Municipalities have had mixed results with their own broadband service

Yes, municipal broadband can help improve government services. However, there can be various outcomes depending on profitability and whether a municipality has its own electricity service and infrastructure. Lafayette provides its own power as does Wilson and Salisbury, N.C. which are mentioned below.

Improved Government Services

One argument for broadband is that it improves government services, and an example of this is the availability of municipal meetings online, sometimes live (Kemp 2015). This can allow members of the public to watch the meeting when it is inconvenient for them to attend. Another example is schools putting assignments online for students to access. This can be done by means of a course management system and this allows students to print readings and take exams and faculty members can post grades. Regarding public safety employees, many police officers now have computers inside their vehicles. This allows them to look up outstanding warrants and criminal records almost instantly. Firefighters also have access to computers and this allows them to find vital information about the scene before arriving. Municipalities have also started their own emergency operations centers where they can respond to inclement weather and other emergency events. Municipalities can also get current information about these events to their citizens. Wilson, North Carolina expanded its public services when it partnered with two nonprofit after-school programs to provide low-income children with the Internet. The city began by laying fiber optic lines between government buildings so it could better share information (Moskowitz 2016).

Peha (2007) states that the country’s public safety communication system is broken and the way to fix that is with a national broadband plan. The resources are available since the federal government planned to transfer a large portion of premium spectrum from analog television to public safety use. There is a national broadband plan at www.broadband.gov and there is a section for public safety.  The plan calls for a nationwide access to wireless networks where first responders can get in touch with others without delay (FCC n.d.). Peha argues that public safety communication systems will remain inadequate if local governments are solely responsible for them. One alternative way of implementing a national broadband plan is to get the help of a commercial provider. This could work since these companies work with communications issues routinely. Peha states the process could include a commercial entity or a governmental entity running the implementation. This could be either from the federal level or a consortium of local and regional entities (2007). Certainly, a federal entity needs to be involved to provide checks on either the local and regional entities or the commercial one. This ensures there is a way for addressing issues.

Objections and Implementation Issues

Despite the advantages of municipal broadband that are advanced by advocates, critics have raised several objections.  These include unfair competition with private service providers and debt financing for new systems, which can leave tax payers holding the tab if the system does not become self-supporting.

 Patrick Gleason (2014), argues that the cost of building and maintaining a broadband network can be considerable and competing with networks already in existence is not a sound use of scarce taxpayer dollars.  He cites the example of UTOPIA, which was a municipal broadband network that spanned 11 Utah localities that failed. It has amassed over $350 in debt and is looking for a taxpayer bailout. According to the Utah Taxpayers Association, residents in the UTOPIA service area would have to pay nearly two billion dollars in additional debt over thirty years if a deal is made to finalize the failed network’s build out (Gleason 2014). However, including this worst-case scenario without at least acknowledging there can be success with a municipal network is reckless.

The unfair competition argument has attracted legislative support.  For example, in 2011, North Carolina passed a law that would put significant tax burdens on municipalities that tried to deploy their own broadband networks. The Level Playing Field/Local Government Competition Act exempts the cities of Wilson and Salisbury, which already had their own networks at the time of the bill’s passage. Telecommunications companies Time Warner Cable and CenturyLink lobbied in support of the bill claiming municipal entry in the telecommunications business would hinder the private sector (Heaton 2011). 

The Federal Communications Commission voted to override laws that would prevent communities, especially Chattanooga, TN, and Wilson, NC from expanding their municipal broadband service (Fung 2015). However, that order was reversed by the U.S. Court of Appeals for the Sixth Circuit. The court stated the FCC would need a clear directive from Congress to step in and influence the market toward any public or private Internet service provider. The ruling came after North Carolina and Tennessee sued the FCC (Daly 2016). This ruling could give other states looking to block municipal networks plenty of confidence.

Ford (2015) raises an objection about the Federal Communications Commission’s view that Chattanooga’s success could be easily replicated, a view that was later picked up by the White House.  Chattanooga was different from most communities in a couple of respects.  First, it has its own utility company, which helped shoulder the cost. There was also a $111 million federal grant, which took away some more of the cost. Ford does mention the possibility of success, but does state that it can be difficult. Also, while Chattanooga received a federal grant for the project, that was not given to incumbent private ISPs. The price for a triple-play package from Chattanooga and Comcast are both $139. While the packages are similar, the glaring difference is that Chattanooga offers 100 mbps while Comcast only has 50 mbps.  In this case, municipal prices might not be lower, but they do offer more speed. Ford fails to mention this despite laying out the features and cost of the packages from both providers. As Ford argued, reasoned analysis is needed when dealing with public policy, and that goes for municipal broadband (2015).

