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Wednesday, January 28, 2004

Missouri's Munis
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In August 2002 the Missouri legislature passed a law to guide municipalities' entry into the telecom market. Among its features, the legislation calls for an annual report from the MO PSC to the legislature on the economic impact of municipal telecom. When the report becomes available online, a link will be posted here.

There is some variance with the Missouri data collected in a survey done by The Progress & Freedom Foundation. In all, we found 19 municipalities engaged in telecommunications activity while the PSC only reported 15. The PSC found one more municipality offering Internet service, 10, than we did in October when we reported nine. The discrepancy can probably be attributed to a difference in definition: At PFF we count public utilities, like power and water, as inherently governmental entities while the state only looked at cities and other political subdivisions. In all, there was startling consistency between the reports.

More on the methodology: The PSC mailed questionnaires to 640 municipalities and received 340 responses. Then, a more detailed questionnaire was mailed to municipalities that indicated their participation in the telecom marketplace. Self- reporting was critical to the data collection and may result in a slight bias toward under-reporting in the state's survey or inconsistency in the application of certain definitions.

Roughly half of the municipal telecom providers report that revenues don't meet costs. The City of Albany reported, "it sold its Internet operation to a private entity because its Internet operation was too resource-intensive." In a telling note, the report summarized that "some cities view the provision of data transmission services as a means of increasing revenues" and that there "appears to be a demand for higher speed data transmission capabilities" in rural areas of the state.

Kudos to the legislature for requiring an economic impact statement on this flashpoint in the telecom sector. The report from the PSC is a well-documented survey of the landscape with up to six appendixes, but sadly does not really assess the economic impact of this type of municipal activity.

posted by @ 3:38 PM | General

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