Study Sees 'Troubling Outcomes’ in Munis

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Washington— The growing number of U.S. cities considering paying for wireless broadband networks may be a recipe for “troubling outcomes” for city budgets and commercial competition, according to a new feasibility study released by telecom and technology advocates.

Chicago, Philadelphia, Las Vegas, New York and San Francisco are among a growing faction of municipalities mulling universal Internet access for residents and visitors. Such government subsidization would require a risky commitment of taxpayer money for network development and expansion, the report’s authors and contributors contend.

The report, released Feb. 3 by the New Millenium Research Council, warns of “a disturbing reliance … on unsubstantiated 'if you build it, they will come’ assumptions.” In a conference call with about 40 reporters, contributors to the report laid out their case for scaling back the surge of government-sponsored service.

Steven Titch, a senior fellow for IT and telecommunications policy at the Heartland Institute, said the addition of broadband access via wireless fidelity, or Wi-Fi, “subsidizes traveling professionals.”

“Rather than pay T-Mobile or maybe the entrepreneurial startup in a struggling Philadelphia neighborhood, they get Internet access free, courtesy of the taxpayer,” he said. “If I were a Philadelphia taxpayer, I’d be questioning the whole idea.”

Philadelphia officials, meanwhile, defend the plan to offer free- and low-cost Internet access within 18 months as a way of bridging rich and poor.

Still, Pennsylvania Gov. Ed Rendell has signed legislation which stipulates that after 2006, all municipal telecom projects must be done in partnership with a commercial provider, with the local telco afforded the right of first refusal.

Barry M. Aarons, a research fellow at the Institute for Policy Innovation, said in the conference call he was concerned with “the real potential [of] government censorship.”

“I think we need to determine whether it’s in the best interest of a free society and free speech to allow governments to control data distribution, and after they’ve driven private companies out of the arena to be able to control the content,” he said.

The report warned that unforeseen administrative and maintenance costs could take municipalities by surprise. It also cautions against driving away competition.

“If the city is allowed to price its service below cost and use its taxing authority to subsidize the municipal operation, the private sector will have no incentive to reinvest in the network,” Ron Rizzuto, professor of finance at the University of Denver and a contributor to the report, said. States News Service

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