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« Economics of News (Not Newspapers) | Main | Congressional Follies »

April 15, 2005



First off, the legislation requiring permission is ridiculous. Second, I don't know about other people, but I don't see municipalities doing a very good job of running large networks. They certainly have advantages from the cost side (meaning their costs):
- they don't pay sales taxes,
- they don't pay property taxes,
- they don't have right-of-way issues,
- they have advantages concerning service levels: it will get fixed when it gets fixed. What are you going to do?

The article complains about the Cato Institute coming out with research that shows this government involvement to be bad. What is the best means of building the finest possible telecommunications network for the future? The article points out that we are behind. Is the government going to be able to get us the finest network year after year? I think most of us know the answer. So why should municipalities get into the networking business??? The answer is they probably shouldn't.


Oh, and as for being behind South Korea, Japan and Canada, doesn't population density partly explain South Korea and Japan? For Canada, what do the numbers look like after the exchange rate is applied? (I couldn't resist!)

Ran Talbott

I don't think this is really about "broadband". Not yet, anyway.

The mesh networks don't compete all that well with dedicated digital lines or cable modems, in most cases. There just isn't enough bandwidth there to give even "lots of folks", much less "everyone", a fat pipe.

Otoh, they're an immediate threat to DSL and POTS connection revenues. And to a big segment of the cellphone market: all those kids who basically never roam, but generate nice profits by consuming lots of paid-for minutes. Just imagine something similar to the Zipit IM gadget, which already has some audio capability, being able to tap into the citywide mesh network to make VOIP calls that aren't billed by the minute.

There are probably already telco execs taking psychiatric meds to cope with the prospect ;-)

Over the long run, the mesh network could cut into consumer sign-ups on last-mile fiber and coaxial connections (in which the telcos have been making big investments): if the "basic" wired package doesn't have that big an advantage over the mesh, the telcos lose a lot of the already-partly-sold market for video-on-demand and other "data-based" services (imagine, e.g., an ADT-style alarm-monitoring system that can be sold for only $5/month, because it has virtually zero dedicated hardware cost, and a huge customer base to keep all those friendly, helpful operators just as busy as bees).

There are also some serious questions quite separate from the "Greedy Capitalists vs Benevolent Public Servants" debate: for example, do you want your local town council setting and enforcing AUPs? Just imagine the fun of a public debate over whether the city's mesh network should be configured to drop all packets to/from or Or over whether local businesses emailing ads to local residents is "really" spam.


- they don't pay sales taxes
- they don't pay property taxes

Here you argue that it's unfair that municipalities should be allowed to compete with private service providers, because they have the insurmountable advantage of not having to pay sales tax (do they get to avoid paying sales tax on the equipment they purchase from out of state?). Yet if something can be provided so cheaply that historically cash-strapped municipalities can support it, does it really make sense to force the service to be supplied via a taxable channel? After all, sales taxes and property taxes exist to fund local governments, so they can then provide services to the community. If the municipality can provide the same services for less total cost (to everyone), then the community (private and public) will have that much more money available for other endeavors.

I would agree with you if the municipalities were funding the networks with tax dollars from people who don't use the networks, but I have no problem with municipalities running subscription services.

Would you prefer that your tap water be provided at greater expense by private companies granted monopoly access to the reservoir?

-they don't have right-of-way issues

Right-of-way is pretty meaningless for wireless networks. (one could argue that they take up spectrum, but hey, maybe we should open more of it up to consumer wifi) Besides, the telecom companies already reap huge benefits by being granted the sole use of those right-of-ways. How do you think they laid their cables? It seems to me that the network providers, by virtue of existence, already make a great deal of money on having a granted monopoly on the use of the right-of-way. How is freedom better served by extending their monopoly beyond the right-of-way to spectrum which is already allocated for individual use?
Why does T-Mobile have a better claim on 809.11b channel 1 around the local Starbucks than the municipality, or anyone else?

