more on Should Municipalities Get in the Wi-Fi Business?

[David Farber <dave () farber net>]

------ Forwarded Message
From: Brett Glass <brett () lariat org>
Date: Tue, 19 Apr 2005 20:32:44 -0600
To: <dave () farber net>, Ip <ip () v2 listbox com>
Subject: Re: [IP] i Should Municipalities Get in the Wi-Fi Business?

[Dave: Please post this better edit to the list instead of the one
I sent a few minutes ago. -BG]

At 04:01 PM 4/19/2005, Kenneth Mayer wrote:
  
> Maybe someone can answer my question? Why is it that the Bells are so
> scared? Money and revenue? Why can't they charge what the city would (I
> am 99% sure it would be cheaper)charge?

Ken:

Here's a brief answer. The Bells' ability to collect "monopoly rent"
(that is, to price gouge) and to foreclose competition depends upon
sole ownership of essential infrastructure. If there is an alternate
way to get access, the Bells must compete on a more level playing
field, which they do not want to do.

My concept of an ideal municipal broadband network is one in which
the basic infrastructure -- the raw network, whether wired or wireless
-- is a municipal facility, just as the roads are. However, the services
provided over that network would be provided by multiple, competing private
providers. This is analogous to being able to call a taxi from more than
one taxi company, or ship freight via more than one freight company, all
of which use the same public roads (which are maintained by the city) to
get to you. What the Bells would like is to have the roads all be their
private roads, over which only they can provide the services. That way,
they can overcharge for services and foreclose competition.

In my scenario, the city becomes a municipal utility that provides
low level infrastructure (this is what cities are best at) while
the private sector provides innovation and competition on the
higher (and more interesting) layers. Because infrastructure is no
longer a barrier to entry in this model (one need not erect towers,
string or bury copper or fiber, etc.), it enables private providers
rather than cutting them out of the picture.

Surveys have shown that residents who are served by municipal utilities
are happier with their service, its pricing, and the value delivered than
are customers of private utilities. Perhaps this is what the Bells are
worried about: that consumers will discover that this form of structural
separation (separating ownership of the infrastructure from provision of
the services) is an optimal solution and it will be widely emulated.

By the way, please note that I am a wireless Internet provider and therefore
such a network would enable people to compete with me. However, unlike the
Bells, I am not so lazy that I am unwilling to compete or so dependent upon
a monopoly position that I could not survive in the face of fair
competition.
Just as one can't expect to be the only plumber or electrician in town, one
should not expect to be the monopoly provider of broadband. I think that I
could be the best one, though.

--Brett Glass


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