Five Ways Public Ownership Solves the U.S. Broadband Problem

Excerpted from a report from the Institute for Local Self-Reliance entitled Localizing the Internet: Five Ways Public Ownership Solves the U.S. Broadband Problem.

Ten years after the 1996 Telecommunications Act, which was supposed to accelerate the introduction of high-speed communications systems, the U.S. has dropped from first to 15th in the world for the percentage of residents with high-speed Internet access. Increasingly, local governments are stepping in where the private sector and federal government have failed. Hundreds of cities are currently debating strategies to develop citywide broadband networks. They share common goals -- universal coverage, equitable access, increased competition, and more effective use of the new communications systems for municipal services, especially those related to public safety.

Their discussions often ignore or give short shrift to a crucial issue: who will own the information network? Ownership matters. As we will argue in this report, public ownership of the physical infrastructure may be the only way to guarantee future competition. It is clearly the only way that communities can influence the design of their future information systems. And public ownership can allow a community to tap into the growing exchange of information to generate significant revenues while enabling all households in the city to have affordable access.

As of mid-2006, more than 650 cities own telecommunications systems. These range from downtown fiber optic networks that connect public buildings and major businesses, to citywide Wi-Fi networks that offer retail service to all residences and businesses. These publicly owned networks have proved remarkably successful in meeting the community's need for advanced services at fair prices.

This first wave of public ownership largely occurred in cities that already owned their electricity networks. That ownership was born a century ago out of public frustration at privately owned utilities' refusal to extend service beyond larger cities. Today, municipal electric utilities are expanding into broadband telecommunications, born of a similar frustration at telecommunications companies' slow response to the needs of small and rural communities.

More recently, communities without municipal electric utilities have begun exploring a governmental role in accelerating the deployment of highspeed information networks. These urban and suburban communities already have some level of high-speed Internet access through cable and telephone company networks.

The incumbent suppliers vigorously oppose any municipal involvement, either through public ownership or by facilitating a competitive network. At the same time, companies that had been leasing space on incumbents' networks view municipal involvement as an opportunity to build their own networks, with public support. They offer cities what appear to be very attractive arrangements if the city grants them an exclusive contract.

Large cities -- Philadelphia, San Francisco, Minneapolis, Boston, Houston, Seattle, and others -- have become the front lines in the battle for affordable, high-speed information and communication networks.

So far, these larger cities have tended to choose privately owned, for-profit networks. They choose expedience over security. They choose the comfort of dependence rather than the risks and rewards of independence. They choose a small, guaranteed income via a franchise fee over the potentially large benefits, financial and otherwise, that stem from public ownership. We believe such a choice does a disservice to their households and businesses, as well as the local government itself.

What is Public Ownership?
Public ownership means ownership by citizens, customers, or the community. It comes in many different forms.

Municipal Networks are owned by a local government entity. This may be the city itself, as in Saint Cloud, Florida, or a municipal utility, as in Moorhead, Minnesota.

Cooperative Networks are customer-owned, as is the case with the Mountain Area Information Network in North Carolina.

Non-profit Networks often are a partnership between a number of