The Chattanooga example raises another issue that is relevant to Lafayette.  A municipally owned utility can provide the service, thereby avoiding a direct burden on tax payers if a subsidy is required.  However, there is the possibility that utility rate payers may end up shouldering the cost if, instead of separating broadband from its other services, the utility cross-subsidizes it through its regular rates. Since municipally owned utilities are usually monopolies, the effect would be like that of tax funding: residents would be required to pay for a service that they might not have chosen. 

The objection to compulsory support is an important one, but it is not different in principle from many other public services, such as police or fire protection.  Policy makers must decide whether a service is so important that it is worth the burden, or the risk of a burden, on the general population.  As Internet use becomes ever more part of the economy, some advocates may consider it a necessity.  This argument is particularly telling for small communities that do not have, and are unlikely to attract, private ISPs.

The questions of whether a municipality should provide a service and what kind of service it should provide require consideration of numerous factors, many of them involving local conditions and goals.  Mandivalla et al (2008) describe a three-step process that they developed in Philadelphia. Their model was developed for a municipal wireless network (MWN), but they argue that it is generic enough to apply to wired service, as well.  The first step involves identifying the goals. One usual goal of MWNs or other municipal broadband systems is to address the digital divide; however, providing access is just the beginning as education and workforce retraining needs to be part of the plan. This will allow citizens who are just introduced to the Internet to learn how to access it and use it to further their own careers. An example of this is a social service agency in Philadelphia setting up wireless service in homeless shelters so residents can learn about welfare-to-work programs and other technological life skills (Mandivalla, et al 2008).

The second step involves managers identifying the type of applications a broadband network will support, with a common one being creating free or low-cost Internet access. Since there are municipal broadband services that use cable and are more in line with private ISPs, there would need to be a subsidy program in place to aid those that need it.  That could increase the cost of taxpayers’ contribution. Project organizers will need to determine how the prospective users will adopt the technology. Determining the funding model, such as government owned and operated, public-private partnership, nonprofit owned and operated and privately owned or operated. The best model would depend on what would work best in the municipality.

The third step would involve the actual implementation where the network is built and made available to subscribers. This could take many forms such as making the network available to citizens, installation in specific phases like testing the service with residents before making it available to business customers. One thing is certain - municipalities will have to make sure in the beginning there are citizens that would like to use the service. There could be pushback from private ISPs; however, the municipality could invite them as partners with providing education or workforce retraining programs. With a MWN, this might be more likely since the main service for the private providers are wired.

The importance of determining the potential for citizen use is illustrated by the case of LaGrange, GA, as reported by (Hsieh, et.al. 2012).  In 1999, city officials witnessed the economic growth coming from the Internet. The municipality eventually partnered with a cable company and private ISP to use surplus bandwidth to provide service at no additional cost. Residents could receive a television-based Internet service for no more than the basic cable fee of $8.70 per month. Although the government, cable, and ISP made a great effort on the project, a significant part of the population failed to subscribe to the service by the spring of 2001.  There were both affluent and non-affluent citizens that declined to take advantage of the service. The less-affluent complained that the city was providing Internet service before more pressing needs and some of the affluent thought the less-affluent should do what they did in the past and just go to the library or other place that provides the service for free. That could now be a fast food restaurant or coffee shop. This would still present a problem for those with limited or no mobility. While there were many economically disadvantaged citizens that embraced the concept since it allowed them to learn digital skills, it was still taken down since the ISP had to declare bankruptcy and subscriptions were down. Also, neither company saw the expected profit they envisioned. This example could be used to remind municipalities to ask for citizens’ views before even envisioning goals. This can help a municipality pick an appropriate business model and scale the project for those that need it. In the LaGrange case, it could be the economically disadvantaged, and maybe their access could be funded through a nonprofit or entrepreneur with the government making a smaller contribution.

In summary, there are many possible advantages and disadvantages of municipal broadband. They are:

Advantages

·       Spurring economic development

·       Overcoming the digital divide

·       Improving public services

Disadvantages

·       Providing unfair competition with the private sector

·       Failing to be self-sustaining

·       Requiring a subsidy from taxpayers or utility customers.

NOTES:

Kemp, Roger L. "Societal Changes and Municipal Public Services." National Civic Review , 2015.

Moskowitz, Peter. "Chattanooga was a Typical Post-Industrial City. Then, It Began Offering Municipal Broadband." The Nation , June 3, 2016.

Peha, Jon M. "Improving Public Safety Communications." Issues in Science and Technology, 2007.

Heaton, Brian. "Georgia Community Broadband in Legislative Crosshairs." Government Technology, January 25, 2012.

—. "Municipal Broadband Networks Slammed in North Carolina." Government Technology, May 25, 2011.

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