network_Is_Foundering.html
Minneapolis’s citywide wi-fi network is not exactly “citywide,” and a few areas are taking much longer than promised to bring online. The problems are typical of municipal wi-fi networks, which have failed in scores of cities around the country.
NYC Presses Ahead with ‘Free’ Wi-Fi Despite Previous Failures
http://www.heartland.org/policybot/results/25593/NYC_Presses_Ahead_with_Free_WiFi_Despite_Previous_Failures.html
Despite recently having to close down eight free wi-fi spots in New York City parks because none was profitable, the city’s Department of Information and Technology and Telecommunications is aiming to have another go. Experts say it doesn’t make sense for municipal authorities to spend limited public dollars on an investment likely to become outdated rapidly.
A State Legislator’s Guide to Telecom Policy
http://www.heartland.org/custom/semod_policybot/pdf/24534.pdf
The telecommunications industry has undergone a revolution. Even the most recent federal law affecting the industry, the Telecommunications Act of 1996, failed to anticipate the widespread adoption of wireless telephone and new technologies like Instant Messaging and Voice over Internet Protocol (VoIP), let alone their substitution for traditional phone service. Never has there been a clearer example of the inability of law to keep pace with technology. And now is not the time for governments to substitute market-based competition for government-managed competition.
Nothing in this message is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. If you have any questions about this issue or the Heartland Web site, you may contact Heartland Research Fellow Jim Lakely, managing editor of InfoTech & Telecom News, at 312/377-4000 or [email protected].
Jim Lakely is the Vice President and Director of Communications of The Heartland Institute.
