Joho the Blog
An Entry from the Archives

The New Deal's wholesale electrification of American society would seem to be a pretty close analogy. Cosma Shalizi quotes from Ronald Tobey's "Technology as Freedom: The New Deal and the Electrical Modernization of the American Home," University of California Press, 1996 [Online] to illustrate one result:

"The New Deal in domestic electrical modernization worked an invisible revolution. ... Material accumulation based in the owner-occupied home created unprecedented material affluence. The dwellings modernized their occupants, as households rebuilt their social and labor relations around new technologies. Minority groups previously locked out of affluence gained the keys to their future. ... The New Deal redefined 1920s luxury commodities into the necessities of the many, from the material symbols of the upper class's conservative retention of an unequal social structure to the material instruments of mass freedom and material justice. ... The New Deal made electrical home appliances into technology."

I read this as saying that the New Deal converted domestic electrification from an upscale niche business into a mass market (but beware - I have winnowed Cosma's excerpt with so many ellipses that Tobey will probably come looking for me with a shotgun; read the original).

The "[Online]" URL to Tobey's work was dropped - it's http://content.cdlib.org:8088/xtf/view?docId=ft5v19n9w0&brand=

Though this comment is slightly peripheral to the issue being discussed here, I just want to record that I think communism could have worked if only better software had existed before its untimely collapse. You really couldn't efficiently manage a centralized, planned, soviet-style economy even as recently as the late '80's any more than you could have started an Amazon.com. Now I bet you could. Therefore, not only should something as obvious as wi-fi (we're quickly falling behind other nations like S. Korea that offer rich subsidies for internet stuff--a fact that is well documented if seldom reported)be municipal, so should a lot of other things.

Gents, you can't have it both ways!

The telcos and the cable companies ARE the private sector. They are not rocket scientests! The crappy service you have today is their doing. The focus on litigation rather than litigation is their way of doing business.

There is no particular genius residing there.

Municipalities, on the other hand, are not all tech dolts. In fact, comparing apples to apples, one could make a powerful argument that municpally-owned electric companies (like our own Lafayette Utilities System — yeh, the city that just approved a $125 million bond issue to do it ourselves rathern than wait until your private sector heroes say we can have the bandwidth we want) are every bit as tech savvy as their private sector brethren.

I plan to respond in a more comprehensive way to the anti-public sector bias shared by Messrs. Weinberger and Isen shortly, but suffice it to say that it is those paragons of the private sector — the phone and cable companies — that are squeezing bandwidth, tamping down innovation, and (shortly, thanks to Brand X) trying to groom the Internet into a customized experience dominated by the logic of commercial tie-ins that will make product placement in Hollywood look like child's play.

No doubt, in some fantasy world (that is, free of the FCC and the U.S. Supreme Court) a free market world of open networks driven by altruistic entrepreneurs may exist. Meanwhile, back in the real world, municipally-owned networks that actually have some allegiance to the interests of the customers of those networks are a quantitative improvement over the tin-eared, greed-driven operations of the so-called private sector oligarchies of the phone and cable companies.

Mike, first, Isenberg and I differ on this point, so don't assume that he agrees with me.

Second, we do agree that the public sector as it is currently strangulated by the incumbents sucks at innovation, service, value, etc. (See the "Fail Fast" letter.)

Third, what you call a "fantasy world" I think is possible through political action, although I am not hopeful about it and am getting less hopeful with each passing week.

Fourth, keep in mind that the post you're responding to is in favor of muni wifi.

David,

My complaint is with the general fatalistic tone taken with respect to municipal-owned network initiatives (I call them public because they are owned by the public; in your response you referred to the phone and cable companies as public, so this is to provide some clarification of terminology).

Here in Lafayette, we welcomed and embraced the idea of a municipally-owned fiber network, not just because it was the only offer on the table to bring us one, but because of the inherent advantages that many of us feel municipal ownership brings. And there are many such advantages.

One of those is retention of revenue in the community. This may or may not be a big deal in large metro areas, but in middle-size communities (Lafayette has about 110,000 people) the process of extracting tens of millions of dollars per year out of the local economy and shipping them off to corporate coffers for some other use exacts a significant toll. With our municipally-owned fiber network, a lot of the money that would otherwise have been shipped off to Atlanta (home base for both Cox and BellSouth) in the form of revenues and profits will now be retained in our city. Since our local utility will not have the pressure to satisfy the expectations of stockholders or stock analysts, the need to maximize excess profits (at the expense of consumers) will be absent, resulting in money that will stay in the pockets of Lafayette consumers. So, two significant economic benefits immediately go to our community as a result of municipal ownership of our fiber network.