As for whether or not municipalities can provide cutting edge network services or customer support --that sounds to me like an opportunity for private enterprise! After all, if the municipality is providing poor service, surely people would be willing to pay for better service! Look at how many people are willing to pay for cable TV, when there are so many (only slightly worse) broadcast stations they can watch for free.

It's true that there might be censorship issues on municipal networks, but at least in this case one should be able to appeal to the 1st amendment rather than have to fight with a private company's arbitrary TOS.

Finally, it's true that South Korea has had an easier time because it's a smaller country with dense cities. And that Canada to a certain extent is in the same boat (most of the population is in a few major cities). So they can obviously deploy tech to a greater percentage of their population faster. But whatever do you mean about the US / Canadian exchange rate coming into it? Do you think the exchange rate determine how good my wifi signal is??

Tim Karr

I'm glad my article, "Is Cheap Broadband Un-American?" is getting such prominent play. It was in the lead slot at SlashDot for most of the day (where it's received more than 700 comments and 10,000 readers), was posted on Common Dreams, Free Press, at the Progressive Trail and linked to by innumerable blogs. However, I wrote it for In These Times and posted it on my blog MediaCitizen. I appreciate the attention, but it seems these other sites, most of whom carried it without asking permission, are basking in the glow of the tens of thousands of readers who were drawn to my report. Meanwhile, the story as it originated on my blog has received less than 200 unique visitors. I’m a sworn citizen of Lawrence L’s Creative Commons. But somehow I am feeling as though I’ve just been royally screwed.

Dan Gillmor

Tim, I fixed the URL.

Jack Krupansky

Given the nature of this particular blog, I'll refrain from commenting on the relative merit of Mr. Karr's broadband proposal, but instead focus on the media issues...

1) Mr. Karr refers to "gullible media". Point well taken, but it's not quite that simple. It's a simple, obvious fact that each media outlet and each media professional has their own biases, some of which are personal, some professional, and some do unfortunately relate to having knowledge of which side their bread is buttered on. This is a known and difficult problem, with no immediate solution, other than to simply encourage media diversity.

2) Is Mr. Karr complaining that people are linking to his site and offering a fair-use excerpt (such as on this site or slashdot) without permission? I would think such a use is quite fair. I checked his site and didn't see any visible notice that vigorously noted restrictions on fair use. I'm sure we each have our own ideas of fair use, but maybe we need a "fair use" web site with side my side examples of what's okay and what's not okay, as well as some standardized boiler-plate notices that avoid confusion. I'm not up on all the nuances of the Creative Commons, but the hits that show up in Google using the first line of text from the last page of his article are exact copies of the full text, but with clear links back to the article, including the author's name. If Mr. Karr feels "screwed", maybe he needs to rethink whether the common perception of the Creative Commons accurately reflects his own views of what constitutes fair use. If I were in his shoes I'd use an old-fashioned copyright notice plus "may be linked or excerpted as long as attributed to this site and author". Personally, I wouldn't have copied his article in-full, but some people think that Creative Commons really does mean "commons" and that fair attribution is all that creative people require.

3) Maybe Mr. Karr is complaining that readers and linkers have been over-trivializing or over-simplifying the gist of his story. That could very well be a fair complaint. His response should be to do some re-posts on his own blog that clarify specific points which he feels people may have glossed over.

4) I'm not a fan of long-winded treatises, so I'd suggest that "journalists" who have important points to make should have crystal-clear executive summaries (that everybody else can copy and promote verbatim) that clearly state their case in summary form. If the average reader can't fathom the "case" from that summary, all the detail in the world simply won't help. In short, writers should have pity on us poor mindless (and pressed for time) readers.

And of course I apologize for being so verbose.

-- Jack Krupansky

not a Yank

The initial project that started all this was in Philadelphia a long time stronghold of a corrupt political machine. Any investigative reporter with a suicide wish may get a great story if he just follows the money. (Do up your life insurance be for starting your investigation)

I recall Palo Alto undertaking with great fanfare a similar network with optical technology to the home. The private sector would not build it. Palo Alto Citi Fathers spending other peoples money less wisely than they spend thier own jumped in to build the network. They knew better and it was not their money. Where is this bold program now? How much is the dark fiber costing the tax payers of Palo Alto?

