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Fast, affordable Internet access for all.
economics
Content tagged with "economics"
Video on the Economics of Open Access
Benoît Felton of Fiber Evolution says that Open Access makes Economic Sense - in four parts:
Bureaucrats as Entrepreneurs: Do Municipal Telecommunications Providers Hinder Private Entrepreneurs?
We consider how government-owned enterprises affect privately owned rivals. Specifically, we compare the types of markets that municipally owned telecommunications providers in the United States serve to the types of markets that competitive local exchange carriers (CLECs) serve. We find that CLECs focus on potential profitability while municipalities appear to respond to other factors, such as political considerations or the desire to provide competition to incumbents. As a result, municipal providers tend to serve markets that CLECs do not. We also find that the presence of a municipal provider in a market does not affect the probability that a CLEC also serves that market. Our results suggest municipalities may not pose a significant competitive threat to CLECs and do not preclude CLEC participation.
Broadband and Economic Development: A Municipal Case Study from Florida
In this paper, we explore whether broadband investment by municipalities has an effect on economic growth. To do so, we employ an econometric model to compare economic growth in Lake County, Florida, with other similar Florida counties. In 2001, Lake County – a small county in central Florida – began generally offering private businesses and municipal institutions access to one of Florida’s most extensive, municipally-owned broadband networks, with fiber optic connections to hospitals, doctor offices, private businesses, and 44 schools.1 Our econometric model shows that Lake County has experienced approximately 100% greater growth in economic activity – a doubling – relative to comparable Florida counties since making its municipal broadband network generally available to businesses and municipal institutions in the county. Our findings are consistent with other analyses that postulate that broadband infrastructure can be a significant contributor to economic growth. Our results suggest that efforts to restrict municipal broadband investment could deny communities an important tool in promoting economic development.
Empirical Study: Does Municipal Supply of Communications Crowd-Out Private Communications Investment?
There are 2,007 municipalities across the United States that provide electricity service to their constituents. Of these, over 600 provide some sort of communications services to the community. An important policy question is whether or not public investment in communications crowds out private investment, or whether such investment encourages additional entry by creating wholesale markets and economic growth. We test these two hypotheses – the crowding out and stimulation hypothesis – using a recent dataset for the state of Florida. We find strong evidence favoring the stimulation hypothesis, since public investment in communications network increases competitive communications firm entry by a sizeable amount.
Paying the Bills, Measuring the Savings
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This paper provides evidence that municipally owned and operated cable television enterprises are financially viable and provide large rate savings to their communities. The findings contradict allegations in Costs, Benefits, and Long-Term Sustainability of Municipal Cable Television Overbuilds, a 1998 paper authored by Ronald J. Rizzuto and Michael O. Wirth, that such enterprises are likely to be poor investments for cities. The authors claim that analysis of financial histories of the cable enterprises in Glasgow (Kentucky), Paragould (Arkansas), and Negaunee (Michigan) “clearly indicates that [they] have been poor investments from a pure business perspective.” They are pessimistic about the fourth, Cedar Falls (Iowa). The authors contend that these enterprises “have not generated [or will not generate] sufficient cash flows to cover their out of pocket cash needs.... None ... [is] currently sustainable over the long run.” However, by the incorrect criteria and analysis that Rizzuto and Wirth use, few new enterprises—public or private—would pass financial muster. The authors further contend that the only reason these utilities have been able to remain solvent is because of various subsidies, personal and property tax transfers, or interest-free loans. Rizzuto and Wirth’s conclusions are not surprising since their paper was partially funded by Telecommunications, Inc. (“TCI”), the private, incumbent cable television provider in Cedar Falls at the time the city was creating its municipal cable enterprise. Although Rizzuto and Wirth’s paper was published seven years ago, critical review of it is timely and important. Formation of municipal cable enterprises is a major public policy issue; private broadband providers have been successful in having several states bar or place crippling limitations on the formation of such enterprises. The time that has elapsed since the paper was published provides a good perspective for checking the authors’ predictions about the financial viability of the four municipal enterprises. Most importantly, however, Rizzuto and Wirth’s paper is often cited currently by those who oppose municipal entry in the cable television industry and related broadband industries. Their paper is widely quoted in reports of other organizations that oppose formation of municipal cable enterprises.
