Submitted by acohill on Thu, 08/02/2007 - 07:27
There are many articles and commentary on the recent announcement by the Governor of Ohio to create a statewide broadband network. But it is not clear what the impact might actually be. If you read the Executive Order closely, what you see is that Ohio, in many ways, is just starting to catch up to other states.
Most of the statewide initiative simply requires Ohio state agencies to start buying off the statewide network, instead of making their own deals. States like Iowa and Virginia did this many years ago. It also creates a Broadband Council, which other states, like Virginia, have also announced. But statewide task forces rarely have the opportunity or the authority to actually get things done. These groups can make use of the bully pulpit to raise awareness of a problem, but even then, the groups often become captured by political realities.
Because so many states have had operational statewide networks, we have had the opportunity to learn something about them. What typically happens is that the networks have a substantial initial impact by lowering the cost of broadband for schools and state agencies, especially in rural parts of a state that might be otherwise underserved.
But small and medium-sized (that is to say, innovative) broadband providers rarely get these big contracts. Inevitably, the big incumbent providers get the contracts. Once in place, the rates tend to decline only slowly, and so after the first big price reduction, prices tend to stagnate.
But here is the worst problem. From a community perspective, statewide networks are a disaster. Schools, libraries, and state agencies are the anchor tenants of a communitywide or regional open network. Without those government customers paying into the community network, it becomes much more difficult to make a business case for such a project.
So schools and state agencies in a rural region get lower rates, but the rest of the community, including businesses, seldom see any benefit, and in fact, are often worse off. Statewide networks can cripple economic development prospects. There is some language in the Ohio Executive Order about allowing non-government connections, but when state agencies and universities are calling most of the shots for a statewide network, business interests usually don't get appropriate attention. And in fact, over time, rates on the statewide network may be higher than what businesses can do in the private market. We don't really want government bureaucrats negotiating rates and services for businesses, and that is way statewide networks are usually run.
What is the alternative? Get local and regional initiatives started that use the "digital roads" approach, where government's role is limited to building a high performance digital road system, and let customers buy directly from private sector providers, instead of putting state level bureaucrats in charge of prices. States have an important role to play, but as I have said for many years, states should be building inter-community digital roads to connect local and regional efforts, using the same open access, open services model.
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