Why does anyone think that wireless mesh networks are such a good deal? The private sector is not busting down doors to buy products and install these networks. The thousands of people who have information are all shying away from investing in this technology. If wireless mesh networks were such promising money spinners then they would be financed without public guarantees or public funding.

As an aside Can anyone show me a project undetaken by the public sector in the past 20 years that has a positive rate of return after adjustment for risk? Other than urban renewal condemnations where the government takes property from the politically disadvantaged to give it to the politically connected?

Timothy Karr

Not a Yank,

You might want to read several reports my organization, Free Press, just published with others on the benefits of municipal broadband -- not only in the provision of access in communities where the incumbents fear to tread, but also in their consistent rate of return to the taxpayer. The reports are here:

Community Internet, especially mesh wireless networks, has proven cheap for municipalities to build, maintain and operate at no long term cost to taxpayers. The large commercial ISPs on the other hand demand federal tax subsidies and relief in the amount of tens of millions of dollars to provide broadband access to Americans. This is money that leaves the community to enrich already profitable corporations located elsewhere.

Don't buy in to the lies being spun by the likes of Verizon, Comcast and their coin-operated thinks tanks, including the Cato Institute, that attempt to paint municipal broadband as creeping socialism and costly taxpayer failures. These initiatives are nothing of the sort and the successes of local broadband initiatives are well documented. To learn more about this I suggest you check out this posting about covert attempts by Verizon to spread false information about municipal broadband with the hope that lazy journalists will accept it as truth:

It links to ample evidence of community broadband success stories, including many initiatives that have considerably lowered broadband costs for subscribers (allowing access to more people) and provided better service while enjoying positive cash flows. This is money that stays in the community.


Timothy Karr: "Community internet" sounds good on first blush, but I can't see how municipalities will spend money on R&D and improvements. I'm from Chicago and, like Philly, the corruption is high. Why let government comingle it's corruption in a hig tech endevour? It short circuits innovation and competition. Someone else mentioned that if the service is spotty, then it will be an opening for entrepreneurs. If there's power or money coming in for cities, then it will be hard for anyone else to make money. If you're a VC, the fact that your competition is a city government, which can change the ground rules in an instant, how likely are you going to want invest? The technology risks are high enough!
As we know, the technology changes rapidly. Who wants to be in a city where the city runs the public network? After a five years, they'll be behind. Then all of the politicking will start on upgrading. So clout, patronage, etc. will rule.
This is obviously a receipe for disaster. On the other hand, making cities get permission is wrong.
Instead, we should fight cities from getting into a high tech business. Actually, common sense says they should be in very few businesses.


Mike: First, the "exchange rate" comment was a joke. I always toss the exchange rate into a conversation involving Canada. It usually gets a laugh. (I have relatives there so don't think I'm making fun of them!)

You're also making an assumption that the city governments will be "honest" and free of influence. I doubt it.

You also said "Would you prefer that your tap water be provided at greater expense by private companies granted monopoly access to the reservoir?"
Actually, I think some private enterprise would be a good idea. Again, I live in Chicago. We have 20% of the world's fresh water and every once in awhile I read a story where some western states would consider a pipeline to them. That's fine, but I'll bet that if it happens, they'll pay just as much (or close to) what we pay. I think the states with high population growth and limited water supplies should pay a lot more than we do. I'm not a water expert, but it seems to me that, since its subsidized, many more people can afford to move there and they expect cheap water. Don't get me wrong, I'm not pulling an "east vs west" or something like that, my point is just about the economics of water and the subsidies. I would think the environmentalists, who study the over-use of water in those states would agree.
The problems aren't too bad when there is enough water to go around, but if we have problems, it will be politics and power that drive who gets what.

Ran Talbott

"I would agree with you if the municipalities were funding the networks with tax dollars from people who don't use the networks"

One of the two described in Tim's article is. That makes 50% of all the networks we know about so far ;-) And the other one is having its capital costs heavily subsidized by tax-deductible donations.

