Some conservatives and libertarians are gloating over the failure of Philadelphia’s WiFi service. It seems that few of the WiFi models are working as intended.

For libertarians and conservatives, this is a positive development because not only were they right, but by and large they didn’t want it to work in the first place. Personally, I consider this to be rather unfortunate. Though the government is failing when it comes to WiFi, it’s not like the market has produced a better track record. When I was at the mall the other day and wanted to check my email on my phone, I couldn’t use the WiFi without paying a subscription fee or an exorbitant one-day charge. A subscription could be worth it, except that different places use different carriers and unless I intend to go to the same places on a regular basis, getting widely available WiFi service would cost a pretty unreasonable amount. If we had a good city-wide system, though, the subscription prices could be far less unreasonable.

It’s not too much unlike the big, bad old days of cell phone usage before we had national networks. While many lament all of the cell phone carrier mergers, it’s had the wonderful effect of creating nationwide coverage available without roaming fees. Back when I was with a local company called ColColl, leaving the city meant paying extraordinarily high rates. It’s possible that the market could do for WiFi what it did for cell phones, but it hasn’t happened yet. Our best bet, at this point, is through cell phone towers. These yield lackluster speeds and reliability, though that could change. It would have been really, really nice if cities could have picked up the slack here.

The notion of city-provided Internet access is not inherently doomed to failure, though. Beyreuth, Delosa, where Clancy was raised and where her parents still live, have city-provided cable and broadband. The existing cable provider screamed bloody murder and tried to stop it legislatively, but they failed. Everyone out there, including my libertarian-minded conservative father-in-law, like it a great deal. When the profit-seeking, private broadband providers you have are relatively indifferent to your business because you have limited options, sometimes the government really isn’t worse.

So why did it succeed in Beyreuth and not Philadelphia? A few reasons, I’d wager. The first is that Beyreuth stepped into an existing industry. People were already comfortable with wired broadband and so they could count on a reasonably large customer base. In a way, they took advantage of the gambles that the cable providers had to take in offering the service in the first place. Another issue, though, is that Beyreuth is a relatively small city with an educated population (due in part to the local university). Such ventures may be easier in cities where there are large percentages of people who are demographically suitable for high-speed Internet. It’s possible that a WiFi program in Beyreuth could work where it would fail in a more urban area with a more economically diverse population.


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18 Responses to WiFi Down

  1. Bob says:

    Wifi seems like a natural monopoly.

    But also seems like it could end up being a natural failure–not because the government provides it but because the public doesn’t need it. 3G service is now widely available, and Verizon is releasing 4G this year. Their networks can’t handle real traffic yet, but maybe they will in the future.

    I’d hate for my city to invest in ultra-expensive, universal, short-distance wifi when other options could very well make them obsolete before they are even able to recover their investments.

  2. trumwill says:

    Weird. I really thought I talked about that, but apparently not.

    Their networks can’t handle real traffic yet for phones by themselves. We’re likely a few years away from that. I think the ability to handle phone and computer traffic will be exponentially more difficult given the differing levels of expectations. I think that we’re really quite a ways off from it.

    As I understand it, city-wide WiFi doesn’t have to be that short a distance. Clearwire manages to cover entire cities. Of course, that’s not for roving Internet, but I think that there is some model of wide access that local establishments can buy into as access points (which they can then advertise, as they do for WiFi availability now). I *think* that’s the model being used by some of these HotSpot-type companies, though I could be wrong (and please correct me if I am). The problem is just that there are too many of them in competition and there needs to be a dominant one.

  3. web says:

    What still annoys me to this day is the fact that monopoly status exists for cable, DSL, etc.

  4. trumwill says:

    I think that falls under the category of “natural monopoly”. Which may be why the Beyreuth model is so desirable. The market is not particularly useful without competition. So if there’s not going to be any competition, why not have local governments take it over?

