The Problem with Municipal Wireless Networks

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Richard Morrison, 202.331.2273

<?xml:namespace prefix = st1 ns = “urn:schemas-microsoft-com:office:smarttags” />Washington, D.C., February 3, 2005—Around the nation, several major cities are considering funding programs to construct Wi-Fi wireless broadband networks for Internet access. Advocates of these municipal Wi-Fi projects argue that they will be inexpensive to operate, foster new business investment and help bring access to underserved communities, but a new study by the New Millennium Research Council, co-authored by Competitive Enterprise Institute Technology Counsel Braden Cox, tells a much different story.

The study, Not In The Public Interest – The Myth of Municipal Wi-Fi Networks, details that, among other potential difficulties, cities are focusing solely on the start-up costs of wireless broadband networks and ignoring the impact on private sector competition. “Municipalities that enter the wireless broadband market make it even harder for private firms to compete,” says Cox. “Instead, municipalities should focus on ways to make it easier for private companies to provide service, such as removing franchise licensing barriers and making right-of-way access available on terms that are fair, administratively efficient, nondiscriminatory, and pro-competitive.”

Municipal Wi-Fi networks, though sometimes a collaboration of public and private efforts, are generally at least partly paid for with taxpayer funds. Because of that partial (and sometimes complete) subsidy, municipal networks make it less attractive for telecommunications companies to invest in large-scale broadband deployment. In addition, urban planners are often keen to use technological infrastructure as a way of attracting new business investment in certain locations. There is little evidence, however, that millions spent on building Wi-Fi will necessarily attract the expected investment to targeted areas.

While the intentions of city officials are admirable and Wi-Fi does have positive benefits, the contributors to Not in the Public Interest believe city ownership of wireless broadband networks is not the solution for bridging the “digital divide” or encouraging competition in the broadband market.