If municipalities don't make use of their tax-subsidized resources in building/running their networks, they're probably not going to be much cheaper than the commercial competition for equivalent services (but see my earlier note about the bogus comparisons between WiFi and wired broadband already being bandied about). If telecom companies were making Microsoft-sale margins that could be eliminated to make dramatic price cuts, the state utility regulators would already be chasing them with meat axes.

And right-of-way is a _huge_ issue for wireless networks: there have already been hundreds of political food fights about cellular and other communications towers. A WiFi mesh will requires at least a full order of magnitude more antennas (albeit less-obtrusive ones) than a cellphone network. And there will be serious conflicts about channel utilization when full-coverage mesh networks are built out in areas where lots of people already have their own WLANs.

Ironically, this situation is similar to the complaints about what happens when Wal-Mart hits a small town: the WiFi mesh will pull away much of the low-hanging fruit, leaving the telcos in a position where they may not always be able to survive on what's left.

In theory, anyway. In practice, I don't think the telcos have all that much to worry about: as alluded to ealier, I think the whole scheme will collapse of its own weight if it's adopted as widely as its proponents seem to hope it will.


Al: My comment about the reservoir was not to suggest that it would be bad if water distribution was handled by private enterprise, but that it would be bad if it were handled by a private consortium with a legally enforced monopoly. The latter is nearly indistinguishable from a government monopoly, except that it's even less accountable for its actions. By prohibiting municipalities from entering the market, in favor of the few companies large enough to make agreements with the municipalities to build their networks, we essentially help to enforce their monopoly.

To my mind, this issue is independent of the problem of corruption in city government. A corrupt government is going to find ways to waste money regardless of whether they can spend it on wifi networks. Is a law that encourages corrupt behavior on the part of private enterprise the only way to tackle municipal corruption?

Ran Talbott: I guess I was mistaken, and I would disagree in principle with the manner in which 50% of the existing wifi networks are funded. :-) I'm not so sure about the project financed by tax-deductions. I don't like taxes, (I prefer use fees), but I suppose one could argue that tax-deductable donations provide one greater freedom to specify how ones tax dollars are spent (albeit to a limited extent, given limitations on how much one can deduct, etc).

Regarding technical limitations of limited bandwidth for a city-wide mesh plus existing WLANs, you're probably right, and it's probably a long run show-stopper. Perhaps a more advanced wifi protocol (directional antennas to cut down on spectrum requirements?) would help with this. As for fights about who has access to thr right of way. I agree that it would be (and currently is) a mess.

My main problem with the telco lobbying efforts is that it has the effect of further restricting access to the commons in their favor. I don't really care if the municipalities would do a horrible job if they tried to make a wifi network. I'm more annoyed that by stopping others from even trying, the telcos don't have to try either, and can avoid cannibalizing their POTS market for that much longer.

Ran Talbott

"My main problem with the telco lobbying efforts is that it has the effect of further restricting access to the commons in their favor."

Yes, but... ;-)

I agree with you as far as that goes, and I think we generally agree on the principles involved. But I see this as also being European-style competitiveness regulation that keeps deep-pocketed competitors with no profit requirement from screwing up the competitive landscape. It doesn't, e.g., keep other private competitors from challenging the telcos with the same types of systems. In theory, at least: in practice, of course, the deep pockets of the telcos have an intimidating effect on would-be entrants. But the net effect might well be better for the entrepreneurs, because it means that they only have to contend with competitors who at least _someday_ have to make a profit.

_My_ "main problem" is that this not as simple as "Giant Telcos vs The People's Broadband", and every simple solution is going to have undesirable consequences for one or more of the several problems that are being addressed.

From our "Nyah, Nyah, Told Ya So Department", here's a Register article that just appeared today, supporting my cynicism about governments getting prudish with "their" WiFi networks:


The bottom line is the government should not be in the high tech industry. Think Post Office.


I don't get what you mean. For the price, the post office does a bang-up job. That's why Amazon uses them.


adamsi, the Post Office isn't known for efficiency.

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