    Where we’re considering moving in Arapaho has a co-op. I’m guessing because it’s off the radar of the Comcasts and Time-Warners of the world. That may be a good solution, too.

  5. web says:

    Will,

    most cable monopolies aren’t “natural” monopolies; the cable companies paid off localities to give them exclusive access for infrastructure.

    One of the worst things to ever happen to the Melleorki area was when Viacom bailed out and left Time Warner (then just “Warner Cable”) as a monopoly. Took them less than a year to start price gouging and thus for my parents to dump the service.

  6. Bob says:

    The market is not particularly useful without competition. So if there’s not going to be any competition, why not have local governments take it over?

    This may hold for something like last-mile electricity delivery. (Wireless power is a LONG way off.) There isn’t going to be much competition in getting electricity from the power-plant to your house because it won’t be profitable for another company to build its own grid just to compete with the existing one.

    For something like Wifi, this isn’t really true. The feds could release more spectrum. And other technological innovations could make a wifi network obsolete.

    But here’s the rub: when a company’s network goes obsolete, they file for bankruptcy. When the city provides something though, it’s there to stay. Come 2025, you might be stuck paying through your taxes for a network you don’t need simply because the city can’t lay off the workers.

  7. trumwill says:

    Web,

    Saying that Comcast has a “natural monopoly” doesn’t mean that they have earned it or deserve it, it just means that they are the supplier in which competition is difficult or impossible. Whoever runs local cable and however they came to be the entity that runs local cable, it is a natural monopoly because nobody else is going to run those cables. Satellite TV, on the other hand, is not a natural monopoly. Not just because there are two major providers, but because there is the capacity for more (and, indeed, there used to be more) should a market position open up. In other words, even to the extent that the local cable companies did pay off the cities for the infrastructure, it’s still a natural monopoly because the infrastructure belonged to a single entity that could sell/lease it off and it doesn’t make sense for any other entity to set up a parallel infrastructure (unless you count satellite as being a parallel to cable).

    -{This comment was modified by Trumwill}-

  8. trumwill says:

    Bob, can you think of a city service that nobody uses anymore but that the city still provides?

  9. web says:

    Ironically, Will, one service I would argue cities SHOULD provide (and which is provided by Melleorki and all of its surrounding suburbs) – trash/recycling pickup – is instead granted local monopolies and paid-for by “civic improvement associations”, aka homeowners’ associations, in the Colosse area for the most part. End result is mostly, the members of the HOA get paid off and then we get screwed for price.

  10. trumwill says:

    I think that varies from place to place. In both Cascadia and Estacado, trash services were paid for to the city or county governments. They may have outsourced the actual delivering of the trash, though. But it isn’t like what you apparently have in your neck of the woods.

    My folks live in East Oak, so I’m not sure what their situation is. Did/do you live in Colosse or unincorporated Colosse County?

  11. web says:

    Fustle’s place is in unincorporated Colosse County; my place is in Colosse City, proper.

  12. David Alexander says:

    While many lament all of the cell phone carrier mergers

    I don’t see what was so bad about the mergers given that it was simply different companies occupying the same allocated spectrum, but in different areas. As you stated, with the large nationwide carriers, at least you now have the benefit of not worrying about roaming if you leave your metropolitan area. If one wants better options and pricing, then we’ll have to have some degree of regulation over pricing and we’ll need to allow more entrants into the field by increasing the allocated spectrum for new firms to enter the market.

    3G service is now widely available

    The problem is that it’s prohibitive expensive and requires long-term contracts to be of any use for the average person. The only remotely useful option is the paygo service offered by Vergin Mobile over Sprint’s network. As the owner of an iPod Touch and a clamshell Verizon Wireless phone, I’d prefer a wifi solution since it’s much easier to use when I’m away from home in lieu of lugging around a laptop for when I want a quick browse or a look on a map.

    one service I would argue cities SHOULD provide (and which is provided by Melleorki and all of its surrounding suburbs) – trash/recycling pickup

    HOAs are one of the reasons I’d prefer to stay in the Northeast. While our property taxes are rather high to pay for our somewhat overlapping government services, I still think it’s absurd to have a basic public service to be outsourced to a private firm that isn’t any better than the government service. Plus, an HOA has all of the drawbacks of a condo, but with none of the benefits…

  13. thebastidge says:

    I think it’s really overstating to say that libertarians and conservatives want government programs to fail (unless they’re inherently infringing on liberty).

