City wireless services don't play on level field

[David Farber <dave () farber net>]

Begin forwarded message:

From: Dewayne Hendricks <dewayne () warpspeed com>
Date: October 4, 2004 4:00:24 PM EDT
To: Dewayne-Net Technology List <dewayne-net () warpspeed com>
Subject: [Dewayne-Net] City wireless services don't play on level field
Reply-To: dewayne () warpspeed com

[Note:  This item comes to me from Esme Voss of MuniWireless.com.  DLH]

Posted on Mon, Oct. 04, 2004

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City wireless services don't play on level field
<http://www.twincities.com/mld/twincities/news/editorial/9813070.htm>

It sounds enticing: Wireless broadband Internet service at deeply 
discounted rates, provided as a municipal utility just like water and 
sewer services. Cities large and small are getting into the wireless 
Internet business. Philadelphia, Boston, Atlanta and L.A. are looking 
into it. Here in Minnesota, Buffalo and Chaska already offer it.

So what's not to like about a deal like that? Plenty.

The primary concern is that when governments compete with private 
businesses to provide goods and services, they don't do so on a level 
playing field. Governments don't pay property taxes on municipal real 
estate. They don't pay corporate income taxes, like Charter 
Communications, Comcast or Time Warner do. They don't face many of the 
regulatory hurdles that private businesses do. They can take land by 
eminent domain.

Another factor to keep in mind: "Government" and "cutting edge" are 
rarely uttered in the same breath. Government is not known for its 
innovation and nimbleness in reaction to market changes.

While municipal wireless systems may start out using cutting-edge 
technology and providing services comparable to those provided by cable 
and phone companies, history shows that they will struggle to keep up 
with the rapidly changing technology. Brad Mayer, Chaska's 
information-systems manager, said that the city's 2,000-subscriber 
chaska.net will use subscriber revenues to keep the system up to date. 
The vendor the city has contracted with has a plan for keeping 
chaska.net on the cutting edge. Time will tell. Just up the road in 
Buffalo, city residents can subscribe for $30 monthly to wireless 
service installed five years ago that offers connection speeds of about 
one tenth as fast as those currently offered by cable companies for a 
few dollars more a month.

Clearly, some cities can make a compelling case for investing in 
wireless Internet systems: rural communities not served by cable or DSL 
providers or cities that plan to integrate wireless communications into 
their police and fire response systems.

But as a general principle, government should not be competing with 
private enterprise to provide non-essential services. It isn't fair 
competition.

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