Saturday, July 08, 2006

Municipal Broadband a Threat

Analysts at Pike & Fischer say: Municipal Broadband Will Pose Growing Threat to For-Profit Operators.
The analysis concludes that muni nets -- depending on the type of broadband technologies used -- could grab up to 35% of the market share for video, fixed voice and high-speed Internet services, and up to 20% of the mobile-services market.
That's a pretty succinct rendering of the competitive threat that municipalities provide the private providers. BellSouth and Cox have always talked out of two sides of their mouth on this. Mostly the incumbents have claimed that "of course" municipal broadband must fail--even in the face of the success of municipal electricity.

But if that were really true why did they go into panic mode to oppose it instead of just sitting back, competing it into the ground and taking over the network at pennies on the dollar? They fought like tigers because they knew that what they were telling the public was not true. They knew that municipalities could take significant market share, and even more importantly, drive down prices.

The combined effect of taking market share and lowering prices could be dramatic:
Cable operators, DSL providers and other incumbent broadband service providers could eventually see their revenues fall by as much as 48% due to competition from city-run broadband networks
And, of course, part of the danger is that publicly funded municipal services wouldn't be analyzing the value of their networks solely in monetary terms. A different metric--one that private providers seem incapable of matching unless they are small and local--would be in play:
"The competitive impacts of municipal broadband will be especially threatening to incumbents to the extent that muni nets can be cost-justified by increased efficiencies, cost-savings and other 'internal' or 'social' benefits captured by local governments, schools, and other public institutions," the report states.
That's a lot closer to the truth than any stuff that will be feed you by the local duopoly.

They're panicked about the competition and they don't tell us that because they don't figure we'd be very sympathetic.

And we're not.

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