The key to municipal broadband success is a wholesale model.
Unless municipal broadband operators are willing to act as common carriers, selling bits to any retailer roughly at cost, then they could easily be accused of being muniopolies, in the words of Tom Evslin (left).
A municipal monopoly would be a dangerous thing. After all, when a deal is signed to create a municipal network a city or county is offering some real valuable assets -- right of way, telephone pole access, etc. As Tom explains:
Cities get companies to put up their own money for projects like these by granting a monopoly on the right to use these locations for service. Without these locations, it’s hard for any competitor to enter the market. Without the monopoly, it would be hard to get any company to put up the money for installation.
But is that really what is happening?
No.
Not according to Robert Cannon, once (like me) a columnist for Boardwatch Magazine (back in the day) and now Senior Counsel for Internet Policy in the Federal Communication Commission's Office of Strategic Planning and Policy Analysis (formerly the Office of Plans and Policy). Here is what he wrote today:
Philly is open on the light posts, open to wholesale, open to resale, and open for backhaul.
Utopia in Utah is a muni wholesale lit fiber with private sector partners. There are 4 service providers who take the wholesale service and provide it retail - Utopia indicates there more providers are invited.
Stokab which provides just dark fiber has service providers in the order of about 400.
These are all different models with different levels of muni involvement. In Philly, they just provide light poles, but they provide them to anyone.
In Stokab, they provide dark fiber - to 400 service providers.
In Utopia, they provide lit fiber - to 4 service providers with the invitation for more.
Is this "monopoly" or is this "facilitation of entrance"?
I think it's the latter, and I think it's more.
I think the big telecomm policy of our time, the big Internet industry mistake of our time, was the Bell decision to end wholesaling. This is the bottleneck that ends choice for users. It was done in order to hoard bits, to enforce monopoly rents at retail, and to let the Bells charge blackmail to Web sites.
By offering bits wholesale, municipalities break the bottleneck and ultimately (I hope) move the Bells and cable guys to start wholesaling again as well. If they do, then it doesn't matter what their terms of service are in their own retail operations. Users can then vote with their feet, and they're going to vote for network neutrality.
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