Another benefit is the local nature of the network ownership. As with small rural telephone companies (No, Alltel and CenturyTel have not bought them all up), local ownership allows factors other than raw economics to enter into the network building and operation equation. For instance, there is the matter of local pride. The fact that the Lafayette Utilities System (LUS) fiber initiative will make Lafayette the largest city in North America with a fiber to the home network was a powerful selling point in the recent election here. Kaplan Telephone, a rural provider nearby, is building a fiber to the home network in its service area about 20 miles from here. That investment grows in no small measure from the desire of the family that owns the company to make their mark in their community and to enable their community to have access to technology that few small communities will have in the foreseeable future.

The flip side of this argument also factored in the election here. It is clear from looking at the investments made by Cox and BellSouth in other communities, that more robust network infrastructure was being built within the systems of these two companies. It was their judgment that our community was not ready for this technology. Our community thought otherwise and voted so on July 16.

Another benefit of local ownership is accessibility to the operators of the network. We know the people who run LUS. We can talk to them just about any day of the week. They are present at Consolidated Government meetings three times a month. Their email addresses are publicly available. Try that with the owners of either a private sector cable or phone company! There's a lot to be said for proximity and access.

One reason why this network is feasible for our community through municipal ownership is the ability of LUS to use long-term financing (25 year bonds) to pay for the network build out. One of the reasons so many long-haul fiber network companies failed was (in addition to the fact that they all identified the same customers and had the same business plans) that the money had to be repaid in relatively short order.

Finally, but certainly not lastly, is the fact that municipal-ownership makes every citizen in our community an owner of the network. Conversely, it obliges the network operators to think in terms of the greater good of the community. The LUS fiber to the home project is a direct outgrowth of an earlier project in which LUS replaced its wireless SCATA system with a fiber network. In the course of engineering that network, it became clear that the network could be upgraded to afford telecommunications access to private sector companies for a fraction of the cost of the basic network upgrade. LUS subsequently set itself up in the bandwidth wholesale business and has been dealing with about a dozen resellers for about four years.

Still, there was citizen pressure to deliver the benefits of abundant, affordable bandwidth to larger segments of the community. It was this subtle but persistent pressure, which prompted LUS to begin exploring the feasibility of the fiber to the premises project, which voters here just approved. That pressure was a direct result of the access that the community had to LUS's leadership and the desire on the part of LUS's leaders to deliver benefits to the community as a whole.

Another benefit that we'll have here is that LUS has agreed not to close off any ports on the network, nor ban any IP-based service providers from dealing with consumers in the city, including VoIP vendors.

Those are the kinds of considerations that don't make their way into the decision-making processes of the phone and cable giants to whom the FCC has foolishly entrusted our economic future. With the phone companies seeking to do away with local franchise agreements, we will see the digital divide widen as they will be legally sanctioned to deliver broadband to the rich. In the grand spirit of "parity" as displayed by the FCC's decision today to allow phone companies to bar competing ISPs from their DSL lines, we can expect cable companies to seek (and be granted) similar exemptions from the obligation to deliver service to all segments of communities.

Municipal ownership may not be a panacea, but it has inherent advantages that it troubles me that visionaries like yourself do not yet get.

Thank you for affording me the opportunity to post.

Mike, thanks for the excellent post. Well thought and well put! You have spelled out, in far greater detail and thoughtfulness, the positive social and economic disruptions my post mentioned.

Keep in mind that I support muni-wifi. I want it to happen everywhere and quickly. I have been slightly involved in helping my community to adopt it. If we differ - and I actually don't think we do - maybe it's over whether the private sector should be allowed to provide competitive offerings; presumably, those offerings will compete on service, not on price. I think it'd be great to have a muni-wifi cloud available to all, supplemented by additional for-profit offerings.

I would like to address these points individually:

First, having ubiquitous, always-on connections available throughout a city adds a layer of infrastructure — information and connectedness — that may have transformative social effects.

This may be true to a point, however have you thought abut the security issues as well as privacy issues - big brother would be monitoring all communications that occured through this network... That is if in fact the network functioned properly in the first place...

Second, having that infrastructure available regardless of the area's economic status may have transformative economic effects.

I cannot see where this would be true in any sense. The internet is not a commodity - it is merely a means of communications.

Third, it is not incompatible with offerings from the free market.* If Qwest, say, has a better product — more bandwidth, better service, better security, etc. — then the market will be willing to pay for it. If the municipality can't keep its network up to date, then let Qwest make money charging for the latest and the greatest.

Look at this in terms of any other municipal owned infrastructures- for example sewer systems.. I know that where I live they are not properly maintained- so do you really believe that a high-tech network that is provided would be maintained properly? If networks are not properly taken care of they stop working...

These are my opinions.. However I welcome anyone to debate these issues in depth! Stop by http://muni-wifi.com - its free and welcome all points of view.