    But as the point was made above, let a bureaucrat be in charge of a service, and it will stick around in the face of innovation and obsolescence at multiples of the market clearing price for far too long.

  14. trumwill says:

    I think it depends on the programs as to whether or not liberals or conservatives want the programs to fail. I think for some things, including WiFi, they wouldn’t want the government to do it even if it were effective and failure is the easiest way to get the government not to do it. Or at least to prevent it from spreading. This sort of thing is by no means limited to conservatives and libertarians.

    Yeah, I probably should have said “some” libertarians and conservatives.

  15. econoholic says:

    >Bob, can you think of a city service that nobody uses anymore but that the city still provides?

    It took about a minute: For more than two decades, Tri-Rail has been searching for a dedicated funding source to keep it from running in the red.

    The closest the South Florida commuter rail system came was three years ago when lawmakers approved a measure that would have allowed the three counties Tri-Rail operates in – Palm Beach, Miami-Dade and Broward – to hold a referendum on a $2 rental car surcharge that would go only to keep the trains running.
    …..
    The extra $13 million to $15 million pledged to Tri-Rail included in the bill would be in addition to the $27 million a year it already receives from the state and would allow it to meet its $60 million annual budget, also shared by the federal government and three counties.

    Without the extra help, Tri-Rail officials threaten they won’t be able to keep running the 50 trains that move 15,000 riders a day.

    And if that happens, federal transportation officials say they will demand the return of the $256 million, which was given on Tri-Rail’s promise to run at least 48 trains a day.

    15,000 might sound like a lot of people, but considering how large the network is, it is pretty close to nobody. At 50 trains, that works out to *300* per train per day. And the article suggests that rather than close it down, they want to expand it so they can get more federal funding!

    Keep in mind that this isn’t even an idea that is subject to possible technical obsolescence. It apparently was a terrible idea to begin with and they just kept growing it anyway.
    —-
    This article *gushes* over Nashville’s light rail before letting out:
    Not only was the commuter-rail operation relatively cheap to launch, but the federal government picked up 80 percent of the costs.
    RTA anticipates operating revenues approaching $1.3 million during 2007. Costs are expected to run nearly $3.3 million, meaning an annual subsidy of around $2 million will be required from local, state and federal governments.

    The agency hopes they can get to 10,000 riders by 2026…
    —–
    Let me ask a different question: given the failure of Philadelphia’s wifi implementation thus far, have they decided to invest more or give it up?

  16. David Alexander says:

    15,000 might sound like a lot of people

    The problem is that those 15,000 people would end up driving to work creating more traffic and taking up more road and parking capacity, and to move 300 of them on one train is the equivalent of five or six buses. Given that transportation is a part of the core of government responsibility, I’d argue that there’s nothing wrong with this level of subsidy.

  17. trumwill says:

    You know, I hadn’t thought of rail because I was thinking of labor-heavy services that were mostly about jobs since you cited that as the reason that they would keep it around. That’s particularly funny since I almost listed rail as something stupid (sorry, DA) in my response to Larry.

  18. Bob says:

    DA, I don’t have a huge problem with some subsidization of rail systems. (I would much prefer to see congestion taxed though, but that’s another issue.)

    What I have a problem with is an argument that can be used to justify *any* rail system regardless of how many people it is able to carry. If congestion could have been reduced more by just reducing bus fairs or expanding the road system for the same amount of money, that would seem to be preferable. Rail makes sense in some cities, but not in all.

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