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. It’s a lesson for all municipalities contemplating such actions.
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 must ask Longmont’s residents for permission. If that law had been in place in the late 1990s, maybe 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, the first such system in the state. 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.”
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. 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 the ill-advised 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 received less than a year of spotty service. The city finally gave up and sold the wireless network to a private company in 2008.
Longmont’s failed attempts to compete in the expensive and ever-changing telecommunications sector have been repeated across the country. Dozens of cities of all sizes—from San Francisco to Philadelphia, from Portland, Oregon to Naperville, Illinois—have learned the same expensive lessons Longmont has. Muni broadband is big on promises but short on delivery.
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 private investment and competition in broadband that would occur naturally.
Instead of throwing more good money after bad, Longmont would better serve its residents by cutting its losses, selling its largely unused fiber infrastructure to a private firm, and getting out of the telecommunications business for good. Voters may suggest just that in November.
The following articles discuss municipal broadband in more depth, providing background and insight for readers interested in learning more about this issue.
Research & Commentary: State & Local Broadband Initiative Failures
http://heartland.org/full/23502/
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 such as 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://heartland.org/full/15851/
Heartland Institute President Joseph L. Bast chronicles the losses caused by several municipal broadband programs and outlines how the private sector does a better job.
Municipal Broadband’s Record of Failure: A Profile 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 already have been undertaken. Almost without exception, the results have been overwhelmingly negative.
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 help energize decrepit downtown areas, break poverty cycles, increase tourism, and earn a city a reputation as tech-friendly. Such promises are rarely met.
Ohio Wireless Company Takes Over Colorado Town’s Wi-Fi System
http://heartland.org/full/23254/
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 in less than a year.
Minneapolis Wi-Fi Network Is Foundering
http://heartland.org/full/25021/
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://heartland.org/full/25593/
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 Technology and Telecommunications is aiming for 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://heartland.org/full/24534/
Regulation is not keeping up with technological change in the telecom industry. 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 such as 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. Now is not the time for governments to substitute market-based competition for government-managed competition.
For further information on municipal broadband and other infotech and telecom issues, visit The Heartland Institute’s Web site at www.heartland.org, where you will find articles on the issue available through PolicyBot, Heartland’s free research database.
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.
