What happens to MuniNets?

With fiber-to-the-future deployments accelerating at least in some counties; the increased penetration of DSL and cable, Heartland Institute believes that municipal broadband networks are risky for taxpayers, and provide no boon to economic development.

“Threatening to build a municipal broadband network may have been a good strategy two years ago, to prompt incumbent cable and telephone companies to make good on past promises,” writes Joseph L. Bast, president of The Heartland Institute and the study’s author. “Following through with municipalization, however, is not a good idea. Broadband services that were scarce two years ago are now plentiful and reasonably priced.”

Esme Vos counters his argument, when she says, “Virtually anyone who wants broadband service can get it? Where is this paradise? Maybe in Seoul, Korea.”

Consultants often try to sell the idea of building municipal broadband networks by claiming they are essential to economic development efforts, but they invariably present no evidence of a link between broadband and economic growth. Econometric research consistently finds subsidies to business are an unreliable and often counterproductive strategy for economic development.

Whether that is true or not, I am not sure. What is true, however that finding DSL or cable service in remote municipalities is hard, and most of the people I know have often told me how they are still being ignored by the large players. The phone companies and cable companies, both want to focus on areas which bring high returns and not small communities. Esme makes a valid point when she says:

No link between broadband and economic growth? What have I been doing for the past 16 months writing about municipalities like Scottsburg, Indiana which had to deploy its own broadband network to preserve jobs? Was Scottsburg’s network some municipal official’s hobby gone out of control? What about poor neighborhoods shunned by cable and DSL companies?

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