Activists and elected officials in Seattle are pushing to get the city in the Internet provider business with municipal broadband. Mayor Ed Murray supports the idea of government-owned and operated broadband networks and has commissioned a study to determine the costs and feasibility of making Seattle the first big city in the nation to treat broadband Internet access as a public utility.
According to the Census Bureau, 79% of American households had some form of Internet access in 2013. Amongst the largest jurisdictions, Seattle is one of the top three cities for Internet connectivity, with nearly 88% of households online.
Despite Seattle’s ranking as one of the most connected big cities in the nation, Mayor Murray and the activist group Upgrade Seattle believe government can do a better job getting people online. They envision a publicly-funded Internet utility run and regulated by the city, similar to water or electricity.
Recently he sent Seattle’s Chief Technology Officer to Chattanooga, Tennessee, which in 2010 launched a city-owned broadband network. Widely considered a municipal broadband success story, a recent New York Law School report found that city’s success in government-run broadband has largely been the result of a unique set of circumstances that would be nearly impossible to replicate.
Studying ten government-owned broadband networks, the report found most have been financial debacles, creating long-term debt that is crippling their communities. The government-owned network in Cedar Falls, hailed by President Obama as an example that other municipalities should follow, has saddled that city’s residents with high costs and long-term debt such that Moody’s recently downgraded its bond rating from A1 to A3. And that city’s network is only partially complete after 20 years of development.
Mayor Murray has already moved in the right direction to encourage broadband providers to provide more households with Internet access—his policy changes “reducing regulatory barriers” have worked. Private companies have increased broadband infrastructure investment since the red tape was cut, providing Internet access to tens of thousands of homes in Seattle, with thousands more households scheduled by the end of 2015.
When unfettered by government regulations, private companies respond to the demand for more broadband access the way the free market predicts they will—they innovate to provide better services at lower prices. Private companies spent $69 billion innovating and building broadband networks in 2012, and another $75 billion in 2013. The result—entry-level prices in the U.S. broadband market are among the most affordable in the world, and consumers enjoy more high-speed Internet technology choices than most other countries.
Three previous studies on the feasibility of a government-run broadband network in Seattle (commissioned by the two previous mayors) found the price tag was simply too high. And the experience in ten other cities shows that such networks leave much to be desired. Mayor Murray should instead continue to focus the City’s efforts on working with the private companies already in existence to encourage more broadband expansion.