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Friday, December 15, 2006

Provo's Municipal Broadband
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To follow on Solveig's blog, it is important to emphasize that Steve Titch's study of Provo, Utah's municipal broadband system - iProvo - is just the latest in a series of studies (including some of our own) that have reached essentially the same result. Namely, these systems are not in the interests of the taxpayers who are their involuntary shareholders. As is typical of these systems, iProvo is in competition with private providers - in this case, Comcast and Qwest - notwithstanding the claim that government needs to step in because the private sector isn't doing it. This competition makes it virtually impossible for the municipal systems to achieve the combination of penetration and price necessary to cover costs, as the experience of iProvo and virtually all similar experiments shows. The result is some combination of higher taxes and higher electricity rates (iProvo is being cross-subsidized by the municipal utility), for no real benefit. The Reason study indicates that most of iProvo's 5,000 customers had broadband before and that the rates being charged are not substantially lower than those being offered by the incumbent cable and telephone companies. Hopefully, the growing accumulation of evidence will dissuade other municipalities from going down this path.

posted by Tom Lenard @ 2:41 PM | Municipal Ownership

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