Mayor Antonio Villaraigosa’s plan to blanket the city with wireless Internet service that would be available for everyone is a bold and egalitarian move. But it’s also more likely to be a fiasco than a help.
Internet service providers already are out there in the marketplace, slugging it out. If we leave them alone and let them compete and encourage other companies to join in the fray they’ll do about anything to get customers. They’ll improve service, introduce technology and drive down prices.
But a local government can make a fine mess of things by interfering in the process and creating an officially anointed monopoly.
Want an example? Think of how cable service over the years has gotten to be consumer unfriendly and change resistant. And at this advanced point in the cable industry’s technological life, cable service should cost a residential customer maybe $10 a month. I might be going out on the proverbial limb, but I’m betting you pay a few dollars more. For all that, you can thank local governments for creating local cable monopolies or oligopolies.
Villaraigosa’s plan is very much in the formative stages so the shape could change, but he’s leaning toward creating a WiFi monopoly. The city would partner with an Internet provider and give it access to buildings and light poles presumably at reduced rates or no rates. In return, the provider would create a citywide WiFi network. Once done, most everyone could get on the Internet for a reduced rate or maybe for free.
Trouble is, by creating a monopoly, Los Angeles would repeat the cable industry error. Other Internet service companies would be inhibited from moving in. Who would want to compete with the preferred provider that has lots of advantages? With little or no competition, the preferred provider’s greatest temptation would be to slowly ossify. It would have little incentive to lower prices, spend money on the latest technology or answer the customers’ angry phone calls.
Actually, there are practical problems with Wi-Fi, too. WiFi signals are slow. A home behind a big tree or an interior apartment that looks into a courtyard may not get the radio-like WiFi signal. If so, the customer has to buy a device for $80 to $200 to get the signal, said Vince Vasquez of the Pacific Research Institute. (Vasquez co-authored a report released last month called “WiFi Waste.”)
Villaraigosa’s egalitarian impulse is to bridge the so-called digital divide. He wants everyone, regardless of income, to have access to the Internet.
That’s an inspired idea and a great goal. But there’s a better way for the city to do it. First, select no “partner.” Instead, focus on opening up the process so any Internet provider WiFi or otherwise can enter. Vasquez suggests the city should define low-income areas and then cut red tape and fees in those areas so the providers can install their systems quickly and inexpensively. Then figure out a system in which the provider agrees to give away the service to a certain number of people or charge a nominal fee of a buck or three a month.
The result would be more competition, better service and lower prices for all. It would not repeat the cable error. And the political types could still brag that they delivered low-cost Internet access to the people.
Charles Crumpley is editor of the Business Journal. He can be reached at
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