Sunday, May 08, 2005

MUNICIPAL BROADBAND NETWORKS: THE WRONG PATH TO INTELLIGENT CITIES

Municipal ownership of broadband networks that compete with private telephone, cable
television and internet access companies for commercial and residential customers is an ill-advised strategy for attracting businesses and residents to a community. Competition by governmentowned and subsidized networks is inherently unfair and will discourage private broadband companies from investing in such communities. Ultimately, those communities will have fewer rather than more sources of broadband services, less rather than more competition, legacy rather than state-of-the-art technology, and higher rather than lower real rates for such services. Instead, municipal governments should focus on strategies that will encourage multiple broadband companies to invest in their communities, such as removing excessive franchise and right-of-way fees and requirements, and other barriers to entry; creating tax and regulatory incentives that encourage operators to upgrade their facilities; and developing programs that will encourage property owners to install “smart” broadband infrastructure and allow service to tenants on reasonable economic terms. Municipal governments should not wear the dual hats of regulator and competitor.

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