Out of Control

Meanwhile, the affirmative votes, at most, allow city municipalities to create telecom boards and to solicit feasibility studies. But without the funding attached, these referenda amount to little more than opinion polls. In fact, across the state, the proponents of these measures sought support by emphasizing that they authorized no spending.

There is no doubt the yes votes signify a desire for alternatives. But the same might be said if another proposed, but unfunded plan were on the ballot – say a town swimming pool or a light rail line.

If anything, the broadband votes in Iowa point to a traditional antagonism toward incumbents and general unpopularity with state laws that bar broadband. We can argue the constitutional legality and appropriateness of these measures all we want, but it’s clear they don’t go down well with local residents.

As for antagonism toward incumbents, municipal enthusiasts fail to realize that it often doesn’t translate into high revenues for a municipal system.

There is no doubt consumers want low-price unbundled Internet access. But than again, it’s natural for consumers to want everything to be cheaper and more plentiful. I’ll concede that the votes in Iowa validate that people want alternatives. So what else is new? They still left open the question as to whether municipalities should be an alternative.

Despite attempts to spin the numbers, study after study, the latest being Ron Rizutto’s report on ten years Iowa municipal broadband published by the Heartland Institute, has demonstrated that municipal broadband systems rarely make back their investment. The problem with low-price bandwidth is that the value proposition has always been difficult. The “if-you-build-it-they-will-come” assumption has never worked. Cities that fooled themselves into believing otherwise – that different rules applied because their goal was not profit, or because they were local, or because their financing structure would be different--have failed. At the end of the day, they couldn’t offer a sufficient reasons to lure enough customers. It’s about the quality of the product and service, not who sells it.

Fortunately for consumers and wary taxpayers in 17 Iowa towns, new entrants from the Internet services sector, including Google and Yahoo, as well as infrastructure companies Praire iNet and MetroFi are beginning see potential ways to offer Internet access either free or at a very low price. But they all center on a value proposition.

The alternatives consumers want are on their way – quite independent from any local government programs. I look forward to revisiting those Iowa cities in a year or so and find plenty of low-priced, widespread broadband wireless availability, and none of it run by the municipality.