Wireless Philadelphia: A Leap into the Unknown

Abstract

The plan announced last week in Philadelphia to create a government-owned wireless broadband network isn't needed, is economically and technologically unsound and will put the city's taxpayers at great financial risk.

The Wireless Philadelphia Business Plan promises (1) ubiquitous broadband service sold at discount, (2) profitable nearly from the outset, (3) with no need for city subsidies, and (4) a surplus that can be applied to economic development.

Given the private sector's highly active investments in the intensely competitive marketplace for broadband and wireless broadband however, the obvious question is why aren't private firms chomping at the bit to do what Philadelphia is proposing?

The most reasonable conclusion is that the Business Plan has dramatically underestimated the costs and risks of this project and overestimated the demand for ubiquitous Wi-Fi service in particular. This is made even more apparent considering the competing private services and alternative wireless technologies that the growing market for broadband access in Philadelphia has shown to be comparatively more cost-effective and sustainable for future broadband penetration.

Keywords: telecommunications, Philadelphia broadband, wireless, broadband penetration, wi-fi, wifi, Wireless Philadelphia, universal wifi, universal broadband, universal wireless, free wifi, free broadband, ubiquitous broadband, market failure

JEL Classification: D4,D5,H2,H4,H41,H42,H71,L5,L51,L63,L96,L97,L98