Build Versus Rent: Tropos Wireless White Paper
Municipal and industrial organizations that want to take advantage of the significant benefits of large-scale broadband infrastructure face the option of whether to build, own and operate their own infrastructure or “rent” services from incumbent cellular providers. In this paper we lay out the substantial business and technical benefits that are associated with organizations opting to own the latest generation of outdoor wireless networks.
This paper is targeted primarily at municipalities and discusses how a wireless infrastructure can benefit public safety, fire and EMS, and city departments such as water and building inspections. Other wireless utility applications such as Advanced Metering Infrastructure (AMI) or Automated Meter Reading (AMR) are also presented. This paper also examines wireless applications for mobile workforces engaged in industrial applications, such as port operations, construction and mining.
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Is Publicly Owned Information Infrastructure A Wise Public Investment for San Francisco?
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San Francisco has launched an initiative to provide wireless access everywhere in the city. A number of Supervisors and residents have raised the possibility of the City following in the footsteps of over 200 other U.S. cities that already own information networks. To date, the City has not addressed that question, or at least no such study has been forthcoming.
Media Alliance invited the Institute for Local Self-Reliance to investigate the economics of a publicly owned information infrastructure. This report contains a preliminary financial analysis. Without complete information from the City, the numbers are not precise. But we think this analysis could serve as the basis for an informed discussion. We urge the City to undertake its own more detailed examination and make it public.
Localizing the Internet: Five Ways Public Ownership Solves the U.S. Broadband Problem
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A new report by the Institute for Local Self-Reliance argues that a publicly owned information infrastructure is the key to healthy competition, universal access, and non-discriminatory networks.
“Localizing the Internet: Five Ways Public Ownership Solves the U.S. Broadband Problem” notes that high speed broadband is becoming ever more widespread. But, it argues, the way in which that broadband is introduced may be as important as whether it is introduced.
Many telecommunications companies are offering to build a citywide wireless or even wired network at little or no upfront cost to the city. That arrangement is especially attractive to local elected officials who fear that government lacks the expertise to manage a high tech network and who worry about the possible impact on their budget. “This is an excellent time to remember to look that gift horse in the mouth,” maintains Becca Vargo Daggett, the report’s author and the director of the Institute’s Telecommunication as Commons Project.
“Even deals framed as coming at no cost to the city require the public sector to enter into extended contracts to pay millions for their own services over the new privately owned network. Cities owe it to themselves and their citizens to carefully evaluate the costs and benefits of public ownership.”
Ms. Vargo Daggett also notes that cities that own infrastructure like roads and water pipelines should not fear owning the physical information network. “Concerns about obsolescence are overstated. Fiber optics is the gold standard, with essentially unlimited capacity and a lifespan measured in decades. Wireless technology is rapidly evolving, but its price is low and the payback period is short.”
Moreover, unlike investments in traditional infrastructure, an investment in information networks can generate a significant return. “The investment will not only pay for itself, but can generate revenue that can pay for other important municipal services.”
Burlington Telecom Fact Sheet
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Much misinformation has been disseminated about Burlington Telecom (BT).
Here are the facts. BT is a city department of Burlington, Vermont, which owns a fiber-to-the-home network and offers triple play services (phone, cable, internet). The network depends entirely on subscriber revenues and is not subsidized in any form by the City. BT has saved the City money while being built entirely with investor money -- no tax dollars have been or will be used.
BT continues to add subscribers and has a take rate above 40% in the area it first began offering services.
Update: BT has encountered some serious problems following some questionable activities by the Mayor's Administration. I have covered some of the BT developments here.
ILSR issued a report in 2011 that updates this case study: Learning from Burlington Telecom: Some Lessons for Community Networks