David Rodeback's Blog

Wednesday, May 3, 2006

Municipal Broadband: Questions and Answers

How big a deal is telecommuting? Is wired broadband technology obsolete? Could American Fork have had its municipal broadband free, with a little more patience?

This article is the fifth in a series of articles on the economic impact of municipal broadband, especially American Fork's AFCNet.

Previous Article: Broadband's Impact on American Fork's Economy and Quality of Life

Today we do some housekeeping. Here are some questions that need to be asked, and the best answers I have for them.

Q. The previous article listed telecommuting and home-based businesses as an important activities made more likely and efficient by broadband. How big a deal are they, really?

A. There is a delay of several years in some of the official statistics about such things, but the picture is clear enough anyway. As early as 1997, the Bureau of Labor Statistics (BLS) said that 3.6 million Americans were telecommuting full-time or part-time -- and at the same time they explained why this measured number was probably slightly lower than the real number. Also in 1997, BLS estimated that 450,000 judges and lawyers were telecommuting -- so it's not just IT workers. (See this page from The Telework Coalition.)

That was the previous decade. More recently, a September 2005 BLS report said that 20.7 million people worked at home at least once per week in May 2004 (seven years later). That's about 15 percent of the total non-agricultural job force. About 30 percent of these were self-employed; about two-thirds of that 30 percent had a home-based business. Do the math and it looks like there were about 16 million telecommuters, in addition to the home-based businesspeople. Overall, about 80 percent of these telecommuters and home-based businesspeople reported using computers.

The report also shows, unsurprisingly, that the more formal education one has, the more likely one is to telecommute.

Q. Is AFCNet's wired fiber-optic and Ethernet technology already (or about to be) obsolete in an increasingly wireless world?

A. My best guess is, not anytime soon. Perhaps in 20 or 30 years or more.

I have both wireless and wired networking at home and at the office. Local wireless networks and wireless delivery of Internet access to a home or place of business are more convenient in some ways, but less reliable and less secure. Wireless technology is maturing and improving, but for large data transfers or 24/7 availability, wires are still the way to go. Further, the more homes and businesses go wireless in an area, the more one sees problems such as interference and overcrowding of frequencies. Cities such as Philadelphia which are working on municipal wireless systems are facing some significant technical problems as a result. At this point, wired systems are also more secure and require less expensive hardware at the home or business.

If we were talking about installing a new system, perhaps wireless would be the way to go. But I'm not even persuaded of that. As it is, the wire is already installed in most of American Fork, so it's a sunk cost.

I wouldn't want to rely on wireless, but I would like to see a wireless component added to AFCNet: I think we should have free, publicly available (but content-filtered) wireless access in all our parks and other significant public spaces in the City.

I haven't even mentioned fiber-optic cable, which accommodates much higher bandwidth than normal cable. Some new developments in the valley have fiber-optic cable running to each home. (AFCNet has some, but not to every home or business.) The Internet speeds there are absolutely dazzling. It will be a very long time before wireless technology can approach fiber-optics, if it ever can.

I'm as fond of new technology as almost anyone, and as eager to see it change some things in our lives. But I remember being told that we would all be driving flying cars by the year 2000, and that the personal computer would render paper obsolete in the near future (a decade or two ago). Those who insist that wired networking is or soon will be obsolete are, in my view, either as wildly optimistic as the flying car contingent or are trying to sell us something wireless. For now and the foreseeable future, I'm happier with the reliability of wire, especially for business purposes.

Q. What has AFCNet done for us so far?

A. It has helped me work efficiently from home for years. It has hastened the coming of other types of broadband to American Fork. (I have unconfirmed reports that other broadband providers moved into American Fork much more quickly than they would have if we hadn't had a municipal system; this benefits everyone who uses broadband, no matter which provider they choose.) And it's child's play to confirm that the private sector providers offer their services for a much lower price in American Fork than in adjacent Highland, for example, where there is no municipal broadband system with which they must compete. All that said, much of the economic effect of AFCNet is still potential, because the City still hasn't gotten around to extending the service to businesses (except a very few).

Q. Would some big company have swooped down and offered us municipal broadband at no cost to the City, if we hadn't already had it, as Google is doing in San Francisco?

A. I doubt it very much. At the risk of belaboring the obvious, San Francisco is a high-profile city, located near Google's headquarters in Mountain View, California. American Fork is relatively . . . not even on the map. Why would such a company ever even care about American Fork, let alone do so anytime soon? Moreover, consider Alpine, Highland, and Pleasant Grove, for example. Has any private company come in and given them municipal broadband yet? If we had waited for some corporate benefactor, we'd be waiting a long time, perhaps forever, and watching economic growth mostly happen elsewhere in the meantime.

Q. Is it true, as someone claimed during last year's campaigns, that if the City had just been a little more patient, the owners of the system it purchased would have defaulted, and the City could have had the system free of charge, thus saving the taxpayers six million dollars?

A. If everything went just right, which almost never happens, I believe the City could have claimed the system if the owners went out of business. But I cannot say whether they would have done so or when it might have happened. In any case, even if there were no legal or other related costs, the savings would not have been close to six million dollars. If the public statements were accurate at the time the City purchased the system, the purchase price was about $800,000; the rest of the six million dollar bond was used to bring the system online throughout the city and to operate it for the first three years or so. So the maximum possible savings, even if the owners had conveniently gone out of business at just the right time, could not have exceeded the purchase price, $800,000, under the most favorable circumstances.

There's a big, looming fiscal question that is unanswered here. That is fodder for the next article, which is also the last in this little series.

Next Article: "Aw, Don't Think Like That! . . . Think Like a Pirate!"

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