Municipal Wi-deology: Put Politics Aside

Editor’s note: Civitium, a suburban Atlanta-based consulting firm, finds itself in the middle of a growing debate about how the City of San Francisco should proceed with a city-wide wireless fidelity (WiFi) network. Civitium worked with the city in setting up the project, as it has with other cities such as Philadelphia. Recently, the San Francisco city council divided over whether to move ahead with a proposed EarthLink-Google privately owned solution or a city-owned network.

The following commentary was written by Greg Richardson, founder and managing partner of Civitium. This is the second of two parts.

ALPHRAETTA, Ga. - Public broadband may be the best hope for positive change for the state of broadband in the U.S. It has already shifted huge power from the halls of the FCC and congress to City Hall, at a time when other forms of local control (e.g. cable franchising) have been moving in the other direction. But we are at risk of screwing it up through letting these discrete special interests dominate the issues.

We are losing perspective on what the goal was in the first place for these projects; stimulate economic development, improve government efficiency and bridge the digital divide. San Francisco is allowing the valid goals outlined by the Mayor to be twisted into ideological debates over public ownership, consumer privacy and all manner of other issues. What was the Board doing about electronic consumer privacy in San Francisco before the EarthLink agreement was delivered to them? How much debate was happening in the Board chamber about network neutrality in 2006? Are these issues important? Yes; but only when considered in the context of the overall initiative, market, program, etc.

To put a finer point on this, let’s consider open access. Following Brand X and the FCC’s decision on DSL line-sharing, cable and telephone companies were relieved of any obligation to share their facilities with competitive providers. But cities have brought back similar regulations and placed them on Wi-Fi operators at a local level. I believe this is a wonderful thing, but it further makes the point about the self-imposed pressure the muni-wireless industry is placing on those motivated to deploy these new facilities.

Shifting gears to the debate over public ownership, again the far-left arguments dominate any moderate, level-headed discussion. In August, 2006, the nonprofit organization Institute for Local Self-Reliance (ILSR), in cooperation with Media Alliance, issued a four-page report entitled Is Publicly Owned Information Infrastructure A Wise Public Investment for San Francisco? The report claimed to be “a preliminary financial analysis” of the viability of a publicly-owned Wi-Fi network.”

While ILSR presented its report as an independent, objective analysis, this independence and objectivity is debatable. On its New Rules Project website, which apparently represents ILSR’s agenda in the telecommunications sector, they stated:

“ILSR believes that only public ownership of a city's information infrastructure can guarantee citizens a controlling voice in the design and operation of those systems. Information networks can operate like road networks: a common carrier, open to all users and suppliers, small and large, at similar rates. We're working with key officials in a half dozen cities to foster publicly-owned information networks.”

Only public ownership …can guarantee..? This statement clearly demonstrates a bias on the part of ILSR for public ownership and calls into question whether its “analysis” of San Francisco’s plans could have led to any conclusion other than that public ownership was both financially viable and desirable.

And ILSR goes on to say “This [publicly-owned Wi-Fi] investment, on the other hand, will yield a 10 to 20 percent annual return.” Hold on a minute; if the argument is about all the revenue and profits that “the City is leaving to the private sector,” this could become a slippery slope. Aren’t “essential services” provided by a municipality often regulated on the rate of return they can achieve? I am quite sure that Public Utility Commissions exist, at least in part, to address this issue. Building a financial model based on replicated pricing, revenue, cost and other assumptions from a private provider (who is justifiably responsible to shareholders for maximizing a rate of return) seems a bit shallow to me. Not to mention that I believe there is little, if any, data available on the revenue, uptake, profitability and other metrics from free-tiered Wi-Fi business models. With so little data available to even the private-sector operators who’ve made these investments, how can we place so much trust in a financial model built by a Minnesota-based not-for-profit?

Accept their advocacy for a given position – public ownership – and applaud them for making their viewpoints know – but don’t translate this into an expert-based, objective analysis of the investment, and don’t make it the cornerstone of the City’s financial feasibility analysis.

Now, counter to ILSR, The San Francisco Planning and Urban Research Association (SPUR) delivered a memo to the Board in support of private ownership and the agreement with EarthLink. After testifying in front of the Board about the memo, the representative from SPUR was asked only one question; “has SPUR ever advocated for public ownership of anything.” After the SPUR representative tried unsuccessfully to give a politician’s answer to a politician, the chair commented “I think the answer is no” and thanked him for his testimony. What’s my point? In part, my point is that the same question should be asked to ILSR; “has ILSR ever advocated for private ownership of anything.”

More importantly, my point is that all of these organizations; ILSR, SPUR, ACLU and others are advancing their viewpoints, as they have the right to do, but none should be taken as expert, independent, objective advice to the board. … Once again, it is not about moderate, level-headed consideration of the issues, it is about ideology.

But the Budget Analyst did an objective analysis you say? Well, I believe the Budget Analyst did a fantastic job looking into the numerous, complex set of issues here. But the Budget Analyst did not conclude that public ownership was feasible, which many advocates of public ownership seem to be suggesting. Here are just a few excerpts from their report to demonstrate my point:

• “The estimates used in this report result in a wide range of possible outcomes. Therefore, if the City wishes to examine further the option of a municipally-owned and operated wireless network, cost and revenue benefits would need to be substantially strengthened through competitive bidding and acquisition of firm vendor price information.”

• “The Budget Analyst is unable to estimate potential advertising revenues which would be available to the City for a municipally-owned wireless network.”

• “..the Budget Analyst was not able to obtain exact cost estimates to install and operate a municipal wireless network in the City of San Francisco from vendors or other jurisdictions as vendor information is proprietary, cost factors differ among different jurisdictions due to density and geographical variations, and data were not readily available for relatively new municipal wireless networks.”

Note: it is public knowledge that one proposal received in connection with the RFP process estimated the costs for a city owned network and associated programs to be $100M over 10 years, again demonstrating the wide range of estimates, and the uncertainty and risk still present in the market.

The trouble that both the far-left and far-right have in these situations is that they can never reconcile their viewpoints. For example, if the board adopts public ownership (which ILSR advocates), and puts a privacy policy in place that adheres to the ACLU’s gold standard, both would be happy, right? Not so fast. I predict the ACLU will have a new concern; and it’s called Big Brother. While the ACLU is noted as saying “knowing [personal] information is being collected will cause users to limit what they say and do on the Internet,” how will users feel about “knowing that not just personal information, but everything they say, will travel over a government-owned network?” And how will concerns over ownership intersect with other far-left viewpoints (e.g. in the area of censorship and free speech?) Consider the publicly-owned Wi-Fi network in Culver City, and that city’s controversial decision to filter content.

Whatever the outcome, the entire debate is fascinating and desperately needed. I just hope that viewpoints can drift back to the center a bit, or else San Franciscans will be getting 802.11z in the year 2020.

For the record, Civitium supports private-ownership of Wi-Fi for San Francisco, and we support the recommendations for public-ownership of fiber (with an open, wholesale model) presented by our partner, CTC. We have the opinion that Wi-Fi should be advanced now, through the approval of the EarthLink agreement, and that tying Wi-Fi to a 15-year fiber plan would be disastrous for San Francisco. None of these positions are based on the ideological arguments discussed above, as is evident by the fact that we support two opposing approaches to the ownership issue.