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How To Untangle The Wireless Debate

By Jed Kolko, research fellow, Public Policy Institute of California
This opinion article appeared in the San Francisco Chronicle on July 9, 2007

The San Francisco Board of Supervisors resumes its heated debate Tuesday over the city's proposal to have EarthLink, in partnership with Google, own and operate a citywide, high-speed Internet service. EarthLink would provide low-cost service, and Google would provide free, but slower-speed, service.

The debate in San Francisco is about who should own and operate the network -- the public or the private sector -- and whether the wireless antennae used for broadband are detrimental to the environment or to public health. These arguments have held up San Francisco's proposal while cities in its backyard, such as Sacramento and a consortium of dozens of Silicon Valley cities, move ahead with planned networks. Not only have they delayed the project, but they're the wrong arguments.

The explicit goal of most governments who are getting into wireless broadband, including San Francisco, is to close the "digital divide" -- the gap between those who have and use high-speed Internet, known as broadband, and those who don't. Providing low-cost or free broadband service is intended to give everyone equal access to the Internet's wealth of information and resources.

Proponents of these wireless networks -- in San Francisco and elsewhere -- expect municipal broadband service to help citizens find jobs, become better educated, stay healthier and use online government services. They also expect it to create jobs because better Internet connections attract businesses.

But does municipal broadband service achieve those goals? My research shows that when people switch from dial-up Internet to high-speed broadband Internet, they are more likely to research medical information online, as well as download more music and visit more adult entertainment sites -- but they're no more likely to search for jobs or use online government services than when they had more primitive technology.

As for attracting businesses, the savings a firm would get from using municipal broadband would be very small compared to the labor, real estate and other cost considerations that factor much more heavily into the decision of where to locate and whether to expand. While some businesses, in some situations, will certainly take advantage of a municipal broadband network, it is doubtful that the service would attract or create many jobs.

So what of the digital divide? There are many places in the United States where there are no broadband services, such as cable or DSL -- but these are almost always sparsely populated, rural, isolated areas. The big gap in availability exists between rural and urban areas, not between neighborhoods within large cities like San Francisco, where broadband is available almost everywhere.

In cities, the main barrier to accessing broadband is cost. Yes, municipal broadband would offer low-cost or free service, that's only half the story. Computers cost money, too, and my research shows that it is the low rate of computer ownership among poorer households that accounts for about half of the gap between households that have broadband and households that don't. Lowering the cost of broadband service without making computers more readily available would leave out half the people the city is trying to reach.

Also, the experience of other cities that have established broadband networks, such as Philadelphia and Taipei, should really give us pause. Many are finding that high-speed subscriptions -- and therefore revenues -- are way below expectations. Technical glitches remain, and some forms of traditional broadband service, such as lower-tier DSL, are already competitive with the $20 or so monthly fee that is standard for municipal wireless broadband. Moreover, three years from now, faster wireless technology could make these networks obsolete, driving demand to zero.

So what should San Francisco do? If municipal broadband is to be in the city's future, it's critical to: keep monthly usage costs low; establish programs that improve access to computers and raise computer literacy; and use very conservative revenue assumptions while planning for unforeseen costs from technical challenges.

Most other localities planning municipal networks, including Sacramento and the Silicon Valley communities, have chosen to partner with private-sector providers rather than having a publicly owned and operated system. San Francisco should decide quickly whether public or private ownership is the right choice to manage the technical and financial uncertainties of broadband because the city's private sector partners won't wait forever. City leaders need to base this decision on a realistic, not booster-driven, view of the costs and benefits of municipal broadband as well as an understanding of what goals the city is trying to achieve with the new service.

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