Municipal Wireless is Good for the Broadband Marketplace

There’s a comment that Rick Truocchio left on the MuniWireless article Scrooge of the Year nomination: BellSouth—about how BellSouth recinded an offer to the city of New Orleans for use of one one of the buildings for free when the city announced its free wireless network—that really highlights the delusion of broadband providers, both big and small, when it comes to Municipal Wireless.

His comment:

First off that is illegal and unpractical. Second I do not see how you do not get the point of BellSouth. They pay millions in taxes and give free internet to government agencies, who then turn around and use their tax money to compete directly with them by give the service that they make money off of to pay thise taxes, for free. You cannot compete with free.

If the city open a restaurant on Bourbon Street and gave away free food I am sure you would see local restauranteurs up in arms as well, and they dont employee half of what bell does, nor do they pay near the taxes, nor do they assist the local govt in achieveing their connectivity goals.

Sorry to burst the philanthopic business bubble, but there still is no such thing as a free lunch, and bell nor anyother intelligent successful/business operator is not going to give free buildings away to a city that threatens to put them out of business or severly cut into thier market share. Economics 101.

I compete with bell and cable co’s all day, but I can never compete with free wireless from a municipality as a small business. This amounts to taxpayer subsidised competition (if taxpayer money is used) which is really not fair or level competition becuase private enterprise does not have access to the same money or free right of way that the city enjoys.

Regards,

Rick

My response:

Rick, do you compete with free dialup? Sure you do. Every broadband provider is “threatened” by free dialup connections. Why should I pay for your broadband when I can dialup to the internet for free?

The answer is simple! I get more service and support from a company that I buy DSL from then from a free dialup service. Municipal Wireless is the same. You compete not just on cost, but on value.

Essentially, Municipal Wireless is raising the floor for broadband. Instead of the base level of service being dialup, it will now be the wireless service that is provided by the city, or by an organization working with the city.

Does this change your marketplace? Sure it does. But it doesn’t cut you out of the market. Just like you need to change strategy when Verizon starts to offer FiOS in your area.

This is healthy marketplace competition. That is Economics 101. According to your view, you’d rather the marketplace be stagnant. And frankly, though I always root for the small ISP in the marketplace, you suggest that customers suffer just so you can live. That’s both unpractical and, more importantly, damaging to our country.

Some people complain loudly about how municipalities shouldn’t compete with private industry. First, this is downright wrong. Of course municipalities should be able to compete with private industry, especially when there aren’t otherwise enough competitors in the marketplace to provide value to consumers. And while they should be competing fairly, most people who complain ignore the fact that the Telcos and Cable Companies already have an unfair advantage because of the tax breaks and subsidies they receive from government.

Second, markets evolve. And in the course of that evolution, some companies die, and every company changes. This is both healthy and unavoidable.

Third, municipal wireless doesn’t kill competitors. If anything, it helps small businesses by bringing more consumers into the marketplace. As Joe Plotkin of Bway.net likes to say, he’s actually gained customers by supporting NYCwireless.

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