Subject: [NEXTEL-1] Local Government Broadband Initiatives

From: [email-masked]
Date: Mon, 15 Dec 2003 12:33:12 -0500

http://itc.mit.edu/itel/docs/2003/localgovbrbd.pdf

Local Government Broadband Initiatives

Sharon E. Gillett
William H. Lehr
Carlos Osorio
Massachusetts Institute of Technology
Program on Internet and Telecoms Convergence (ITC)1
December 3, 2003

The future for Internet access is broadband. Federal and state
policymakers are exploring initiatives to promote the deployment and
adoption of broadband services, and in recent years, an increasing
number of local governments have joined them. While the first
generation of narrowband dial-up access was able to piggyback on the
near universal availability of the mature telephone network, broadband
relies on communications infrastructure that is both more heterogeneous
and less evenly distributed. These local infrastructure differences
suggest a greater role for local communities in affecting how next
generation access will evolve.

A few case studies of local government broadband initiatives exist, but
there is little systematic data or research categorizing the range of
activity or assessing the effectiveness of these efforts. This paper
represents a first step in an ongoing research effort to better understand
the factors that influence a community’s decision to act, its choice of
what to do, and the effectiveness of its actions. In recognition of the
diversity of initiatives observed, the paper presents a taxonomy to
classify the range of policies that local governments are adopting,
according to four roles of government vis a vis broadband: as user, rulemaker,
financier, and infrastructure provider.

After discussing examples of each type of initiative within the
taxonomy, the paper analyzes a sample of communities – those with
municipal electric utilities (M.E.U.s) – that have adopted the role of
infrastructure provider.2 From a match of the sample of M.E.U.
communities to demographic data from the 2000 Census, we find that on
average, these M.E.U.s are more often found in mid-sized communities
that are more likely to be in rural counties. Those that provide
communications are in the vanguard: although they represent only about
a quarter of all M.E.U.s, their number has grown more than 10%
annually for the past two years.

Within the subset of our sample of M.E.U.s that offer communication
services, our analysis finds two distinct segments. While the average
U.S. community has a population of around 8,000 people and the
average M.E.U community around 42,000, the average population is
around 6,000 in M.E.U communities that offer only consumer services,
and around 149,000 in those that offer only commercial services. This
size-based split suggests two separate rationales for public-sector
interventions in different local contexts. Smaller communities may be
less well-served by the private sector because commercial carriers may
perceive them to be unprofitable in light of the high fixed costs of
broadband technology and low prospects for aggregate demand. Larger
communities, on the other hand, may experience an abundance of
competitive entry that suggests a coordinating or facilitating role for the
local government (for example, to encourage competition but minimize
street cuts by bringing fiber installation under city management, while
leaving the actual use of the fiber to the commercial sector).

The paper concludes with a discussion of issues to consider for further
research. These include a deeper understanding of M.E.U.’s choices with
regard to technology (in particular, the advent of workable wireless
solutions) and business models (the choice of wholesale vs. retail
business models, especially in providing consumer services); and
extension of the data set beyond municipal electric utilities.

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