Who's More Capable? Pitting Government Against Private Business (Cont'd)

David Ackermann, president of Ceragon Networks, Inc. concurs, “If there is a good business case for [municipal governments] to be a part of [wireless service], why not? If this is what needs to happen for people to get service, what is the difference between this and roads?” The sentiment echoed among these hardware providers is that, provided no party has an unfair advantage over the others, it doesn’t matter who provides the service.

Jeff Reedy, CEO of Overture Networks, agrees, but with a slight caveat. “We want people to receive data,” Reedy says. However, Reedy exercises a bit of caution in singing the praises of municipal systems, noting that such networks are relatively easy to establish, but can be difficult and expensive to maintain. “I think that as people start to depend more on data, they want to make sure their networks are reliable,” Reedy adds. Can municipal governments maintain cost-efficient QoS on these sorts of intricate networks?

While that question is still far from being answered in many areas, the answer in some communities has been a resounding ‘no’. Orlando, FL recently dismantled its small-scale downtown service after deciding that the $1800 a month that the city spent on the system was too prohibitive a cost, considering that the system accommodated a mere 27 users a month. That’s $67 per user for a free system with no positive cash flow.

Other municipal networks, whether wireless or wireline, have faced numerous setbacks over the last few years, usually due to unforeseen expenses involved in maintaining the system. Marietta, GA lost an estimated $24 million when their FiberNet was sold after eight years of expensive trial and error. Marietta Mayor Bill Dunaway was quoted as saying, “That's why we should not be in this business–you have to keep reinvesting. It's negative cash flow once you consider reinvestment of capital.” Whatcom County, WA sold its three-year-old fiber network to the city of Bellingham after investing $2.3 million. The sale price? $126,000.

Service providers have no qualms about pointing out the potential failure of municipal networks, but have also softened the way that they address these issues, focusing less on the threat to competition, and more on the comparative lack of technical and financial know-how that the government can offer. Steve Lee, a spokesman for SBC, says that his company is fully sensitive to the needs of cities, and that 75% of homes and businesses in the 13 states served by SBC have access to broadband. When all types of IP services are included, that figure rises to 90%. Furthermore, Lee states that SBC “fully intends to expand broadband availability within the next few years.” Specifically, SBC is launching its $4 billion Project Lightspeed initiative, which intends to bring super high-speed broadband, along with IPTV and VoIP services to some 18 million homes by 2007.

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