Municipal Networks: Competitive? Or Complementary?

Brenda van Gelder

Director, Virginia Tech eCorridors

April 18, 2005

Competitive?

com·pet·i·tive  

1. Of, involving, or determined by competition: competitive games.

2. Liking competition or inclined to compete: a highly competitive teammate.

1. “Due to their much larger size, experience, and economies of scale, commercial competitors are able to offer better content and lower prices than municipalities.”-- Joseph L. Bast, President of the Heartland Institute

2. Most municipal telecom efforts consider themselves “the provider of last resort,” and are undertaken only after all possible alternatives have been exhausted

Complementary?

com·ple·men·ta·ry   

• Forming or serving as a complement; completing.

• Supplying mutual needs or offsetting mutual lacks.

Ways in Which Municipal Networks are Complementary• Objectives• Markets• Perspectives• Technology• Assets/Expertise• Long term Strategies

Objectives

• Private– return on investment

– market penetration

– critical mass

• Municipal – economic development

– education and quality of life for local citizens

– survival

Markets

• Private – Urban

– high density population areas

– “cherry picking”

• Municipal – tend to occur in rural and isolated communities

– “low return-on-investment areas”

Perspectives

• The dominant private sector providers tend to view the network as a distribution network with a few centralized producers and many consumers (broadcast model)

• Consistent with their economic development objectives, municipal networks strive to provide access to capacity that would allow any citizen and any business to become a point of production and therefore tend to view the network as a “producer network”

Technologies• Private

– the primary technologies comprising the dominant providers’ offerings are copper wire and cable modems

– These technologies typically provide low speed from the consumer to the network hub and moderate speeds from the network to the consumer

– tentative efforts are beginning with wireless and FTTH technologies but are currently limited to urban markets

• Municipal – Are using emerging technologies including wireless, Broadband

over Powerlines, and optical fiber – Experimentation with bi-directional multi-megabit per second

wireless and with gigabits per second capacity to the home and small business

Assets/Expertise

• Private – significant experience in deploying infrastructure; ownership of

infrastructure with sunk costs recovered many times over; regulatory stability and lobbying; Universal Service subsidies; monopoly status

• Municipal – significant experience in providing public infrastructure service

such as power, sewer, water; ownership of ROW; ability to do expeditionary marketing in untapped market segments; efficiencies in deploying infrastructure in conjunction with municipal construction requiring little to no incremental expense; access to small amounts of grant funding for rural “digital divide” projects

Long Term Strategies

• Private – maximize investments in existing infrastructure, minimize

risk

• Municipal – World Domination