Muni Wi-Fi: No Wires, Plenty of Strings for Taxpayers

By Chris Leonard

Why are people carrying their laptop computers into parks and coffee shops? To finalize a presentation for work? To catch up on e-mail? Well, these days it’s to chat, read or do just about anything you can do on the Internet at home.  

Now, thanks to a state grant (read: taxpayer funds) Decatur will soon become the first metro Atlanta city to offer wireless Internet access outdoors. These citywide Internet “clouds” are popping up all over the state. 

The idea for universal Internet access seems great. Bringing people out of stuffy offices and letting them surf the net on every street corner in the city sounds like the wave of the future. But whenever things seem too good to be true, they usually are. Across the country such municipal hot spots are already putting a drain on local tax dollars.  

Granted, Decatur is using a private company to install this system. Yes, the state government is giving Decatur a large portion of the money to install this system. But is it the gift that keeps on giving? Or is it wise to look this gift horse in the mouth, especially when national trends indicate the state is “gifting” the city more debt and bills?  

The Georgia Technology Authority is doling out $4 million this year to six areas to establish wireless networks. Decatur will receive $427,500 toward the $620,000 start-up costs. That’s a gift of $192,500 liability in the first year alone, not to mention the annual operating and maintenance costs.  

There’s more on the downside. Underperformance and low usage plague the wireless spots currently in use. The Internet has turned into a world that is driven by video-based content. Web sites such as YouTube require high bandwidth, something that many of the Wi-Fi users find is lacking. Not to mention that a burgeoning number of coffee shops, fast-food restaurants and bookstores are drawing customers by providing Internet access. This is a major incentive for businesses to use that will fade away if taxpayers’ bottomless wallets are used to fund citywide Internet access. Government should stick to former Indianapolis Mayor Stephen Goldsmith’s test for privation of service: “If the phone book lists three companies that provide a certain service, the city probably should not be in that business.” With hundreds of wireless hotspots currently in the metro area, this is an easy test to pass.  

Another important characteristic of the Wi-Fi technology is the rapid advancement of the technology. By the time a government gets a Wi-Fi system financed, procured and installed, it is already out of date and obsolete. The costs of maintaining and updating the network on a citywide level would be massive.  

This is a clear case of governments looking for short-term solutions. The kicker here is that there is no problem that needs a solution. Internet access is available in most public libraries for those who can not afford access. Low-income families might afford a personal computer, but are unlikely to be able to afford the laptops that would benefit from the Wi-Fi network. Nor will such municipal Wi-Fi networks replace residential use of DSL or cable access to the Internet. City officials in other parts of the country are already finding that out: Networks in St. Cloud, Fla., and Portland, Ore., are having difficulties penetrating building walls, forcing indoor users to buy signal boosters for as much as $150. And when it works, service can be slower than cable and DSL. 

If ever there was a case for the private sector to be the provider for a public good, it is made by Wi-Fi. The biggest challenge with public goods is the inability to exclude those who do not pay for those goods. These are called market failures and are used by the government to justify intervention. There is no public good problem with Wi-Fi. The technology was created with the ability to allow or exclude, through passwords and log-ons. Private companies could obtain the right to install state-of-the-art hardware across towns and, through user fees and advertisements, create a profit with the network.

Instead of facilitating networks that can pay for themselves, the state of Georgia has committed $4 million in hard-earned taxpayer money, with promises of more money in coming years. Not only is government creating another liability for cities with already-tight budgets to operate and maintain underperforming services, it is providing another glaring example of mission creep:  doing for us what we can do for ourselves. Worse, it’s something we can do better.

Chris Leonard, a University of Georgia graduate in Public Policy, is the Georgia Public Policy Foundation’s SPN/Institute for Humane Studies Koch Summer Fellow. The Georgia Public Policy Foundation is an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.

© Georgia Public Policy Foundation (July 13, 2007). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.