Institute for Local Self-Reliance
1313 Fifth Street SE, Suite 303, Minneapolis, MN 55414
www.newrules.org

CONTACT: Christopher Mitchell, 612-379-3815 x209

christopher@ilsr.org

Publicly owned networks are the key to universal access and healthy competition

MINNEAPOLIS, JANUARY 8, 2007 – A new report by the Institute for Local Self-Reliance argues that a publicly owned information infrastructure is the key to healthy competition, universal access, and non-discriminatory networks.

“Localizing the Internet: Five Ways Public Ownership Solves the U.S. Broadband Problem” notes that high speed broadband is becoming ever more widespread.  But, it argues, the way in which that broadband is introduced may be as important as whether it is introduced.

Many telecommunications companies are offering to build a citywide wireless or even wired network at little or no upfront cost to the city.  That arrangement is especially attractive to local elected officials who fear that government lacks the expertise to manage a high tech network and who worry about the possible impact on their budget.  “This is an excellent time to remember to look that gift horse in the mouth,” maintains Becca Vargo Daggett, the report’s author and the director of the Institute’s Telecommunication as Commons Project.

“Even deals framed as coming at no cost to the city require the public sector to enter into extended contracts to pay millions for their own services over the new privately owned network. Cities owe it to themselves and their citizens to carefully evaluate the costs and benefits of public ownership.”

Ms. Vargo Daggett also notes that cities that own infrastructure like roads and water pipelines should not fear owning the physical information network. “Concerns about obsolescence are overstated. Fiber optics is the gold standard, with essentially unlimited capacity and a lifespan measured in decades. Wireless technology is rapidly evolving, but its price is low and the payback period is short.”

Moreover, unlike investments in traditional infrastructure, an investment in information networks can generate a significant return.  “The investment will not only pay for itself, but can generate revenue that can pay for other important municipal services.”  

 www.newrules.org. 

###

Localizing the Internet: Five Ways Public Ownership Solves the U.S. Broadband Problem

by Becca Vargo Daggett, Director, Telecommunications as Commons Initiative, January 2007

Executive Summary

Local governments have taken the lead in U.S. broadband policy. Hundreds of communities of all sizes are making decisions about how to best deliver universal, affordable access to high-speed information networks. Many are offered seemingly attractive arrangements with no upfront cost to the city. They do themselves and their households and businesses a disservice if they do not seriously explore the costs and benefits of a publicly owned network.

In this report, we highlight five arguments for public ownership.

1. High-speed information networks are essential public infrastructure.

Just as high quality road systems are needed to transport people and goods, high quality wired and wireless networks are needed to transport information. Public ownership of the physical network does not necessarily mean the city either manages the network or provides services. Cities own roads, but they do not operate freight companies or deliver pizzas.

Information networks are technologically sophisticated and the technologies involved are rapidly evolving. However, fiber optic cables are to this century what copper wires were to the last, and their capacity is essentially unlimited. While wireless networks are experiencing rapid advances, the initial investment is so low and the payback period so short that rapid upgrades are part of both private and public business plans.

2. Public ownership ensures competition.

A publicly owned, open access network can be open to all service providers on the same terms, thereby encouraging the entry of new service providers. Customers can choose broadband service providers according to the combination of price, speed and service that fits their needs. This is particularly important given that consolidation in the telecommunications industry and a hands-off policy by the federal government have combined to lessen competition among private suppliers.

Cities establishing new, privately owned citywide networks can require the owner to allow fair access. But it is unclear whether these contractual obligations will be enforceable in the future.

3. Publicly owned networks can generate significant revenue.

Telecommunications networks are different from traditional public works like roads because they can be self-financing both in terms of initial construction costs and ongoing upgrades. They can also generate revenue for local government, reduce the cost of government services, or keep more money in residents’ pockets with lower prices.

4. Public ownership can ensure universal access.

Publicly owned road, water and sewer, and sidewalk networks connect all households without discrimination. All have access to the same services, though they may purchase different amounts. Private companies, on the other hand, have incentives to upgrade their networks only where it will be the most profitable.

5. Public ownership can ensure non-discriminatory networks.

With publicly owned networks, customers can be sure that any traffic management mechanisms are necessary and not simply to improve profitability. Communities can insist on neutrality from any service provider that uses the network. Or, if the market is large enough to support multiple service providers, a publicly owned network can leave neutrality to the market, knowing that unhappy customers can easily change service providers.

Download the full report