Are community broadband networks faster than the metro area?

Partly because of the federal stimulus and partly for other reasons, people all over Minnesota are pushing projects to improve broadband access to the Internet.

I highlighted one Thursday in Sibley County, where residents are talking about creating a utility to build a new fiber optic network. But elsewhere, telephone cooperatives, electrical cooperatives, for-profit companies, cities and counties are also proposing or building new models.

The context is typically put this way: Rural areas that don’t keep up on the Internet are destined to languish economically and socially behind metro areas in the 21st Century.

This week Christopher Mitchell at the Institute for Local Self-Reliance suggested in a report that the normal perspective might be overstating what exactly Twin Cities residents have available to them. The community-built fiber optic system in Monticello northwest of the Twin Cities is faster and cheaper than what Qwest, Comcast and Minneapolis’ wireless system offer metro residents, he says.

He compares service at several price levels and concludes, for example, that at $35-to-$45-a-month, Monticello delivers about 20 megabits per second both uploading and downloading. Comcast speeds are more than 12 downstream but only 2 or so upstream. Qwest is more like 7 megabits downstream and 2 upstream, Mitchell says.

The Monticello project, born amid considerable controversy and contention with the existing private provider TDS Telecom, is owned by the city and operated by the private company Hiawatha Broadband Communications.

Part of this seems obvious to me. You put in the latest technology and you should get the best service. The interesting part involves the economics and whether you define Internet access as public infrastructure or something best left to the markets. Does a community network necessarily perform better?

Mitchell believes community networks have advantages over large incumbent phone and cable companies. They can respond to individual business demands more easily, he suggests, and have the advantage of investing in state-of-the-art fiber technology instead of relying on improvements to copper phone lines or coaxial cable.

Big phone and cable companies have invested billions to deliver service they can profit from and millions of consumers have benefited greatly. But they often are criticized, especially outstate, for failing to make the investments required for topnotch service.

Nonetheless, it was interesting to note when I was in Arlington in Sibley County the other day that proponents of a community network there assume flat out the existing private providers would respond to a new community fiber network by lowering their own prices and perhaps raising service.

Does that fact mean the market can work or does it mean this is really a public infrastructure question better answered in the public sector?

  • http://www.muninetworks.org Christopher Mitchell

    “Does that fact mean the market can work or does it mean this is really a public infrastructure question better answered in the public sector?”

    I actually think the answer is both. The market can work – but not if the service providers control the infrastructure. The costs of providing infrastructure (fiber-optic wires, polls, trenching) are huge whereas the costs of offering Internet access is quite small comparatively.

    When companies like Comcast or Qwest control the infrastructure, they refuse to share it with other providers so they can maximize their own profits.

    Probably the best approach is when the infrastructure is publicly owned but the network is open to independent service providers, creating an actual market, real competition, and more choices for subscribers.

    Alas, this model generates too little revenue in most cases to pay the full costs of building the infrastructure, so few have embraced it.

    Nonetheless, markets work well when there is not a natural monopoly and huge barriers to entry…

  • http://www.designnine.com/news/ Andrew

    Chris is right about sharing infrastructure. Communities that build, own, and manage the digital road system as an open network, as in open to any private sector provider that wants to offer services like Internet access, telephone, TV, computer backups, telemedicine/telehealth, and much more compete with each other and there is no monopoly or duopoly, as we have in most places now. It is much more difficult to fix prices for your service if you have to compete against four or five other private sector firms all sharing the same high performance digital road system.