Professor Christopher Yoo of the
University of Pennsylvania, a member of FSF’s Board of Academic Advisers, spoke
at the Free State
Foundation Tenth Annual Telecom Policy Conference on March 27. The conference’s final panel featured
Professor Yoo, Professor Michelle Connolly of Duke University, and Professor
Daniel Lyons of Boston College Law School and was entitled “Final Thoughts and Looking Ahead:
Perspectives from Three of FSF’s Academic All-Stars.”
Professor Yoo recently
noted from his experience examining municipal broadband system a problem that
is often not recognized by proponents of municipal broadband. He points out
that proposals for new municipal broadband systems tend to focus on the costs
being manageable, while paying too little attention to the demand side. In
other words, these systems tend to be built on the assumption that “if we build
it, they will come.” But the demand side is the part that municipalities are
the most ill-equipped to address, especially in cities that already have
established private broadband providers. As Professor Yoo explains:
I'll
tell you right now, the problem is not generally on the cost side. . . It's on
the revenue side because as anyone who's been in this business knows,
especially if you're in an overbuilt situation, you're marketing the heck out
of these things. You got to come up with a new advertising campaign all the
time to chisel someone off who's already got service. Guess what? Elected
officials were not born to do that. They're not trained to do that. It's just
not what's in their blood. But they think about operating a network. That's the
easy part of being in this business, and they don't realize that. And they also
assume that the incumbent won't drop its price. Well, guess what? If a
monopolist faces duopoly competition, any economist will tell you prices are
going to go down. They don't take that into account. A lot of models are
oversold. Some of them are not even pro forma financials; they're pure
marketing pitch. And they're put into the bond instruments, and simply put,
some of them really have no chance of succeeding at all.
Professor Yoo also pointed out that some municipalities
are finding more creative solutions for making Internet access available to
their residents, such as fixed
wireless service, that don’t
involve building risky municipal broadband networks:
And
in fact, there are a lot of areas of the U.S. that are underserved, and we're
not just talking about Indian reservations, but counties. And we're studying western
Massachusetts, counties in Arkansas. There are a lot of places that have real
challenges. The two things that struck me about it is how the deployments that
are working in a lot of these places that have some problems are very
unorthodox. They looked very different than the ones before. Many of them are
fixed wireless deployments, sometimes WISPs [wireless Internet services
providers] where they're using unlicensed spectrum.
To view the panelists’
discussions on those points and on other issues such as Internet freedom and
net neutrality regulation, please watch the C-SPAN video of the conference here. The transcript
for the panel on “Final Thoughts and Looking Ahead: Perspectives from Three of FSF’s
Academic All-Stars,” featuring Christopher Yoo, is available at: http://www.freestatefoundation.org/images/March_27_2018_Tenth_Annual_Conf_Academic_Panel_Transcript_051718.pdf.
[Note: The quotations
by the panel speaker included in this post were taken from the C-SPAN
transcription of the Conference, with minor edits made for purposes of
correcting obvious syntax, grammar, and punctuation errors. None of the meaning
was changed.]
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